South African Authorities Finally Closing in on Biggest Fraud

(Bloomberg) -- It’s been a long 16 months for investors who were devastated when global retailer Steinhoff International Holdings NV shocked markets with its accounting scandal, but now South African police and regulators are finally saying their investigations have progressed.

With four separate cases lodged, the police’s serious commercial crimes unit has taken 21 statements to probe potential fraud and theft involving Steinhoff directors. While the cops are closing in, South Africa’s Financial Sector Conduct Authority has said it will probably be ready with charges related to insider trading and the publishing of false and misleading financial statements within the next two months.

At this rate South African authorities might just beat the German regulators and be the first to come up with charges against the company and its directors. Germany’s public prosecutors and BaFin said in 2017 they were investigating Steinhoff, but there’s been no conclusion to those probes yet.

Steinhoff’s woes go further than these investigations. There are a number of class-action lawsuits pending and there’s a court hearing set in Amsterdam in May for a group of shareholders requesting the right to appoint their own investigator and their own board director. While Steinhoff mandated PwC to forensically investigate at least three years of the retailer’s accounts, that report isn’t yet complete and may not be released publicly in full.

South African Authorities Finally Closing in on Biggest Fraud

In the meantime, there’s a large hole where the equivalent of $14.6 billion in market value used to be. And it’s not like the share price is showing much sign of recovery -- it’s still 96 percent lower than it was before the accounting scandal erupted. Steinhoff was trading 0.7 percent down at 0.12 euros as of 1:39 p.m. in Frankfurt.

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