Steinhoff: ‘Book the crooks who cooked the books’
Shareholders are keen for some kind of retribution preferably involving prison for the key culprits
The bounce in the Steinhoff share price, after last week’s release of the PwC report, didn’t last long – bounces never do. The share price is back to the level it was a week ago.
Traders had apparently been encouraged by the report’s reference to €6.5bn of “fictitious transactions” created by former CEO Markus Jooste and his gang of seven between 2009 and 2017. This was significantly below the €12.4bn written off the March 2018 balance sheet and may have prompted some to believe there was scope for a revaluation of the balance sheet.
Sadly, there appears to be little chance of this. In a SENS statement issued around the same time the pithy 10-page PwC report was released, Steinhoff indicates it doesn’t believe the March 2018 restatements (published in June 2018) are materially out of line with what has been discovered by PwC.
If it turns out otherwise, “the group will inform the market as soon as it becomes aware of such material difference”.
It appears the €6.5bn relates to “fictitious transactions” but that there’s an additional €5.9bn of balance sheet overstatements. Hopefully in the months ahead, it will all become a little clearer.
What is also likely to become clearer in the weeks and months ahead is the nature of the “remedial measures” the Steinhoff supervisory board is considering. Long-suffering Steinhoff shareholders, who are probably looking at a bill of as much as R1bn for the PwC investigation, are no doubt keen for some kind of retribution preferably involving prison for the key culprits.
That might not happen but the Steinhoff boards (supervisory and management) have also resolved to pursue claims against the responsible individuals including recovery of bonuses paid to certain individuals.
It will be a lengthy and complicated process given the uncertainty of the ultimate beneficiaries of the “fictitious transactions” and the various jurisdictions involved. Meanwhile perhaps a good starting point would be to freeze the assets of the eight named individuals.