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Four key things to know from Steinhoff's briefing to Parliament

Mar 19 2019 18:04
Lameez Omarjee and Jan Cronje

The leadership of Steinhoff, as well as officials from the JSE, the Hawks, the National Prosecuting Authority, and the Companies and Intellectual Property Commission, appeared before a joint sitting of three Parliamentary oversight committees on Tuesday to update MPs about the state of investigations into the company.

The sitting took place 16 months after Steinhoff's former CEO Markus Jooste abruptly resigned as auditors flagged accounting irregularities in the group's financial statements. 

It follows three separate briefings by current and former Steinhoff leadership in 2018.  

On Friday, the Stellenbosch-headquartered retail conglomerate published an 11-page overview of a long-awaited forensic report by PricewaterhouseCoopers into the company's books.

Steinhoff had approached PwC to conduct the independent forensic report in December 2017 shortly after Jooste's resignation. 

Below are some of the key takeaways from the sitting.  

Eight execs implicated in the PwC report were named for first time 

After being instructed to do so by the committee, Steinhoff CEO Louis du Preez made public the names of eight people implicated in the PwC report.

The "small group" of former Steinhoff executives mentioned in the PwC report are: Markus Jooste; Dirk Schreiber; Ben le Grange and Stehan Grobler.

Du Preez said the other executives named are: Siegmar Schmidt; Alan Evans; Jean-Noel Pasquier and "Mr Ramano".

No further details were provided, meaning it was not clear where and why the executives were mentioned in the PwC report.

The PwC report has not (yet) been shared with regulators

Du Preez said the company has not yet agreed to share the 15 000-page forensic report with regulators, contradicting what was earlier said by the head of investigations and enforcement at the Financial Sector Conduct Authority. 

Brandon Topham, who spoke before Du Preez, said the authority was awaiting the full PwC report, and had already received some of it. But Du Preez later said Steinhoff had not agreed to this.

In a document shared with the committee, Steinhoff said it considers the report "subject to legal privilege [and] confidential".

Asked who has access to the report, Du Preez said he is the only person at Steinhoff to have a physical copy of it. Other people at the company have electronic copies that "cannot be printed". Deloitte - the group's auditors - Werksmans Attorneys and PwC also have copies. 

Yunus Carrim, the chair of Parliament's standing committee on finance, advised regulators they could officially ask for the report after the meeting ended. He specifically ordered the Hawks to secure the report.

Hawks still investigating single transaction

MPs questioned why the Hawks, who have been investigating Steinhoff for over a year, had only probed one suspicious transaction, an investigation which is yet to be completed.

Carrim ordered the Hawks to provide weekly feedback to Parliament on progress being made into the investigation.

ANC MP Dikeledi Mahlangu said the lack of action by the NPA and the Hawks was making Parliament appear "toothless".

DA MP Alf Lees asked how the Hawks could only have investigated a single transaction.

 "This is the biggest corporate fraud in the history of SA and [the Hawks] traced one transaction, which was not concluded, and no one has been charged," he said.

Steinhoff is being probed for insider trading

Topham, the head of investigations and enforcement at the FSCA, said the authority was investigating three offences at Steinhoff: insider trading, market manipulation and false and misleading information.

He added that, for the next three to six months, the Steinhoff matter would be its number one priority.

Potential penalties would be known once the investigation was complete. He did not give a time frame for the investigation, saying this was not possible.

Topham also asked anyone who had been advised to sell Steinhoff shares by executives to come forward as part of its insider trading investigation.

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