Steinhoff accounting scandal sinks shares, CEO exits

JOHANNESBURG: Steinhoff International’s shares crashed after it revealed ‘ accounting irregularities’ and its CEO quit, shocking investors who had backed the rapid reinvention of a South African furniture chain into an international retail empire.

It put Christo Wiese, its largest shareholder and chairman, in charge and later sought to give ‘ additional comfort’ to investors worried about its ability to fund its existing operations, saying it had identified measures that would give it around 2 billion euros ( US$ 2.4 billion) of additional liquidity.

Steinhoff said chief executive Markus Jooste, who oversaw its expansion to one of the world’s largest household goods retailers over nearly 20 years, had resigned and PwC would undertake an ‘ independent investigation’.

The company later said its chief financial officer remained in his position and there was no

It’s a red flag, this is something very serious. Peter Brooke, portfolio manager at Old Mutual Investment Group

evidence to suggest he had any involvement in the matters being investigated.

“It’s a red flag, this is something very serious,” said Peter Brooke, portfolio manager at Old Mutual Investment Group, a top 20 shareholder in Steinhoff.

It also raised wider questions about South African corporate governance and would have a negative impact on the country’s assets, he added.

Steinhoff has been aggressively expanding in developed markets since moving its primary share listing from Johannesburg to Frankfurt in 2015, snapping up Britain’s Poundland, U. S- based Mattress Firm and Australia’s Fantastic.

Steinhoff said Wiese would “embark on a detailed review of all aspects of the company’s business with a view to maximising shareholder value”, but its South African shares had slumped 61 per cent to close at 15.87 rand, after hitting an eight- year low of 13.50 rand in earlier trading.

Steinhoff stock closed down 63 per cent in Frankfurt, while its bonds also sold off sharply.

A spokeswoman for Deloitte Accountants B. V., which signed off Steinhoff’s 2016 results, declined immediate comment.

Steinhoff, which also said it was postponing the release of its 2017 results until the probe was over, has been under investigation for suspected accounting irregularities by the state prosecutor in Oldenburg, Germany since 2015.

The company has said that move related to whether revenues were booked properly, and whether taxable profit was correctly declared. — Reuters