The Enforcement Committee (EC) of the former Financial Services Board (now FSCA) has imposed an administrative penalty of R30 million on Harmony Gold Mining Company Limited (Harmony), for publishing misleading financial statements during 2007. The company contravened section 76 of the Securities Services Act No.36 of 2004.
On 25 April 2007 Harmony published its financial statements for the quarter ending 31 March 2007 (hereafter referred to as the statements), which statements were inaccurate and misleading in that they omitted to include costs to the value of approximately R250 million, thereby overstating profits and headline earnings. As a result, the Directorate of Market Abuse referred the matter to the EC.
In arriving at the administrative penalty, the EC took several circumstances into account, including that Harmony co-operated during the enforcement process; that the misleading statements were not deliberate but as a result of shortcomings in the process employed in connection with the implementation of Harmony’s then newly installed accounting and software system and that the penalty imposed would serve as a deterrent.
A copy of the order is available on the FSCA website: www.fsca.co.za