South African holding Steinhoff International demands at least 53 million euros from its former CEO Markus Jooste. The group believes he personally shares responsibility for the accounting scandal that nearly destroyed Steinhoff.
CFO summoned to court
Steinhoff has now subpoenaed its former CEO Jooste and former CFO Ben La Grange. Along with a handful of other people involved, the holding considers both to be responsible for the huge accounting scandal that erupted in May 2017 after the concern’s profits and valuation had been found out to be boosted artificially for years. In total, a fraud worth 6.5 billion euros was committed, according to an independent report from PwC. Since then, the group’s stock market value plummeted by 97 %.
Jooste emerges as the scapegoat: according to a subpoena at the Supreme court in Capetown, Steinhoff demands back at least 850 million rand (53 million euros) in wages and bonuses from its former CEO. The former CFO has been demanded to pay back 270 million rand (about 17 million euros).
A loss of billions
The group of 12,000 employees worldwide has been in financial trouble ever since the scandal broke. When the group released its results for split financial year 2018 (ending in September), they were forced to admit to a loss of 1.2 billion euros. In the previous financial year, they suffered a loss of 4 billion. Meanwhile, Steinhoff has been negotiating for months on a debt settlement of about 11 billion euros, according to financial press agency Bloomberg.
Steinhoff now values its assets at 16.4 billion euros, a billion less than in 2017. Ever since the irregularities in the accounting emerged, the company has had to write off 15.3 billion euros of value. Obviously, all of this is bad news for the many investors (including quite a few Dutch and Germans) and business partners who have filed claims against the South African retailer. According to the annual report, at least fifteen such cases are now running against the concern. Meanwhile, Steinhoff is also under investigation by the South African courts and the German competition watchdog.
Deloitte, which has to approve the annual figures in its capacity as Steinhoff’s accountant, has refrained from doing so for the second year in a row. Deloitte says they couldn’t gather enough decent accounting evidence, according to Dutch business paper FD. Steinhoff is the world’s second biggest group of home decoration stores (after IKEA) and owns contains chains like Conforama, Poundland and Pepco. The group was founded in South Africa, but has its statutory seat in Amsterdam.
