Ann Crotty Writer-at-large
Tunnel vision: Former Steinhoff CEO Markus Jooste was well aware of the accounting shenanigans taking place but carried on with business as usual. The company has now lost R194bn of its market value. Picture: SUNDAY TIMES
Tunnel vision: Former Steinhoff CEO Markus Jooste was well aware of the accounting shenanigans taking place but carried on with business as usual. The company has now lost R194bn of its market value. Picture: SUNDAY TIMES

Dutch shareholder association VEB has pointed out that eight months after the announcement of "accounting irregularities" at Steinhoff wiped out R300bn in investor value, only two executives have left the group.

Former CEO Markus Jooste resigned in December, followed by former chief financial officer Ben la Grange in January.

Nine members of the Steinhoff supervisory board, which is similar to nonexecutive directorships in SA, left under the cloud caused by the fallout from the "irregularities".

Of the nine who have left since January, four have resigned. They are Christo Wiese, Jacob Wiese, Jayendra Naidoo and Thierry Guilbert. Five have retired. They are Claas Daun, Theunie Lategan, Len Konar, Bruno Steinhoff and most recently Johan van Zyl.

VEB, which launched a class action against Steinhoff on behalf of shareholders in January, asked the company for an update on executive departures last week.

In a letter to the Steinhoff board VEB referred to an undertaking by the board that if any member of the management board or executive committee was implicated in the PwC investigation into alleged accounting irregularities at Steinhoff, "measures would immediately be taken against the individuals involved".

In his letter VEB MD Paul Koster noted that Steinhoff had not disclosed any executive departures. "May we therefore conclude that so far the investigations have not brought any [suspicion of] inappropriate behaviour to light with respect to the individuals concerned?" asked Koster.

Steinhoff acknowledged on Monday it had received the letter, saying it is "in the process of considering it".

VEB has also asked for more details about the management’s decision, disclosed in the recent interim report, to reduce the group’s asset value by €12.8bn to €19.8bn.

The Dutch association is particularly critical of the €1.6bn write-off in the value of Mattress Firm as at the end of September 2017. "Could Steinhoff explain in more detail how it is possible that only one year after the completion of the transaction more than half of the carrying value of the goodwill with respect to Mattress Firm had to be impaired?" asked VEB, referring to the $2.8bn acquisition of the US-based mattress firm in 2016.

The management said that the reduction in the value of goodwill was mainly the result of the cancellation of a major supply contract and deteriorating profitability.

VEB said the reduction in the asset values and the divestments, at prices below their book values, would seriously hamper Steinhoff’s earnings capacity. Since the December announcement about the irregularities the board has sold a string of assets all, with the exception of PSG and KAP, at substantial discounts to the prices paid for them.

crottya@businesslive.co.za

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