PwC found that a 'senior management executive' – since named as Jooste – was allegedly behind a small group of other executives, who, working with other individuals outside the Steinhoff Group, used fictitious and/or irregular transactions to inflate the group’s assets by an estimated €6.5 billion - about R105 billion - between 2009 and 2017. CAPE TOWN - Steinhoff bosses, regulatory bodies, the Hawks and the NPA on Tuesday met Parliament’s joint meeting of the standing committees on finance, public accounts and the committees on trade and industry and public service and administration. The meeting came after Steinhoff on Friday released an 11-page summary of audit firm PwC’s 3 000-page report on its probe into the alleged fraud and corruption that led to the collapse of the company’s share price in December 2017. The company’s CEO Markus Jooste resigned hours before Steinhoff disclosed the hole in its accounts. PwC found that a “senior management executive” – since named as Jooste – was allegedly behind a small group of other executives, who, working with other individuals outside the Steinhoff Group, used “fictitious and/or irregular transactions to inflate the group’s assets by an estimated €6.5 billion - about R105 billion - between 2009 and 2017. Steinhoff did not want to name the individuals implicated in the PwC report citing lawyers’ advice over privacy concerns. The issue was that the company could not volunteer this information. Once instructed to do so by Standing Committee on Finance chairperson Yunus Carrim, however, the company’s new CEO Louis Du Preez went on to name former Steinhoff chief executive Markus Jooste, former chief financial officer Ben la Grange and former executives Dirk Schreiber and Stehan Grobler. Du Preez also named four non-Steinhoff executives linked to the companies Campion/Fulcrum, Talgarth and TG Group: Siegmar Schmidt, Alan Evans, Jean-Noel Pasquier and Davide Romano. After the meeting, Du Preez confirmed to journalists that Steinhoff on Tuesday received a summons from the Financial Sector Conduct Authority (FSCA) to provide it with the full PwC report. He said he would be taking legal advice, but said Steinhoff wanted to co-operate. Earlier on Tuesday, Du Preez told the joint committee meeting he was sole possessor of a printed version of the PwC report and that it was not possible for any of the electronic versions to be printed. Carrim has urged regulators and investigators to ask for copies of the full report. The Financial Sector Conduct Authority’s (FSCA) Brandon Topham told the meeting Steinhoff was the FSCA “number one priority” but couldn’t give a precise date when it would finalise its investigation, while hoping this would be by the end of the year. He was awaiting the full PwC report. Topham said the FSCA was focusing on eight accounts linked to possible insider trading on Steinhoff shares. He urged anyone who received information on which to trade shares to come forward. The FSCA was also investigating market manipulation and the issuing of false and misleading information in relation to Steinhoff’s financial statements. Rudi Voller of the Companies and Intellectual Properties Commission (CIPC) told the meeting there was no legal basis in terms of the Companies Act for Steinhoff to withhold the names of implicated former executives, and that they should be asked to do so. Voller said the CIPC was closely watching the investigations under way with a view to launch director delinquency applications under the Companies Act. Hawks head Lieutenant General Godfrey Lebeya told the meeting the three criminal complaints lodged in December 2017 were merged into a single docket. The Hawks are investigating fraud, theft, corruption and breaches of the Companies Act. MPs were not impressed with the lack of progress in the Hawks investigation, with the Democratic Alliance’s Alf Lees saying they took almost a year to investigate a single transaction, with no conclusion yet. Lebeya said the probe was to be expanded and would include the PwC report’s findings. JSE CEO Nicky Newton-King said Steinhoff was already fined R1million and Pepkor (formerly Steinhoff Africa Retail STAR) R5million, of which R1m was suspended for two years. Newton-King said they’re working on proposals to strengthen the JSE’s regulatory approach to new and existing listings. Steinhoff board chairperson Heather Sonn told the meeting the group is still in “a precarious position” and did not want to do anything that would jeopardise legal proceedings and prosecutions. All board members had subjected themselves to the PwC probe and it was now critical to complete the group’s financial statements for 2017/18, with adjustments