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Steinhoff's former Chief Executive Markus Jooste appears in parliament to face a panel investigating an accounting scandal that rocked the retailer in Cape Town

Ex-CEO, seven others responsible for Steinhoff fraud, new CEO tells lawmakers

By Wendell Roelf

CAPE TOWN (Reuters) - Former Steinhoff Chief Executive Markus Jooste and seven others were involved in a 6.5 billion euro ($7.4 billion) accounting fraud at the South African retailer, the new CEO told lawmakers on Tuesday.

Steinhoff said on Friday an independent report had found it overstated profits over several years in the fraud that involved a small group of top executives and outsiders and took what was once an investor favourite to the brink of collapse. PwC conducted the independent investigation.

The company did not name the individuals last week, citing legal reasons. But during Tuesday's session in parliament South African lawmakers instructed Louis du Preez, who was appointed CEO last year, to reveal those involved.

"We have no choice but to instruct you as a committee to give us the names of the people who PwC alleges committed the most serious offences," said Yunus Carrim, chairman of the finance parliamentary committee.

Du Preez then named former CEO Jooste and former Chief Financial Officer Ben la Grange, alongside six other people, who he said the investigation report has identified as key players in inflating Steinhoff profits and asset values over several years.

Jooste, who resigned hours before Steinhoff disclosed the hole in its accounts in December 2017, could not be reached for comment through his lawyer. He has previously denied any wrong doing.

La Grange could not immediately be reached for comment through his lawyer.

ILLUSION OF PROFIT

Du Preez also identified four other outsiders, who he said worked alongside Jooste, La Grange and two other executives, over several years to enter into fictitious transactions with entities purported to be third parties to create the illusion of income to hide losses.

The accounting fraud forced the company to write down the value of its assets by 11 billion euros.

Steinhoff will pursue claims against those involved and co-operate with legal authorities on any civil or criminal investigation, du Preez said.

However, Steinhoff repeatedly refused to share the 15,000 page PwC document with regulators that also include capital markets watchdog Financial Sector Conduct Authority (FSCA), citing legal advice.

This has prompted the FSCA to serve the company with summons to produce the report. Du Preez said he would take legal advice on the demand.

The acting head of a specialised commercial crime unit within the National Prosecuting Authority told lawmakers the team would look to fast-track its investigation as soon as it received a copy of the report.

($1 = 0.8804 euros)

(Writing by Tiisetso Motsoeneng; Editing by Louise Heavens/ Edmund Blair and Emelia Sithole-Matarise)

First Published: 2019-03-19 12:55:57
Updated 2019-03-19 16:48:10


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