Committees grill Steinhoff executives

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THE parliamentary standing committee on finance, standing committee on public service accounts and portfolio committee on public enterprises held a joint meeting with Steinhoff International Holdings Netherlands’ executive team and affected stakeholders this week.

The chairperson, Yunus Carrim, pointed out the meeting was an initial briefing to provide the basis for the committees to develop a strategy and programme to exercise oversight responsibility in respect of the regulators and others investigating Steinhoff.

The Public Investment Corporation (PIC) is a public asset management company owned by the government, with the finance minister its representative. The PIC holds an 8% stake in Steinhoff.

The joint committee invited Steinhoff and regulators to brief it on what happened and current investigations, given that there is a forensic investigation under way.

Steinhoff presented to the joint committee that in early December its auditors advised they were not in a position to sign off its consolidated financial statements.

The announcement of this postponement, the establishment of an independent investigation by Pricewaterhousecoopers (PWC) into reported financial irregularities coupled with the abrupt resignation of chief executive, Markus Jooste, caused the share price to plunge 85%.

Steinhoff stressed that as the PWC forensic investigation was ongoing, they were not able to answer certain questions or make some statements.

Steinhoff did, however, disclose that the chairman of its auditing committee, Dr Steve Booysen, reported transgressions to the authorities in terms of the 2004 Prevention and Combating of Corrupt Practices Act. This included reporting Jooste to the Hawks.

Former Steinhoff chairman and major shareholder Christo Wiese pointed out he became aware of the “debacle” only three days before the company’s board meeting. On the day of that meeting, he and the executive had hoped to ascertain what had gone wrong from Jooste, but he never pitched and instead sent a message that he had resigned. He himself had lost a significant amount through the share price fall.

Questions from the MPS ranged from whether in terms of Steinhoff’s fiduciary duties to look after assets, it had proper oversight mechanisms in place. Were there accomplices? How was it possible Steinhoff’s audit committee was not aware of any irregularities sooner? Could Steinhoff recover?

Steinhoff responded that it was not possible to respond to questions as the investigation was ongoing, but its audit committee was picking up irregularities from three years ago.

Wiese said he was not in a position to respond on whether Steinhoff could recover. He advised the joint committee that there were reports publicly available assessing Steinhoff’s sustainability that the joint committee could consider.

Asked when the chairman of the audit committee became aware, the Steinhoff acting chief executive advised the chairman not to respond to this question until having obtained legal advice – a response that angered MPS who insisted he respond immediately.

The chairman said there was a report of an irregularity in August, in a German magazine. This was confirmed on December 5.

The JSE informed the joint committee it had decided not to suspend Steinhoff from share trade as it wanted to await the forensic investigation outcome.

This gave individual shareholders an opportunity to trade out of Steinhoff if they wished to do so.

Steinhoff’s primary regulator in respect of its listings is Frankfurt Stock Exchange. The JSE is its secondary regulator and has launched two investigations to determine whether there had been any breaches in JSE listing requirements. The

JSE also said it was possible for chief executives to hide financial irregularities from boards.

The PIC said it had asked Wiese to step down and that it be represented on the Steinhoff board committee tasked with the investigation, to ensure transparency.

Carrim concluded that the joint committee “feels that far more needs to be done, far more decisively, far more swiftly. People in our country are fast reaching their tipping point on corruption. Both the relevant statutory bodies and Parliament need to intensify our work in this regard. We owe it to the public”.

Jansen is chief executive of the Zelna Jansen Consultancy