Must Read: Steinhoff forensic report finds former execs inflated profits; Jooste no comment

By Janice Kew

(Bloomberg) – Steinhoff International Holdings NV’s long-awaited probe into an accounting scandal that almost destroyed the South African retailer in late 2017 found that a small group of former executives and other non-Steinhoff executives structured deals that “substantially” inflated profits and asset values.

The forensic report by auditors at PwC said a number of deals were implemented over several years that enabled Steinhoff to artificially boost earnings.

Also read: Steinhoff paid bad boy CEO Markus Jooste more than R300k a day

The summary of the report didn’t identify any of the executives involved and said that former Chief Executive Officer Markus Jooste has not yet made himself available for an interview with PwC investigators. Jooste, who has already been referred by the company to a local anti-graft police unit known as the Hawks, couldn’t be reached for comment as his phones didn’t ring. His lawyer didn’t immediately respond to an emailed request for comment.

Key insights

  • Jooste didn’t do it alone. A myriad of third-party deals allowed the retailer’s accounts to be manipulated.
  • About 100 auditors at PwC laboured on the report for well over a year, and pushed back an original deadline of end 2018 due to the complexity of the work.
  • The publication may trigger a domino effect as Steinhoff’s new management, plus regulators and law authorities around the world, seek to bring those responsible to account.
  • Steinhoff can now proceed with publication of 2017 and 2018 audited earnings, needed to show the retailer is keeping sales moving as Steinhoff aims to finalise its debt restructuring.
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