Former Steinhoff CFO Ben la Grange jailed for five years
A beneficiary of sculduggery but not the mastermind, court finds
03 October 2024 - 13:22
UPDATED 03 October 2024 - 23:18
byJana Marx
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Steinhoff International Holdings former CFO Ben La Grange at the Pretoria specialised commercial crimes court on Thursday. Picture: JANA MARX
Former Steinhoff CFO Ben la Grange was on Thursday sentenced to 10 years in prison, five of which were suspended, after pleading guilty to one charge of fraud in the Steinhoff saga.
The sentence means La Grange will serve five years behind bars, provided he does not commit similar crimes. His conviction follows that of Gerhardus Burger (an associate of the late Steinhoff CEO Markus Jooste), who received a five-year suspended sentence for insider trading after turning state witness.
The Pretoria specialised commercial crimes court found that between November and December 2016 La Grange and Jooste defrauded a Steinhoff subsidiary, Steinhoff At Work, along with the boards of Steinhoff Manufacturing and Steinhoff SA, of more than R376m.
La Grange admitted that under Jooste’s instruction he had created falsified invoices to inflate and manipulate the Steinhoff Group’s financial statements for the 2016 financial year. After an investigation by the JSE, La Grange was fined R2m and barred from holding a position in a public company for 10 years due to his involvement in the Steinhoff At Work transactions.
As part of a plea deal with the state, the remaining eight charges against La Grange, including two counts of racketeering, will not proceed.
During the sentencing proceedings, La Grange’s counsel, André Bezuidenhout, responded to a submission from the Public Investment Corporation (PIC), which argued that the five-year effective sentence was “too lenient”.
Bezuidenhout said La Grange “did not cause the demise of Steinhoff”, but was part of a larger network of individuals who collectively defrauded the company and its investors.
“He has undertaken to assist the state and has accepted some punishment,” Bezuidenhout argued.
Stéhan Grobler, La Grange’s former co-accused, is scheduled to appear in the same court on Friday.
The state argued La Grange was a key figure in Steinhoff’s fraudulent activities, accusing him of working alongside Jooste and others in a “common purpose” to misrepresent the company’s profits and assets.
State prosecutor Dries van Rensburg said the sentencing agreement came after days of deliberation, weighing mitigating and aggravating factors, alongside the state’s requirements for future prosecutions.
Van Rensburg acknowledged La Grange’s remorse, co-operation with the JSE and willingness to testify, but emphasised that La Grange’s failure to act sooner had significantly contributed to Steinhoff’s financial collapse.
“Although not the mastermind, he did benefit,” Van Rensburg noted.
The charges relate to Steinhoff’s financial misconduct from 2014 to 2017, culminating in the company’s collapse in December 2017.
Once a global retail giant listed in Germany and SA, Steinhoff’s share price plummeted 90% after the scandal broke, wiping out more than R230bn in market value.
The fraud centred on overstated earnings inflated by R100bn through fictitious sales and inflated asset values.
That misrepresentation led to an artificial inflation of Steinhoff’s stock price, misleading investors. The company was officially liquidated in 2023, and Jooste committed suicide a few months later, avoiding prosecution.
The state’s indictment outlines a systematic and continuous effort to manipulate Steinhoff’s financial health by fabricating invoices and engaging in sham deals with entities such as TG Group, artificially boosting profits and deceiving investors.
It characterised the actions as “a systemic, organised and continuous series of fraudulent transactions processed through the SIH and SINV accounting systems”.
Steinhoff Investment Holdings (SIH) is a subsidiary of Steinhoff International Holdings NV (SINV), the Netherlands-based parent company.
According to the indictment, the activities formed a pattern of racketeering.
The company’s downfall remains a sharp focus for SA authorities and financial regulators, who continue to pursue those responsible for one of the country’s largest corporate scandals.
