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Steinhoff's former CFO assisting authorities with investigations

Mar 20 2019 13:58
Janice Kew, Bloomberg

Steinhoff’s former chief financial officer is working with authorities as they investigate questionable transactions that brought the global retailer to the brink of collapse.

“I am cooperating and working with all government agencies on this matter,” said Ben la Grange, the ex-CFO, in a response to requests for comment after being named in a report commissioned by the company as one of eight people, including former chief executive officer Markus Jooste, who were allegedly responsible for the accounting misdeeds.

The company was compelled on Tuesday by South African parliamentary committees to release the names even as chairperson Heather Sonn and CEO Louis du Preez warned it could jeopardise investigations and break European privacy laws.

The release of the names follows a forensic probe by auditor PwC that uncovered 6.5 billion euros (roughly R105bn) of irregular transactions with eight firms from 2009 to 2017. The deals, orchestrated over several years, enabled Steinhoff to artificially boost profits, puff up property values and inflate the amount of cash it held, the probe found.

Others Named

  • Siegmar Schmidt, a former Steinhoff Europe director;
  • Dirk Schreiber, Steinhoff’s ex-head of finance in Europe;
  • George Alan Evans, a director of Geneva-based Campion Capital SA;
  • Stehan Grobler, Steinhoff’s ex-company secretary; and 
  • Davide Romano and Jean-Noel Pasquier, who are also listed as being part of Campion Capital

Steinhoff suspended La Grange and ex-director Grobler in late August. While both men had stepped down from their roles earlier in the year, they remained on the payroll of the South African retailer on short-term consultancy contracts.

La Grange, 44, worked as CFO under Jooste for almost five years. Grobler’s positions included company secretary and executive director of treasury and financing.

The names were released as Steinhoff said it remains in a “precarious position.”

The retailer is seeking to complete agreements with creditors after revelations of accounting irregularities in December 2017 erased almost 95% of its market value.

In August, La Grange blamed Jooste and auditors including Deloitte for the retailer’s accounting scandal, telling parliamentarians that he only became aware of any wrongdoing days before the crisis erupted.

Jooste, a week later, said in parliament that the origin of the global retailer’s near-collapse was a protracted dispute with a former Austrian partner mainly over the valuation and ownership of German furniture chain POCO.

PwC’s report, which with supporting documents runs to more than 10 000 pages, shows a “pattern of communications where the senior management executive,” now identified as Jooste, “instructed a small number of other Steinhoff executives to execute those instructions,” with the help of others outside the company, Du Preez said in parliament on Tuesday.

Steinhoff still plans to get to the bottom of the fictitious or improper deals. While the PwC report identifies three main companies that were counter-parties to Steinhoff related to deals being investigated, it similarly shows a handful of other companies involved in various transactions, where there was “a practice of using similar entity names and changing names resulting in confusion between entities,” Du Preez said.

Further work is needed to figure out the legal or beneficial ownership of some of these companies, he said.

While the PwC report is not publicly available, Steinhoff has said none of the executives identified are currently employed by the company. Schreiber, however, is being paid by Steinhoff to assist in the investigations. Steinhoff said Jooste hasn’t made himself available for interviews with the PwC investigators.

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