informed by the PwC report. A total of 22 current and former directors – but not Markus Jooste, who did not cooperate with PwC – had been interviewed. The Independent Regulatory Board for Auditors (IRBA) reported that its investigation into the auditors of Steinhoff would rely on the publication of Steinhoff’s restated financials. The board also noted with concern the allegations contained in the PwC forensic investigation report regarding the nature and extent of the corporate fraud allegedly perpetrated by a small of group of executives and related parties, potential accounting irregularities and potential non-compliance with laws and regulations. The IRBA investigates whether auditors complied with international auditing standards, e.g. audit work on related parties, and the IRBA Code of Ethics, for example, the exercise of professional scepticism by the auditor. IRBA CEO Bernhard Agulhas says their probe is into Deloitte South Africa, who signed off on the group’s consolidated financial statements up until 2015.<doc-sep>Companies / Retail & Consumer Steinhoff shares jump on PwC report The report shows that about €6.5bn worth of fictitious transactions between 2009 and 2017 inflated the group’s profits and asset value BL PREMIUM Steinhoff International’s shares rose as much as 13.6% to R2.09 in early trade on Monday after the overview of PwC’s forensic investigation into the retailer’s past results was released. The report, released late on Friday, revealed that an estimated €6.5bn worth of fictitious transactions between 2009 and 2017 had inflated the group’s profits and asset value. But the amount was significantly below the €12.4bn that had been tagged by management when it released the March 2018 interim results in June 2018. PODCAST: Hear from the Steinhoff whistleblowers..<doc-sep>Companies Steinhoff to dig deeper into $7.4bn of dodgy deals The PwC report has shown how ex-execs structured phony transactions while further investigations are needed to answer remaining questions BL PREMIUM Steinhoff International Holdings NV plans to dig deeper into the accounting misdeeds that brought the retailing giant to its knees as it seeks to get to the bottom of some $7.4 billion in fictitious or improper deals. A forensic probe by PwC found that a small group of former executives -- with the help of others outside the company -- structured phony transactions that substantially inflated earnings and asset values, according to a 10-page summary of the report published Friday. The deals, orchestrated over several years, enabled Steinhoff to artificially boost profits, puff-up property values and inflate cash and so-called cash equivalents. PODCAST: Hear from the Steinhoff whistleblowers..<doc-sep>Citizen reporter A 'small group' of executives have been blamed for alleged fraud at the company, and parliament has insisted on having their identities aired. 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 For more news your way, download The Citizen’s app for iOS and Android.<doc-sep>
Steinhoff has, so far, only released an 11-page summary of the 3,000-plus page report and did not name the former executives involved. CAPE TOWN - Steinhoff has been summoned to provide the Financial Sector Conduct Authority (FSCA) with the full report it has received from audit firm PricewaterhouseCoopers (PwC) on the fraud and corruption that led to the company’s shares going into free-fall nearly a year and a half ago. Steinhoff has, so far, only released an 11-page summary of the 3,000-plus page report and did not name the former executives involved. Appearing before Parliament’s Standing Committees on Finance and Public Accounts, along with two other committees on Tuesday, Steinhoff CEO Louis du Preez and board chairperson Heather Sonn were challenged on this decision and instructed to name names, which Du Preez then did. Du Preez said the summons from the Financial Sector Conduct Authority to produce the PwC report was received on Tuesday morning. “Whilst we were sitting here the FSCA has issued a summons. So, I will take legal advice and we will deal with it. We’re here to cooperate.” Earlier, FSCA divisional executive for investigations and enforcement Brandon Topham told the meeting the regulatory authority expected to receive the report “soon”. Du Preez then said Steinhoff was still weighing up whether or not to hand it over. Du Preez was also instructed by finance committee chairperson Yunus Carrim to divulge the names of former Steinhoff executives, including disgraced ex-CEO Markus Jooste and four others, who allegedly worked together over many years to inflate Steinhoff’s profit and assets values. (Edited by Zamangwane Shange)