Steinhoff: MPs demand action
PARLIAMENT’S standing committee on finance has called on a number of entities to expedite their investigations into South African-based global retailer Steinhoff and to release the outcomes to the public urgently.
The committee yesterday expressed outrage and urged the Financial Services Board, the South African Reserve Bank, the Independent Regulatory Board for Auditors and the Johannesburg Stock Exchange (JSE) to do good by their investigations and deliver substantial outcomes, as soon as possible.
The Department of Trade and Industry (dti) and the Companies and Intellectual Property Commission (CIPC) also expressed deep concern following allegations of governance failures and financial irregularities at Steinhoff which led to the resignation of its chief executive, Markus Jooste.
The dti and CIPC will launch an investigation into the allegations “as they relate to non-compliance with the Companies Act and Regulations”.
Committee chairperson Yunus Carrim said the Steinhoff scandal had confirmed the need for tighter regulations and monitoring of companies. He also called for more effective regulatory bodies.
“We are concerned, not just about the financial losses suffered by the Public Investment Corporation (PIC), the Government Employees’ Pension Fund (GEPF) and the government employees they represent, but also about the prospects of major job losses for workers in Steinhoff companies,” Carrim added.
He said the committee was also concerned about the consequences for the retirement and saving funds of many other investors in Steinhoff through a number of pension fund managers.
The committee believes that, as a listed company on both the Frankfurt and Johannesburg stock exchanges, the two stock exchanges and their regulators should urgently investigate Steinhoff ’s conduct and take appropriate action.
This, he said, should include reporting all transgressions to prosecutorial agencies or other regulators.
“Regulatory and prosecutor agencies in the two countries must co-operate effectively.”
Working with the standing committee on public accounts, Carrim said that the finance committee would play a full oversight role and will call the regulatory bodies, the National Treasury, the PIC, GEPF, Steinhoff representatives and any other relevant stakeholders to account to Parliament as soon as it reconvenes next year.
“Alleged fraud of this scale requires swift and decisive action of regulators, both in and outside South Africa. The perpetrators have to be prosecuted and sanctioned to the full extent of the law,” Carrim said.
Although the full nature and extent of the fraud is not yet known, Carrim said the events at Steinhoff had raised questions about the appropriateness of governance oversight frameworks, corporate incentives and the role of entities entrusted to ensure discipline in corporates, such as the asset management and accounting industry.
“In the meantime, we are writing to the regulatory bodies to find out what action they are taking and their timelines for finalising outcomes, and to the PIC and GEPF about the extent and implications of the financial losses,” he added.