December 4, 2018 3:05 pm
CAPE TOWN – South Africans want heads to roll and answers as the tale of woe caused by the Steinhoff International accounting scandal unfolds, which has taken a toll on confidence in the country, wiped out billions of investor’s rand and has hit the pockets of the pensions of South African government workers.
Trade union Cosatu on Tuesday called for “Steinhoff looters to be prosecuted for stealing and mismanaging workers retirement savings” in the wake of the release of the Government Employee Pension Fund (GEPF) annual report for 2018 in Parliament this week.
As at March 31, 2017 the GEPF, through the Public Investment Corporation (PIC), owned about R28 billion in Steinhoff International, which is about 10 percent of the shares of the company and 1 percent of the total assets of the GEPF.
The GEPF’s R4.3bn investment in Steinhoff’s empowerment shareholder, Lancaster, which is partially owned by Pepkor Holdings chair Jayendra Naidoo, was rendered worthless after the 2017 accounting scandal wiped off about R200bn of the furniture retailer’s value.
“The pensions of South African government workers took a hit thanks to Steinhoff’s accounting fraud. This means that workers have lost a portion of their retirement savings, while these criminals are not being held accountable. What is more disturbing is the indifference of law enforcement agencies that are not willing to hold the Steinhoff criminals accountable,” Cosatu said.
James Brent Styan, the author of “Steinhoff: Inside SA’s Biggest Corporate Crash, provides an insight into the value destruction.
“The PIC has seen about R22bn in value destroyed by the spectacular crash of the Steinhoff share price since December 5, 2017,” he said
Brent Styan said when the crisis hit Steinhoff, the GEPF owned 428 million shares in Steinhoff, which were worth R24.1bn on November 30, 2017.
At the depth of the Steinhoff crisis in December, it still owned 415 million shares worth about R23bn, which then rapidly depreciated to R2.5bn.
In September 2017 the Steinhoff group threw all its best assets into a new business subsidiary called Steinhoff African Retail and listed it separately on the JSE.
In August 2018 Steinhoff African Retail changed its name to Pepkor, in an ongoing effort to distance itself from the Steinhoff name.
Pepkor yesterday had a market capitalisation of R74bn. Its holding company, Steinhoff, has a market cap of R7.7bn.
While there has been several changes in the management and the the board to sort out the corporate mess, the wheels of justice are moving slowly with the blame game being played.
Earlier this year in Steinhoff Parliamentary hearings, Steinhoff International Holdings’ ex-chief financial officer Ben La Grange blamed departed leader Markus Jooste and auditors including Deloitte for the retailer’s accounting scandal, saying he became aware of any wrongdoing only days before the crisis erupted.
Some have pointed fingers at South African billionaire Christo Weise, Steinhoff’s previous chairperson, who in the wake of the scandal said he was suing the retailer for R59bn to recover some of the investments he made before the share price crashed amid an accounting scandal.
The fraud dates back to 2014 and is taking time to unravel.
Lawsuits are mounting up against the firm, while regulators are conducting investigations in Germany and in the Netherlands.
PwC, which is conducting a forensic investigation into the fraud has conceded that due to the complexity of the probe it has no timeline to give the public.
The report on Steinhoff was due this month with the audit firm studying more than 320 000 documents to determine who did what. Whatever comes out of the report, those held responsible will need to be held to account.
BUSINESS REPORT ONLINE
Categorised in: Business