Government pensions survive Steinhoff fraud

The Government Employee Pension Fund (GEPF) yesterday assured its more than 300 000 beneficiaries their money was safe and would still keep flowing following the fraud being investigated at Steinhoff Investment Holdings and the subsequent collapse of its share price.

Trading in Steinhoff opened at about R6 yesterday morning from about R55 on December 1 when the scandal broke, and closed at R8.60.

“As at March 31, 2017 the GEPF through PIC owned about R28 billion in Steinhoff International Holdings which is about 10% of the shares of the company but 1% of the total assets of the fund,” GEPF spokesperson Matau Molapo said in a statement yesterday.

But requests on multiple platforms for more information from Molapo went unanswered.

So, based on a simple extrapolation, it appears about R25 billion has been wiped from the GEPF’s books in less than two weeks.

This leaves the current stock holding of GEPF in Steinhoff worth about R3 billion, pending confirmation from the GEPF.

Big numbers, and enough of a bite leave the GEPF – and its members both current and past – with “serious concerns”.

However, according to the GEPF 2017 Annual Report, it’s still in good shape with R1.67 trillion in funds and reserves as at March 31.

In comparison, South Africa’s debt stands at more than R2.2 trillion.

So who or what is Steinhoff Investment Corporation and what did it do to lose all the billions, not only of the GEPF but many others, and claimed the heads of then CEO Markus Jooste; and just yesterday, Dr Len Konar who resigned from the board and audit committee of Alexander Forbes.

Konar was the deputy chair of Steinhoff’s supervisory board and is expected to be busy there for a while.

Steinhoff has more than 12 000 shops dealing in furniture, appliances and the auto sector in 30 countries with more than 130 000 employees.

Kali Khama (@KhamaCA) is a chartered accountant in the making, and has broken the fiasco down in a recommended reading thread which has been shared more than 2 000 times on micro-blogging platform Twitter.

Using information published by Viceroy Research Group and in a nutshell, it appeared some very creative bookmaking had been taking place, said Khama.

“Steinhoff was owing more for longer to its suppliers as time went by but then it went ahead and gave loans to its suppliers,” Khama explained.

In one instance, it sold one of its companies to another one of its businesses but instead of using cash, it would provide a loan for the transaction.

Another example shows where the sale of a loss-making company was announced which boosted the share price, only the company was never sold leading to speculation about insider trading.

“There are plenty other issues happening at Steinhoff such as understating depreciation expense charges, tax irregularities with Steinhoff paying artificially low rates and limited synergies but group business make money consistently,” Khama said.

“Given the number of chartered accountants on Steinhoff’s board who either failed to see all of this or participated, I’m a little ashamed to claim I’d like to be one myself.

The accountancy profession isn’t having a great year.”

– amandaw@citizen.co.za