German authorities file charges on former Steinhoff executives
THE NET IS finally closing in on Steinhoff International’s former executives, with people familiar with developments saying that a former chief executive who oversaw the R200 billion accounting meltdown that led to a 95 percent decline in the company’s share is among those who have been charged by the German authorities.
Reports emerged yesterday that German authorities filed charges against former Steinhoff International bosses, including former chief executive Markus Jooste, for alleged balance sheet fraud.
The executives, who are responsible for SA’s biggest corporate scandal, are said to have been indicted by authorities in Oldenburg, near Westerstede, where Steinhoff was founded.
However, the company’ share price largely ignored the news of the criminal charges first laid nearly four months ago, remaining flat at R1.84 from yesterday’s close of R1.85.
James-Brent Styan, the author of Steinhoff: inside SA's Biggest Corporate
Crash, said the developments indicated the charges were long coming.
“We are waiting for the concrete criminal charges to be laid against those individuals,” Styan said.
“The names have been omitted in the potential criminal charges claim. However, any criminal charges brought against the guilty individuals in the Steinhoff saga would be welcomed. It has taken too long for the justice system to bring those individuals who are responsible for the Steinhoff collapse to account for their actions.”
Jooste is facing separate criminal charges by the Hawks.
In October, Jooste was fined R122 million by the Financial Sector Conduct Authority. He has taken the fine on review.
Steinhoff was rocked by an accounting scandal in December 2017 which led to a more than 90 percent collapse in its share price in one day and cost the group more than R200bn in market capitalisation.
Jooste resigned in a huff after the admission to accounting irregularities told parliament that he was innocent of any wrongdoing.
Styan said this was a slap on the wrist for Jooste.
“It is absolutely ridiculous to impose such a small fine to someone who was at the helm when the scandal took place. It seems as if the Hawks and the National Prosecuting Authority (NPA) don’t have enough capacity or expertise to bring those guilty individuals to book,” he said.
“It is even more disturbing to read that Steinhoff is willing to give the NPA R30m to complete their investigations into the company,” Styan said.
Styan said that the biggest question would be whether SA authorities would be willing to extradite Jooste to face the charges in Germany.
“I don’t think so, because it would be a complete humiliation for our justice as it would have failed to act against our own,” he said.
LIBERTY Holdings fell 6.79 percent to R68.32 a share yesterday after swinging to a loss during the year ended in December, underscoring the Covid-19 pandemic economic fallout.
Liberty, wholly owned by Standard Bank, swung to a R1.53 billion loss from R3.25bn profit a year ago on a positive adjustment of R37 million arising from the consolidation of the Liberty Two Degrees listed real estate investment trust (Reit).
The loss was R1.57bn compared with R3.2bn the prior year.
The group said the R1.59bn normalised operating loss from R2.2bn in 2019, included a R2.22bn net after tax cost of establishing the pandemic reserve which, if excluded from the result, would have normalised operating earnings for the year of R628 million.
Group financial director Yuresh Maharaj said 2020 was an unprecedented year with lockdown restrictions imposed across its footprint impacting new business volumes after face-to-face interactions were curtailed.
“We expect a prolonged economic and market uncertainty in the short to medium term with constrained disposable income and increasing unemployment levels,” said Maharaj. The group established a R3bn pandemic reserve before tax in December to prudently recognise the financial impact of Covid-19.
It said the Stanlib South Africa division’s assets under management increased,
Liberty Two Degrees division struggled as the hospitality sector was compromised by the early lockdown and foot traffic in malls fell drastically leading to the provision of rental relief.
However, there was a slow recovery in foot traffic and trading during the second half of the year. Liberty remained open for business during the lockdown and made R8.6bn in annuity payments to clients representing a 9.3 percent increase from 2019.
“This was a critical injection of income into society to sustain many vulnerable people in the latter years of their lives,” said the group. It also paid a staggering R11.7bn in total death and disability claims, up 11.4 percent compared to a year ago.
However, group long-term insurance indexed new business fell 10.1percent compared to the prior year to R7.3bn.