Christo Wiese.   Picture: BLOOMBERG
Christo Wiese. Picture: BLOOMBERG

Steinhoff International said on Tuesday two 2017 payments to former chair and biggest shareholder Christo Wiese didn’t follow proper governance and disclosure processes, dragging the billionaire deeper into an accounting crisis.

The deals were agreed to with entities related to Wiese in the weeks leading up to the emergence of financial irregularities that have wiped more than 90% off the value of the global retailer. Steinhoff has investigated the payments and is in the process of being reimbursed, it said in a statement on Tuesday, without giving further detail on the transactions.

Wiese said by phone that he would comment later in the day. The stock plunged as much as 25% to €0.15 in Frankfurt, a fresh low since the owner of Conforama in France and Poundland in the UK relocated its primary listing from Johannesburg in 2015.

Wiese has so far distanced himself from the crisis that’s engulfed Steinhoff, which he bought into when he sold his pan-African retailer Pepkor to the company three years ago. To date, the only executive implicated directly is former CEO Markus Jooste, who quit on December 5, when Steinhoff first reported accounting irregularities. Wiese told lawmakers earlier this year that the announcement came to him as a "bolt from the blue" and that he had no prior knowledge of any wrongdoing.

Off-balance-sheet

Steinhoff has hired auditors at PwC to investigate its accounts, with a particular focus on off-balance-sheet transactions and deals, particularly related to the central European operations. The company is being investigated by a range of regulators and law authorities around the world, while German newspaper Süddeutsche Zeitung said last month that Jooste conspired with European executives at the retailer to move revenue figures around subsidiaries to boost their balance sheets. Steinhoff said at the time it would alert PwC to the report.

"The longer this thing drags out the less likely that the company survives," Michael Treherne, money manager at Johannesburg-based Vestact, said by phone. "That’s my personal view, and that’s a similar view to the market."

The Steinhoff-Wiese deals were first reported by Moneyweb. The website also said Wiese asked the company to cover a margin call on his behalf after Steinhoff reported the accounting irregularities in December. Wiese denied that aspect of the report by phone.

Bloomberg

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