Steinhoff board – innocent?

Failure to act could boomerang

STEINHOFF board members will not get away with pointing a finger at the group’s management to avoid prosecution for alleged fraud if they failed to know what they should have known regarding the company’s accounts.

The kind of knowledge required in the Companies Act is very wide. If one foresaw the possibility that Steinhoff’s statements were false and did not act, that would be enough.

“I expect a lot of people are going to go to prison for this,” said James Grant, a practising advocate and visiting associate professor at Wits University.

“There can be no doubt that someone at Steinhoff must have known that the financials were false and that by presenting those financials, others were acting to their prejudice. The moment that is true, that person commits fraud.”

Markus Jooste, known as a charismatic, powerful CEO, appeared to take the fall for his “mistakes” when he resigned, saying in a letter to staff other executives had played no part in his errors.

Although the management and supervisory boards have been shuffled, the fact that some Steinhoff directors retained their seats has been criticised.

“They could be trying to ensure that they are not held accountable,” said Zwelakhe Mnguni of Benguela Global Fund Managers, who wrote to former chairman Christo Wiese when the scandal broke, calling for the whole board to resign.

Last week, attempts to put questions to Len Konar and Steve Booysen, members of the independent subcommittee of Steinhoff’s board, were unsuccessful. The subcommittee was set up after the scandal broke but includes existing board members.

The Steinhoff supervisory board includes Booysen, the former Absa Group CEO; Konar, the independent non-executive chairman of Exxaro Resources; and Johan van Zyl, the former Sanlam Limited group CEO, where he remains a board member.

Konar and Booysen, both distinguished in accounting, said they were legally prohibited from answering specific questions because Steinhoff was in a closed period.

But if they are found to have failed in their duties, with the rest of Steinhoff’s top brass, they could face criminal proceedings under common law, with further consequences flowing from the Companies Act. Penalties can include disqualification from serving as a director, or being fined or jailed.

“As a rule, the response of directors is that they didn’t actively do anything wrong, which fails to appreciate that an omission or a failure to do something [they should have done] is also conduct in criminal law and can equally attract criminal liability,” said Grant.

● Steinhoff International shed 7.85% to R6.22 by Friday’s close on the JSE.

French retailer Carrefour said earlier it had acquired Steinhoff’s 17% stake in online retailer Showroomprivé for half the R157.4-million Steinhoff originally paid for it. —