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Steinhoff report to police said to include three executives plus Jooste

Nov 07 2018 12:30
Janice Kew, Loni Prinsloo and Renee Bonorchis, Bloomberg

Steinhoff International [JSE:SNH] has provided South African police with information about a set of transactions involving three more former executives who may have contributed to its accounting crisis, according to two people familiar with the matter.

The owner of Conforama in France and Poundland in the UK has already referred ex-CEO Markus Jooste for his role in the scandal, which has wiped 96% off the market value. Now Dirk Schreiber, a German national who was head of finance in Europe, can be added to the list, said the people, asking not to be named because the information is private. Former Chief Financial Officer Ben la Grange and ex-Company Secretary Stehan Grobler complete the quartet, they said.

Details of the four former executives’ alleged involvement in events leading up to a failure to report audited results for 2017 have emerged during an ongoing investigation by PwC, the people said. Three more as-yet-unidentified individuals may also be reported, according to one of the people.

PwC’s forensic report into the accounts is due to be completed by the end of this year. Once the findings of the report are published, formal charges may proceed against anyone implicated in wrongdoing, according to a spokesman for the Hawks.

Inflated profits

Schreiber didn’t respond to requests for comment. Grobler declined to comment on his referral, citing confidentiality agreements. La Grange said he hasn’t been informed that Steinhoff has given his name to the Hawks and so can’t comment. Neither Jooste nor his lawyer responded to a message seeking comment.

Steinhoff said that while it handed a report to the Hawks in August requesting that the police investigate a set of transactions, no complaint was made against any individual.

“Any speculation of the names and the number of names included in the report is just that,” a spokeswoman for Steinhoff said in an emailed response to questions.

While specific details about what caused the crisis have been sparse, Steinhoff has said PwC is particularly focused on certain off-balance-sheet deals and inflated asset values. The company has written off the value of assets by more than $14bn over the course of the year, while US unit Mattress Firm filed for bankruptcy on October 5. To survive, Steinhoff has sold off a slew of assets and restructured its debt.

Jooste quit in December when the shock announcement was made and Schreiber resigned from the boards of two key units in July. While both La Grange and Grobler stepped down from their roles earlier this year, they remained on the pay roll of the South African retailer on short-term consultancy contracts until late August, when their contracts were suspended by the company.

The battle to bring those responsible to justice is playing out against a backdrop of class action law suits in South Africa, Germany and the Netherlands. Steinhoff’s former chairperson, the billionaire Christo Wiese, is also suing the retailer for R59bn.

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