Secret Steinhoff PwC report to be handed over on Wednesday to some media

The complete secret Steinhoff report compiled by PwC about what happened at Steinhoff will be handed over to the media houses that applied for the report to be released after the Supreme Court of Appeal delivered its judgment on 4 December.

Ibex, as Steinhoff is called now, took the matter on appeal after the High Court ordered it to hand over the report to Rob Rose, who was editor of the Financial Mail, owned by the Tiso Blackstar Group, and Karabo Rajuili from amaBhungane.

The Supreme Court of Appeal (SCA) upheld the High Court’s order, finding that the objective evidence, such as the SENS announcement and PwC’s engagement letter, did not support Steinhoff’s assertion that the purpose of the report was to obtain legal advice or for use in contemplated litigation, Ibex says in a notice on its website published to warn people named in the report that it will be handed over.

Ibex decided not to appeal the SCA’s judgement. The Western Cape High Court instructed Ibex in 2022 to hand over the report in terms of the Promotion of Access of Information Act (PAIA).

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PwC report based on investigation into collapse of Steinhoff

PwC had to analyse and investigate allegations of potential accounting irregularities and/or potential noncompliance with laws and regulations made against various Steinhoff entities and its former executives, concerns raised by Steinhoff’s external auditor, Deloitte, and any other issues brought to PwC’s attention requiring investigation in relation to the Steinhoff Group.

After 14 months, PwC produced a report of more than 3 000 pages with over 4 000 documents as annexures. At the time, on 15 March 2019, Steinhoff said it could only provide an overview of its understanding of the report’s key findings, adding that the report and the related information gathering and investigation are subject to legal privilege and are confidential.

Steinhoff argued that the work PwC performed was focused on accounting irregularities and non-compliance with laws and regulations but did not constitute legal advice or legal opinion. According to the overview, PwC interviewed or submitted questions to 22 then-current and former directors and officers, but Jooste and “certain other individuals” did not make themselves available for interviews.

ALSO READ: Steinhoff board knew of audit problems as far back as September

Key findings of PwC report into Steinhoff

The key findings of the PwC report that Steinhoff included in the overview were:

• A small group of Steinhoff Group former executives and other non-Steinhoff executives, led by a senior management executive, structured and implemented various transactions over a number of years, which had the result of substantially inflating the profit and asset values of the Steinhoff Group over an extended period.
• The PwC investigation found a pattern of communication that shows the senior management executive instructing a small number of other Steinhoff executives to execute those instructions, often with the assistance of a small number of persons not employed by the Steinhoff Group.
• Fictitious and/or irregular transactions were entered into with parties said to be, and made to appear to be, third-party entities independent of the Steinhoff Group and its executives but which now appear to be closely related to and/or have strong indications of control by the same small group of people.
• Fictitious and/or irregular income was, in many cases, created at an intermediary Steinhoff Group holding company level and then allocated to underperforming Steinhoff operating entities as so-called “contributions” that took many different forms and either increased income or reduced expenses in those operating entities. In most cases, the operating entities received cash for the contributions from another Steinhoff Group or from non-Steinhoff companies (funded by Steinhoff), resulting in intercompany loans and receivables.
• The transactions identified as being irregular are complex, involved many entities over a number of years, and were supported by documents, including legal documents and other professional opinions that, in many instances, were created after the fact and backdated.

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Notice to warn data subjects of PwC report

According to the notice on the Ibex website, the PwC report contains the personal information of individuals and corporate entities and the purpose of the notice is to inform “affected data subjects” in line with the requirements under the Protection of Personal Information Act that their personal information will be disclosed to the media.

“Due to the nature of the SCA ruling and because it would require disproportionate effort to notify all affected data subjects individually, we have published this notice. As a result of the SCA ruling, we are required to disclose the PwC report by no later than 18 December 2024.

“The disclosure is mandatory, and we are required by law to comply with the SCA ruling. We are lawfully permitted to disclose the personal information in the PwC report as we have a legal obligation in the form of a court order to do so.”

Ibex says the data subjects are former employees, directors, and officers of the Steinhoff Group; former professional and/or service providers of the Steinhoff Group; persons and/or third-party entities that had any business dealings with the Steinhoff Group, including in relation to commercial transactions and arrangements; and persons who were interviewed by PwC for purposes of compiling the PwC report or who were otherwise involved in PwC’s forensic investigation.

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Personal information in PwC report

According to the notice, the personal information contained in the PwC report includes:

• individual’s names, surnames, titles and positions held
• a corporation’s name and registration number
• email addresses, physical addresses, postal addresses, telephone numbers and other contact details
• letters, faxes, emails and other correspondence
• signatories and/or counterparties to various agreements
• financial information, such as remuneration and tax information
• legal opinions, comments, statements and/or other publications of internal and external advisors and
• personal information of witnesses to the accounting irregularities and persons who were interviewed by PwC.

ALSO READ: Who could still be charged for financial irregularities at Steinhoff?

Ibex cannot control what media does with PwC report

However, Ibex says the purpose of PwC’s forensic investigation was in relation to the accounting irregularities, and it does not relate to the private life of any person.

Ibex also makes it clear that once the report is handed over, it will have no control over what the media does with it.

“The media parties are responsible for what they do with affected data subjects’ personal information. We have no control nor responsibility over the processing of personal information by the media parties.”