Steinhoff Blame Game Goes On as Ex-CEO Targets German Partner
Steinhoff Ex-CEO Says He Didn't Know of Financial Irregularities
(Bloomberg) -- Steinhoff International Holdings NV ex-Chief Executive Officer Markus Jooste said the origin of the global retailer’s near-collapse was a protracted dispute with former partner Andreas Seifert, the latest example of a senior figure blaming others for the crisis.
The legal battle with Seifert, mainly over the valuation and ownership of German furniture chain POCO, led to investigations by European regulators and tax authorities that attracted the attention of Steinhoff’s auditors at Deloitte LLP, Jooste told lawmakers in Cape Town on Wednesday. He quit in December after the retailer’s board disagreed with his plan to replace the auditors, he said.
In his first public appearance since the accounting crisis that wiped billions of euros off the company’s market value, Jooste, 57, said he wasn’t aware of the financial irregularities reported by the company the day he quit. Instead, he blamed Deloitte for wanting an additional probe into allegations of financial mismanagement in Europe just days before the retailer was due to report 2017 financials.
“My advice was to appoint new auditors and get accounts out by end-January,” Jooste told the lawmakers. He knew the alternative of failing to report full-year results --- which eventually happened -- would have a “disastrous impact,” he said. The board disagreed, and opted to appoint PwC to probe the accounts.
Steinhoff said Dec. 5 that it had uncovered accounting irregularities and that Jooste had left. The shares have since crashed more than 95 percent, causing the company to restructure about 10 billion euros ($11.6 billion) of debt and sell a string of assets to stave off collapse. The owner of Conforama in France and Mattress Firm in the U.S. has reported Jooste to a South African police unit known as the Hawks, although they say they don’t have enough information to start an investigation.
“To me, accounting irregularities means fraud,” Jooste said. “I was not aware of any accounting irregularities.”
Jooste’s appearance in parliament follows a similar hearing with former Chief Financial Officer Ben La Grange last week. By contrast, the ex-CFO didn’t mention Seifert, opting to blame Jooste for not sharing information and for influencing third-party transactions that are now being investigated by PwC. Before that, former Chairman Christo Wiese said news of the financial wrongdoing came as a “bolt from the blue” and also accused Jooste of being involved.
Flanked by four lawyers and wearing a dark suit and spotty gray tie, Jooste said the billionaire Wiese was involved in several meetings with Deloitte leading up the refusal to sign off on 2017 financials. Wiese’s net worth has plunged to $1.3 billion from $5 billion before the scandal. Jooste said he personally has lost 3 billion rand ($193 million).
Steinhoff agreed to sell half of POCO to Seifert earlier this week, putting an end to the dispute.
To contact the reporters on this story: Janice Kew in Johannesburg at jkew4@bloomberg.net;John Bowker in Johannesburg at jbowker2@bloomberg.net
To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net, John J. Edwards III, Vernon Wessels
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