Steinhoff’s new ethics committee ‘does little to reduce concern’
'They were on the board, it was their duty to prevent this and now they’re going to investigate it,' says Sasfin Securities’ David Shapiro
Steinhoff’s move to assemble a subcommittee of independent nonexecutive directors has done little to reduce concern about corporate governance failures at the beleaguered group, says the deputy chairman of Sasfin Securities, David Shapiro.
The group said on Monday it had assembled a subcommittee of independent nonexecutive directors, headed by former Sanlam CEO Johan van Zyl, "to bolster the independent governance of the group".
The other members are former Absa CEO Steve Booysen and Heather Sonn.
"It doesn’t give me any comfort at all — they were on the board, it was their duty to prevent this, and now they’re going to investigate it," Shapiro said.
Given the size of the company’s recent deals and how onerous accounting processes were, Shapiro said that "along the way, there are many people who must’ve been aware of what was happening, or if not party to it, turned a blind eye, which is worse".
He said he was becoming disillusioned with corporate
SA as Steinhoff’s and other recent scandals "undermine South African business".
Shareholder activist Theo Botha said the formation of a subcommittee was a pointless exercise and that Sonn had attended just three of the board’s five meetings in 2016, while Van Zyl only joined the board in 2016.
"What more is this committee going to do than, let’s say the audit committee or the social and ethics committee?"
Botha said shareholders "remain in the dark" and that auditor Deloitte should elaborate on its reasons for refusing to sign off on Steinhoff’s results.
The full extent of the fallout at Steinhoff remains to be seen.
Several pension funds and a higher education institution were due to be paid back about R580m in capital that they had invested in Steinhoff debt instruments. But it is unclear if the global retailer has the capacity to pay back this amount — which was due on Tuesday.
Steinhoff is now planning to dispose of noncore assets to free up €1bn in additional cash.
The ArcelorMittal SA Pension Fund and the University of the Free State, along with asset managers Sanlam Investments, Investec Securities and other creditors, are due to receive their share of the R580m, excluding interest.
Steinhoff has scheduled a meeting with its creditors on Tuesday week to discuss its operations and financial situation. Steinhoff issued the debt as part of a R15bn programme to fund its global shopping spree.
The ArcelorMittal pension fund could not be reached for comment. The steel maker’s spokesman Hennie Vermeulen said the chairperson of the fund’s board of trustees and the administrator would "make a decision in due course".
Waseem Thokan, head of research at Legae Securities, said there was no way of knowing whether Steinhoff would put up the cash.
"At the last financial year they reported €2.8bn in cash, so in theory liquidity shouldn’t be an issue," Thokan said.
"As to solvency, it’s hard to know the truth of it."