No more anonymity for Steinhoff execs implicated in PwC report

Parliament on Tuesday instructed the troubled South Africa-based multinational Steinhoff to make public the names of its former executives who were found by auditing firm PwC to have inflated the company’s profit and assets values.

The implicated individuals’ names were apparently initially kept confidential in the recently released forensic report, but MPs were of the view that they should not be protected.

The company’s current executives were appearing on Tuesday before three parliamentary committees in a joint sitting with representatives from the National Prosecuting Authority and the Hawks.

The PwC report was due at the end of 2018 but was delayed and only released on Friday. The forensic report ultimately ran into 3,000 pages (and even 14,000 pages with addenda and other explanatory document).

It laid the blame for the alleged fraud that has thrown the company into turmoil at the feet of a small group of executives who allegedly dishonestly inflated the company’s profit and asset values for several years.

Although their names were not published in the report, the current Steinhoff CEO was made to tell parliament that they included former CEO Markus Jooste, along with Dirk Schreiber, Ben la Grange and Stehan Grobler.

Regulators have not yet been given a copy of the report, and parliament wants to see it in uncensored form.

Jooste resigned in December 2017 after auditors refused to sign off on the company’s results after unearthing accounting irregularities.

Earlier this month, the newly appointed director for investigations and enforcement at the Financial Sector Conduct Authority (FSCA), Brandon Topham, said earlier this month that “the next two months will be interesting” in terms of the regulator’s investigations into Steinhoff.

At a media roundtable, Topham indicated that announcements would be made regarding charges against the company or individuals associated with it. Specifically these related to one count of insider trading and one of publishing false and misleading financial statements. Other charges could well follow.

“Steinhoff [itself] published a SENS stating that its financial statements were wrong,” Topham pointed out. “So they have consented to the fact that they have published false and misleading information. Even though nobody at this stage has been charged, there is definitely a case to be made.”

Significantly, Topham indicated that these charges were not dependent on any findings that may be made in the course of the independent forensic investigation being conducted by PwC.

“We have our own ongoing investigation dedicated to Steinhoff,” he said. “We have been working on the matter for more than a year.”

These statements were in response to speculation that Steinhoff may not release the full PwC report when it was finalised. It was meant to be completed by the end of 2018, but had since been delayed twice. This led many to wonder if it would ever be fully aired.

However, Topham indicated that while the PwC report was important, any action by the FSCA was not dependent on its findings.

“There has been some reliance by everyone in South Africa on the PwC forensic report because this is an extremely complicated group structure and fraud, by all indications,” Topham said. “It’s an extremely costly investigation to get to the bottom of.”

Apart from the expense involved, PwC’s investigation does have specific advantages.

“PwC was appointed by Steinhoff as an independent investigator to look at what went wrong,” Topham explained. “They have the expertise to do it, the international footprint, and the independence to deliver a report that theoretically any court in the world could use as evidence.”

The FSCA was, however, not waiting specifically for it to come out.

“I’m very happy to use the PwC report,” Topham said. “It will save everyone a lot of time and effort. But we have our own investigation under way. We are looking with interest at what might be in the PwC report that we don’t know about, but if we don’t get it very soon we will move without it.”

– Background reporting, Moneyweb

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