Wiese Rebuts Wrongdoing Allegation Over Steinhoff Payments

(Bloomberg) -- South African billionaire Christo Wiese denied he did anything wrong in receiving a combined 325 million euros ($402 million) from Steinhoff International Holdings NV while he was chairman and largest shareholder.

The two payments related to a planned merger between Steinhoff’s African operations and South African supermarket chain Shoprite Holdings Ltd., in which Wiese was also the biggest investor, he said in an interview. The transactions were cleared by the central bank, and he started returning the cash when the deal collapsed following the accounting scandal that engulfed Steinhoff in December.

Steinhoff, which has lost 95 percent of its value since the crisis broke, said Tuesday that payments made to Wiese in October and November didn’t follow correct disclosure or governance procedures. That dragged the billionaire deeper into a crisis that ended the career of former Chief Executive Officer Markus Jooste, who quit when financial irregularities were first reported.

The disagreement between Steinhoff and its former chairman sent the shares down as much as 18 percent to the lowest since its primary listing was transferred to Frankfurt in December 2015. The stock has declined for the fourth straight day, and has more than halved since the start of the year.

The owner of Conforama in France and Mattress Firm said Tuesday evening it had no further comment.

Forward Sell

To facilitate the merger of Shoprite and Steinhoff Africa Retail Ltd., known as STAR, Wiese was to swap a 25.5 billion rand ($2.1 billion) stake in Shoprite for shares in STAR. Given the amount of time it would take to gain regulatory approval for the combination, Wiese said he agreed to forward sell STAR shares to Steinhoff to boost his cash reserves earlier and reduce the debt of one of his investment companies.

Payments of 200 million euros and 125 million euros “were made in terms of a commercial and legally binding sale agreement,” Wiese said. “In the normal course of events, I would simply have received my STAR shares and transferred them to Steinhoff.”

Wiese, who quit Steinhoff in mid-December, became its largest investor in 2015 when he sold his pan-African clothing retailer Pepkor to the company. He told lawmakers in late January that news of the irregularities came as a “bolt from the blue” and that he had no prior knowledge of any wrongdoing.

‘Governance Lapses’

“There have been lots of governance lapses at Steinhoff, both from the executive and non-executive boards, and this may be an example of another,” said Asief Mohamed, chief investment officer at Aeon Investment Management in Cape Town. “It doesn’t appear this followed due process on what is a material related-party transaction.”

Steinhoff has hired auditors at PwC to investigate its accounts and is also being probed by a range of regulators and law authorities around the world. The Federation of Unions of South Africa plans to attend Steinhoff’s annual general meeting on April 20 to push for a new board, it said in an emailed statement.

The way the company handled disclosure of the payment “has created additional uncertainty,” said Theo Botha, a shareholder activist. “These were the leaders of Steinhoff. Where is the transparency from the board of directors?”

To contact the reporters on this story: Janice Kew in Johannesburg at jkew4@bloomberg.net, Loni Prinsloo in Johannesburg at lprinsloo3@bloomberg.net.

To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net, John Bowker, Vernon Wessels, Paul Armstrong

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