Former Steinhoff chief executive Markus Jooste did not disclose his relationships with third parties who were key in the losses suffered by the global retailer, MPs were told today.
Testifying before four parliamentary committees, former chief financial officer Ben La Grange said false profits, assets acquired at inflated values by third parties and the fact that Steinhoff did not have a single auditor were the three main reasons for the accounting irregularities which led to the collapse of the share price. While he insisted he did nothing wrong “deliberately” at least, he did not hesitate much to point a finger at Jooste when asked whether he was lied to.
“I’m not a lawyer so I don’t want to venture into dangerous terrain but I do believe there was limited sharing of information from Mr Jooste to myself,” he said.
“There were certain relationships between him and third parties where that relationship was not disclosed to the company and myself…”
He said assets were acquired at inflated values by third parties being “influenced by the previous CEO”.
In addition, the creation of a dummy corporation, set up using a Steinhoff loan, led to false profits being declared.
“What transpired there was a buying group and this buying group paid additional rebates to operating entities, therefore the companies showed profits…”
La Grange said this had been happening over a period of years and that profits were incremental in nature, explaining this was why it was not detected for so long by him or others.
He told MPs he came to know of the details of these for the first time on December 2 last year when he was called to an audit committee where the Deloitte report was shown to him, saying he was “shocked”.
Jooste was overseas and was meant to be back two days later and was summoned to a meeting with the audit committee. When Jooste failed to pitch, La Grange said: “Then I knew something was wrong.”
La Grange said he decided to step down as chief financial officer in January to give a new team the opportunity to speak to creditors.
“People were so angry at Steinhoff they wanted to hit my face,” he said.
La Grange was meant to remain a consultant at Steinhoff until the end of September, but was suspended before his contract expires at the end of next month. He claimed the reason given by Steinhoff for his suspension on full pay, was for an invoice he approved from one of the Steinhoff African companies to the non-existent buying group.
MPs did not take La Grange at his word, with many questioning how he did not know what was happening under his watch.
Democratic Alliance MP David Maynier asked: “Can you at least accept, given you were the group chief financial officer with considerable responsibilities, that you were negligent?”
At this point, La Grange’s legal representative intervened, saying it was a legal question he could not answer as there were several court processes underway.
Jooste is expected to testify next week.
– African News Agency (ANA)