Pepkor is still suffering a Steinhoff hangover

Having successfully convinced investors that the numerous corporate governance failings of its parent was not a feature of its own business, Steinhoff Africa Retail

— since renamed Pepkor Holdings — has been thrown in the spotlight because of the increasingly antagonistic fallout between itself and the previous founder and executives of Tekkie Town.

Following Steinhoff’s implosion in December, the Pepkor share price took a beating as investors may have deemed it guilty by association. The share price sank from R25 to as low as R15. However, in the absence of any material financial restatements and allegations of fraud, Pepkor slowly won back the confidence of investors and its share price recovered to above R20 per share.

Since then, though, disagreements with the founders and former executives of Tekkie Town, a business that it had acquired from Steinhoff, has resulted in plenty of dirty laundry being aired. This included the contentious investment scheme undertaken by Pepkor executives with borrowed money. The scheme found itself underwater when the Steinhoff share price collapsed and shareholders in Pepkor were informed the company would be providing a guarantee.

These developments may have highlighted concerns regarding transparency, and it would seem the market punished the share price, sending it to levels last seen in December. It remains at R16 per share, a discount of about 20% from where it was trading before details of the litigation involving Tekkie Town became public. This discount may reflect a corporate governance discount. If this is the case, the company should move to improve transparency and disclosure.

Mining companies would do well to heed President Cyril Ramaphosa’s clarion call for those with knowledge about dodgy dealings to step forward and fully participate in the commission of inquiry into allegations of state capture.

Comments from a number of mining companies that they will participate if called on to do so send a rather apathetic response to attempts to unravel the underhand dealings and damage done to the economy and investor sentiment by those acting in the interests of a small corrupt group.

While the Minerals Council SA has encouraged its member companies to step forward, there has hardly been a stampede of CEOs wanting to talk about interactions with then mineral resources minister Mosebenzi Zwane and those around him, interactions that raised ethical, legal and moral questions.

“It is critical that the commission has the means and opportunity to effectively fulfil its mandate,” Ramaphosa said at the time of accepting Nhlanhla Nene’s resignation as finance minister after testifying before the commission about his meetings with the Gupta family.

“It is incumbent upon any person who may have knowledge of any of the matters within the commission’s mandate to provide that information to the commission, to do so honestly and to do so fully,” he said.

One company that must step forward without waiting to be asked is Glencore, the global commodity trader and miner, which came under pressure from Eskom and Zwane to sell its Optimum colliery to Gupta-owned Tegeta Resources.