Heather Sonn. Picture: FINANCIAL MAIL
Heather Sonn. Picture: FINANCIAL MAIL

Progress in bringing the culprits to book for the collapse of international retailer Steinhoff continues to grind slowly, with the Hawks blaming the company for failing to submit a detailed affidavit listing the alleged crimes committed as disclosed in the forensic report conducted by PwC.

But Steinhoff International chair Heather Sonn rejected this claim by the Hawks, saying they were in possession of a draft statement from Steinhoff. However, national head of the Hawks commercial crime unit Maj-Gen Alfred Khana insisted that draft reports were not helpful and what was needed was a final statement.

Sonn said in an interview after a parliamentary meeting that Steinhoff had submitted a draft statement at the request of the investigators so that they could work on it with a view to Steinhoff submitting a final statement.

Steinhoff uncovered a €6.5bn (about R110bn) hole in its accounts in 2017, causing a share collapse and multiple lawsuits from former business partners and aggrieved shareholders that include former chair Christo Wiese. The share price crashed on December 6 2017, when Markus Jooste resigned as CEO and the company said it had picked up “accounting irregularities”. Jooste denies any wrongdoing.

Regulators and enforcement authorities briefed five parliamentary committees on Wednesday on the progress or otherwise with their investigations. These included the Hawks, the Companies and Intellectual Property Commission (CIPC), the Financial Sector Conduct Authority (FSCA), the JSE, the Independent Regulatory Board for Auditors (Irba), the National Prosecuting Authority (NPA) and the Treasury.

Sonn and CEO Louis du Preez also briefed MPs on latest developments in the group, actions taken to strengthen corporate governance and progress with litigation. Sonn insisted Steinhoff was co-operating with the regulators, was transparent and had provided access to the PwC report.

Treasury deputy director-general Ismail Momoniat said the Treasury shared the concern that very little seemed to be happening on the investigative front with respect to Steinhoff, as well as in other cases such as the Gupta-linked Estina dairy farm, VBS and Tongaat, all of which seemed to be held up. MPs also stressed the need for some urgency in the investigations and were concerned that Steinhoff had not provided the Hawks with the required affidavit.

Finance committee chair Joe Maswanganyi also said it was “disturbing” that no culprit had been brought to book while some (presumably Jooste) were staying in luxurious beach houses.

Khana, who also spoke on behalf of the NPA, said the Hawks still needed a final statement from Steinhoff outlining what went wrong, who was responsible and all the irregularities identified in the PwC report. Without this it was not possible to build a case.

Khana expressed frustration what while Steinhoff had given the Hawks and NPA access to the PwC forensic report it had refused to hand over a copy on the grounds of professional privilege. The report highlighted the inflation of Steinhoff profits and/or asset values through the recording of fictitious or irregular transactions which happened between 2009 and 2017. Asset values were inflated by over R100bn, the report showed.

MPs were outraged that the Hawks had not been given the report that Khana stressed was needed for Hawks to do its work. However, Sonn believed that granting access to the PwC report was adequate, especially considering that Steinhoff had to protect the interests of the company against litigation and could not hand it over. Du Preez added that it was also necessary to protect the identity of witnesses who had provided evidence for the PwC report.

Khana said the Hawks would investigate various options to get possession of the report, either by way of a court order or a search warrant.

Also awaited was a report from the FSCA, Khana said.

He said that to date, four complaints had been received together with a report in terms of the Prevention and Combating of Corrupt Activities Act. The allegations were that Steinhoff Investment Holdings had submitted false, misleading and/or deceptive financial statements in contravention of the Financial Markets Act. Irregular transactions amounting to €6.5bn had been identified.

Marshall Mokgatle, of the NPA’s special commercial crimes unit, said the report was a forensic report for accounting purposes and would not assist with the prosecution, though it would useful for the police. He emphasised the complexity of the case and that the investigation was continuing.

NPA director of public prosecutions in Gauteng George Moloi said the NPA was satisfied with the progress of the investigation and had commissioned its own forensic report into Steinhoff. Three experienced prosecutors were dealing with the matter.

“The prosecuting team is working very methodically with clear timelines,” Moloi said adding that no time would be wasted in taking a prosecutorial decision as soon as the investigation was completed.

Irba CEO Bernard Agulhas said the organisation was currently reviewing the PwC forensic report. The Irba investigation depended on the issuance of the SA audited financial statements of Steinhoff for 2017 and 2018, which had not been issued to date. The Irba investigation is limited to the role of SA auditors. 

FSCA head of the market abuse investigation team Alex Pascoe said the authority was engaged in ongoing investigations into insider trading which was close to completion and would be presented to FSCA for decision by October 2019. This investigation relates to allegations that Jooste provided inside information to a third party and encouraged the person to trade on the information which he did.

The FSCA is also investigating the publication of false financial statements between 2016 and 2018 and was in the process of completing an administrative action. “We are investigating Steinhoff, the entity, as well as individuals who knew or ought to have known that the Steinhoff annual financial statements were false and misleading,” Pascoe said.

Another investigation by the FSCA into insider trading and false statements dealt with the Viceroy research report published on December 7 2017, after the announcement of alleged irregularities which saw the collapse of the group’s share price.

CIPC commissioner Rory Voller said the main action that the commission could still take was to apply to court to have Steinhoff directors declared delinquent, but that depended on the completion of other actions. Steinhoff had complied with a compliance notice issued by the CIPC on January 29 2018.

Du Preez told MPs that a priority of Steinhoff was to lift the suspension by the JSE of the R1.5bn preference shares in Steinhoff Investment Holdings, so that the holders of the instruments could trade in them.