Steinhoff pays for PwC to help Hawks graft probe
Steinhoff International Holdings is paying for forensic auditors at PwC to help South African anti-corruption police investigate alleged financial wrongdoing that brought the retailer to the brink of collapse.
While PwC completed its own probe on behalf of Steinhoff last year, legal authorities have shown little progress in identifying those responsible for transactions that caused Steinhoff to report accounting regularities in late 2017. The Frankfurt-listed stock remains more than 98% lower than before the announcement.
Steinhoff “agreed to contribute funds to cover a substantial portion of the costs of the PwC work”, it said yesterday. “The funding is to be provided on an arms-length basis.”
Steinhoff and an elite law enforcement division have repeatedly squared off in parliament over why the authorities have made so little progress holding individuals to account. Former chief executive officer Markus Jooste quit at the time the accounting discrepancies came to light, and PwC’s report linked him to deals that may have led to the financial collapse. He denies wrongdoing.
Steinhoff remains in operation after asset sales and a deal with creditors to skip payments on about €9 billion ($10.1 billion) of debt through 2021. However, the company said yesterday its Conforama business in France faced an uncertain future following lockdowns as it has been unable to secure a state-guaranteed loan for which it is eligible. All subsidiaries, other than Conforama, have sufficient liquidity.
The Hawks have said they were only able to make serious headway with their investigations after being given full access to the PwC report completed in March last year.
PwC uncovered €6.5 billion of irregular transactions between Steinhoff and eight firms between 2009 and 2017. The deals enabled the owner of chains from the US to France to artificially boost profits and asset values, the report found.
Steinhoff paid PwC at least €35 million for the investigation, according to its annual reports. – Bloomberg