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Steinhoff's Christo Wiese defends company payments as legitimate

Apr 11 2018 06:50
Loni Prinsloo and Janice Kew, Bloomberg

Johannesburg - Steinhoff International Holdings ex-Chairperson Christo Wiese said he received €325m from the retailer last year as up-front payments related to a planned merger between supermarket chain Shoprite Holdings and Steinhoff’s Africa operations.

Steinhoff [JSE:SNH], which has lost 94% of its value since an accounting scandal erupted in early December, said earlier Tuesday that two payments made to Wiese in October and November last year didn’t follow correct disclosure or governance procedures. That dragged the billionaire deeper into a crisis that has already ended the career of former Chief Executive Officer Markus Jooste.

In a phone interview, Wiese said he received two payments of €200m and €125m for shares in Steinhoff Africa Retail, known as STAR, a step in the process of combining the unit with Cape Town-based Shoprite, in which Wiese is the biggest shareholder. That deal collapsed shortly after Steinhoff reported accounting irregularities, so he agreed to return the cash, he said.

“Given the parties involved from Steinhoff’s side, I accepted that the requisite internal approvals and governance matters in respect of the sale agreement and payments there were complied with,” Wiese said. The pre-payment for STAR shares was cleared by South Africa’s reserve bank, he said.

Wiese quit Steinhoff in mid-December. He became its largest investor in 2015 when he sold his pan-African clothing retailer Pepkor to the company, though has been forced to sell down his shareholding since the financial wrongdoing emerged. He told lawmakers in late January that news of the irregularities came as a “bolt from the blue” and that he had no prior knowledge of any wrongdoing.

Steinhoff shares traded 15% lower at the close in Frankfurt, where it moved its primary listing from Johannesburg in 2015. The company said it had no further comment beyond a statement earlier Tuesday about the improper payments to Wiese.

“Entities within the Steinhoff group concluded commercial agreements in October and November 2017 with Wiese-related entities. These transactions did not follow the normal governance and disclosure processes of the company,” Steinhoff said.

Moneyweb said earlier that Wiese asked the company to cover a margin call on his behalf after Steinhoff reported the accounting irregularities in December. Wiese denied that aspect of the report by phone.

“I made no request for Steinhoff to cover a margin call in December 2017,” he said.

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steinhoff  |  christo wiese  |  accounting fraud  |  retail
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