PIC in court over PwC report on Steinhoff
Asset manager says this is needed to identify those responsible for malfeasance and who should be pursued in delinquency process
The Public Investment Corporation is filing a court application to force Steinhoff to release the forensic report into the company conducted by PwC, which Steinhoff has withheld on the grounds of confidentiality.
The Public Investment Corporation (PIC) is filing a court application to force Steinhoff to release the PwC forensic report, which the company has withheld on the grounds of confidentiality.
The corporation which is asset manager of the Government Employees Pension Fund (GEPF) and other statutory funds and manages more than R2trillion in assets has an exposure of about R24bn due to the collapse of the Steinhoff share price after revelations of financial irregularities under former CEO Markus Jooste, now being investigated by the
Hawks and the National Prosecuting Authority.
The PIC is instituting legal proceedings to declare directors implicated in Steinhoff financial irregularities as delinquent, and says it needs access to the PwC report to identify who was responsible for malfeasance and who should be pursued in a delinquency process.
PIC head of legal services Lindiwe Dlamini told parliament’s finance committee on Tuesday that the PIC believes access to the PwC report is critical for it to understand what happened at Steinhoff and who was responsible. The PIC issued a letter of demand for access to the report from Steinhoff about two weeks ago but this was refused. PIC deputy chair Sindi Mabaso-Koyana said the PIC found it “mischievous” of Steinhoff to withhold the report.
PwC investigated financial irregularities at Steinhoff for 18 months. Steinhoff refuses access to the 7,000-page forensic report (3,000 pages of report and 4,000 pages of annexures) on the grounds that confidentiality is essential in view of litigation it intends. It argues that the report is protected by legal professional privilege because the report was commissioned by Werksmans Attorneys on Steinhoff’s instructions.
Media house Arena Holdings (previously Tiso Blackstar) and the ama-Bhungane Centre for Investigative Journalism have also embarked on court action in the high court in Cape Town to force Steinhoff to make the PwC report public, arguing that exposure is in the public interest and will reveal the extent and the detail of the unlawful conduct in what is “arguably SA’s biggest corporate fraud”.
Dlamini said the PIC received an offer from Steinhoff last week, and is applying its mind to it, but would not disclose details.
She emphasised that the PIC would reactivate the litigation it had launched with other creditors in a Dutch court if Steinhoff failed to come up with a palatable offer. The PIC is participating in a class-action lawsuit against Steinhoff and its related parties. A petition has been filed in the Amsterdam court of appeals enterprise chamber for an independent judicial inquiry into irregularities at Steinhoff and any corporate governance failures. This petition was put on hold pending the outcome of mediation proceedings, which got under way in July.
“While Steinhoff has made efforts to reach a settlement, it must be noted that this process is fragile and could perhaps not come to fruition, or the details thereof could change at any moment. The sheer size of the number of parties involved, the fact that it is multijurisdictional (SA, the Netherlands and Germany) all make this process very complex and time consuming,” Dlamini said.
“The key to finding a solution is that Steinhoff will have to sell certain assets. Such a structured settlement will require an additional stock issue as well as approval of the Dutch court of a mandatory haircut of outstanding creditors’ claims.”
The deadline for the end of the mediation process is the end of December.
Dlamini said that the PIC was assisting the law-enforcement agencies with their investigations and was finalising its submissions to them.
Finance committee chair Joe
Maswangani said the reason for calling the PIC and GEPF to report on recent developments was that they wanted to know what was being done to recover the money lost at Steinhoff.
“There seems to be no movement by law-enforcement authorities to recover the money of pensioners. They are moving at a slow pace.”
PIC chair Reuel Khoza said that there was no reluctance to pursue what needed to be pursued on behalf of pensioners, widows, widowers and orphans. “There is no sluggishness on our part. We have been active. We take our responsibilities extremely seriously.”