The National Prosecuting Authority (NPA) and the Hawks welcomed La Grange’s sentencing, with the NPA describing the case as “one of the most complex commercial crime cases” it had handled.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Former Steinhoff CFO Ben la Grange jailed for five years
A beneficiary of sculduggery but not the mastermind, court finds
Former Steinhoff CFO Ben la Grange was on Thursday sentenced to 10 years in prison, five of which were suspended, after pleading guilty to one charge of fraud in the Steinhoff saga.
The sentence means La Grange will serve five years behind bars, provided he does not commit similar crimes. His conviction follows that of Gerhardus Burger (an associate of the late Steinhoff CEO Markus Jooste), who received a five-year suspended sentence for insider trading after turning state witness.
The Pretoria specialised commercial crimes court found that between November and December 2016 La Grange and Jooste defrauded a Steinhoff subsidiary, Steinhoff At Work, along with the boards of Steinhoff Manufacturing and Steinhoff SA, of more than R376m.
La Grange admitted that under Jooste’s instruction he had created falsified invoices to inflate and manipulate the Steinhoff Group’s financial statements for the 2016 financial year. After an investigation by the JSE, La Grange was fined R2m and barred from holding a position in a public company for 10 years due to his involvement in the Steinhoff At Work transactions.
As part of a plea deal with the state, the remaining eight charges against La Grange, including two counts of racketeering, will not proceed.
During the sentencing proceedings, La Grange’s counsel, André Bezuidenhout, responded to a submission from the Public Investment Corporation (PIC), which argued that the five-year effective sentence was “too lenient”.
Bezuidenhout said La Grange “did not cause the demise of Steinhoff”, but was part of a larger network of individuals who collectively defrauded the company and its investors.
“He has undertaken to assist the state and has accepted some punishment,” Bezuidenhout argued.
Stéhan Grobler, La Grange’s former co-accused, is scheduled to appear in the same court on Friday.
The state argued La Grange was a key figure in Steinhoff’s fraudulent activities, accusing him of working alongside Jooste and others in a “common purpose” to misrepresent the company’s profits and assets.
State prosecutor Dries van Rensburg said the sentencing agreement came after days of deliberation, weighing mitigating and aggravating factors, alongside the state’s requirements for future prosecutions.
Van Rensburg acknowledged La Grange’s remorse, co-operation with the JSE and willingness to testify, but emphasised that La Grange’s failure to act sooner had significantly contributed to Steinhoff’s financial collapse.
“Although not the mastermind, he did benefit,” Van Rensburg noted.
The charges relate to Steinhoff’s financial misconduct from 2014 to 2017, culminating in the company’s collapse in December 2017.
Once a global retail giant listed in Germany and SA, Steinhoff’s share price plummeted 90% after the scandal broke, wiping out more than R230bn in market value.
The fraud centred on overstated earnings inflated by R100bn through fictitious sales and inflated asset values.
That misrepresentation led to an artificial inflation of Steinhoff’s stock price, misleading investors. The company was officially liquidated in 2023, and Jooste committed suicide a few months later, avoiding prosecution.
The state’s indictment outlines a systematic and continuous effort to manipulate Steinhoff’s financial health by fabricating invoices and engaging in sham deals with entities such as TG Group, artificially boosting profits and deceiving investors.
It characterised the actions as “a systemic, organised and continuous series of fraudulent transactions processed through the SIH and SINV accounting systems”.
Steinhoff Investment Holdings (SIH) is a subsidiary of Steinhoff International Holdings NV (SINV), the Netherlands-based parent company.
According to the indictment, the activities formed a pattern of racketeering.
The company’s downfall remains a sharp focus for SA authorities and financial regulators, who continue to pursue those responsible for one of the country’s largest corporate scandals.
The National Prosecuting Authority (NPA) and the Hawks welcomed La Grange’s sentencing, with the NPA describing the case as “one of the most complex commercial crime cases” it had handled.
Former Steinhoff CFO Ben la Grange back in court
Suspended jail sentence for Steinhoff shareholder over insider trading
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