Steinhoff board knew of audit problems as far back as September

In an announcement that will raise more questions concerning who knew what and when, the chair of Steinhoff’s audit committee has told Moneyweb that the board and executive team knew about problems with respect to the 2017 financial year-end audit before the company’s financial year had concluded.

Dr Steve Booysen responded to questions regarding when the company’s supervisory board (board of directors) was first informed of problems with the year-end audit, stating that he received a letter from Deloitte on September 25, 2017 expressing concerns regarding entries in the ‘group’s draft accounts’.

This seems to directly contradict other statements members of Steinhoff’s supervisory board have made regarding developments that ultimately came to a head almost two-and-a-half months later on December 5, when Steinhoff announced the resignation of CEO Markus Jooste and an investigation into accounting irregularities.

In Booysen’s own words:

“As reported in the SA Parliament, the auditors raised questions with executive management regarding some entries in the group’s draft accounts and on September 25 2017, the auditors, Deloitte, addressed a letter to the audit committee chairman about these concerns. The audit committee chairman kept the members of the audit committee and then the chairman of the Steinhoff supervisory board [Christo Wiese], informed of developments as the process unfolded. 

At a supervisory board meeting on December 3, the board was informed that it would not be possible to issue audited accounts. This was followed by an audit committee meeting on December 4 to which the CEO was invited to answer specific questions. He never arrived at the meeting and provided no answers. Instead, the CEO resigned on December 5. The supervisory board then commissioned the PwC forensic investigation.”

When presented with the same questions, Deloitte was more tight-lipped, saying only that it “had raised a series of questions in order to obtain information that would assist in finalising its audit opinion. It was determined, in consultation with Steinhoff NV, that answers to these questions could only be obtained through an independent investigation”. This last sentence appears to indicate what triggered the decision to hire PwC to look into the matter.

Booysen’s comments however appear to directly contradict representations made by Steinhoff’s previous chairman and largest shareholder, Christo Wiese, when appearing before Parliament’s joint committee hearing into the matter earlier this year as reported by Moneyweb and other media. He stated then that, “I became aware of the impeding problem three working days before the accounts had to be finalised for the board meeting in December. It was absolute turmoil”. Wiese further described the revelations of accounting irregularities as a bolt from the blue.

Wiese did not respond to Moneyweb’s questions prior to publishing.