Steinhoff fined R1.5bn but will pay only R53m
Troubled retail group Steinhoff secured a massive discount on the R1.5bn fine levied by the financial markets regulator because of its fragile financial condition and co-operation with the investigators.
The group was forced to pay R53m, which is the highest fine issued by the Financial Sector Conduct Authority (FSCA) for providing false and misleading information to the market, said Bradon Topham, divisional executive, investigation and enforcement at the FSCA.
The false and misleading information related to the R155bn that had to be written off the revised 2017 financial accounts, Topham said.
The share price dropped below R1 when news of the settlement was first released, but recovered to close 1.89% firmer on the day at R1.08.
The hefty reduction of the fine is the first sign of what Steinhoff CEO Louis du Preez referred to during a results presentation in August as a “strategic solution” to the litigation challenges it was facing from shareholders, vendors and regulators. On Thursday, Du Preez
said the Steinhoff board was pleased the FSCA matter had been brought to a conclusion, and that “the FSCA has recognised our full co-operation with the investigation”.
The FSCA has no further enforcement actions against Steinhoff, but Topham said its investigation into the accounting scandal, first revealed by Steinhoff in December 2017, was continuing, and was considered very important.
The regulator’s investigation will cover more than the eight individuals named in PwC’s forensic report on Steinhoff. The names, which were disclosed in parliament in March, include former CEO Markus Jooste and former CFO Ben la Grange. “It’s more than likely if we have found the company guilty of providing false and misleading information, then some individuals will also be found guilty,” Topham said.
He said the FSCA hoped to complete its investigation and be able to levy a penalty within 12 months. Topham said PwC’s 2,000-page forensic report had not been necessary in its finding against the company.
“The R155bn restatement was sufficient evidence of false and misleading information being provided to the market.” But the forensic report, to which the FSCA has been given access, was critical for the regulator’s probe into individuals involved.
Topham also confirmed the FSCA would finalise an investigation into insider trading within the next few months. He said the investigators had studied cellphone text messages sent by Jooste to some close friends in September 2017. Details of the messages, advising the sale of Steinhoff shares, were revealed in recent court action by Jaap du Toit, the executive of a trust that exchanged PSG shares for Steinhoff shares in 2015.
Topham would not say if Jooste was at the centre of the soon-to-be finalised insidertrading investigation.
In addition to investigations by authorities in Germany and the Netherlands, Steinhoff is facing litigation challenges from former chair Christo Wiese as well as a number of class actions on behalf of shareholders.
2017 the year in which the accounting scandal was first revealed by Steinhoff