JSE’s investigation into GWK silo receipts continues

An independent audit by the Johannesburg Stock Exchange (JSE) verified that agribusiness GWK’s combined physical stock (wheat) at the Modderrivier and Douglas silos were sufficient to meet all GWK’s Safex silo receipts obligations.

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This follows a finding by the JSE that the company contravened the regulations for silo owners by issuing silo certificates for wheat stored in its Douglas silo in the name of its Modderrivier silo which was receipted for its full tonnage. The JSE claimed the GWK had breached silo owner requirements by issuing Safex silo receipts for wheat held in the Douglas silo, a non-registered delivery point.

GWK argues that the registration of the Douglas silo was not a feasible option because of the limited loading capacity of the Belmont-Douglas railway line, said Neil de Klerk, executive manager for corporate marketing. Safex has also launched an investigation into the matter. Chris Sturgess, Safex’s general manager for commodity derivatives, said in a JSE market notice that GWK continues to co-operate fully with the JSE to ensure the remaining Safex silo receipts still in issue are honoured.

GWK may, however, not issue any new Safex silo receipts pending the outcome of the JSE’s investigation and its decision about GWK’s future registration as an approved silo owner. Louis Cockeran, legal counsel for the JSE, said, “The investigation has been finalised and the JSE will inform the market about its decision regarding the continued registration of GWK as an approved silo owner within the next few days.”

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Cockeran explained that the integrity of the South African grain market is founded on the assurance that grain is physically stored at the location indicated on the silo receipts. “A silo receipt guarantees that the quantity and quality of the commodity specified is stored at the location indicated on the silo receipt. It will cause serious disruptions in the market if these rules are not strictly adhered to,” he said.