Steinhoff Seeks $59 Million From Former-CEO After Crisis
Steinhoff Seeks $59 Million From Ex-CEO After Accounting Crisis
(Bloomberg) -- Steinhoff International Holdings NV is seeking more than 850 million rand ($59 million) from former Chief Executive Officer Markus Jooste for his role in the accounting crisis that triggered the global retailer’s near-collapse.
The owner of Poundland in the U.K. and Pep stores throughout Africa is looking to claw back base salaries, bonuses and other incentives paid to Jooste over several years from 2009, according to legal papers filed to the High Court in Cape Town. Ex-Chief Financial Officer Ben la Grange is being sued for about 271 million rand as part of the same case.
The lawsuit leaves little doubt that Steinhoff’s current management holds Jooste chiefly responsible for the series of dubious third-party transactions and artificially inflated asset values at the South African company. The ex-CEO and La Grange were among eight people named by Steinhoff in March as being allegedly behind the irregular deals, which ultimately forced it to restate years of financials.
The shares have collapsed by 97% since the crisis erupted in late 2017, while Steinhoff remains locked in talks with creditors about the restructuring of $12 billion of debt. The company is being investigated by regulators and authorities around the world, including South Africa’s anti-graft police unit known as the Hawks. The stock rose 2.4% as of 9:55 a.m. in Frankfurt, extending Wednesday’s 1.4% gain.
Mistaken Belief
The payment of salaries and bonuses to Jooste and La Grange was dependent on “the sound and successful financial performance” of the retailer, according to the court papers. Had the company been aware of all the facts, the remuneration committee would not have recommended any payment, they said. Steinhoff was under the “reasonable, but mistaken, belief that such base salaries were due,” the documents said.
The case was earlier reported by the Johannesburg-based Financial Mail.
Steinhoff is itself facing a string of lawsuits, and in May a Frankfurt court received 10 to be included in a mass German investor case. That’s on top of 6.2 billion euros ($7 billion) of claims highlighted by the group in its 2017 annual report.
Jooste didn’t answer a call or text message to a mobile-phone number he has used in the past. His lawyer, Callie Albertyn, didn’t immediately respond to an emailed request for comment.
“I have received the summons and we are currently working through it,” La Grange said by text message. “I don’t wish to comment on the claim other than by way of the legal process.”
Steinhoff didn’t immediately respond to a request for comment.
As part of the more than 850 million-rand claim against Jooste, Steinhoff is seeking about 2.1 million euros ($2.4 million) in bonuses that the ex-CEO received in 2017 without prior approvals. Those payments were first disclosed in Steinhoff’s annual report for that year, which was belatedly released in May.
Jooste has 10 days to respond to the legal claim, while La Grange has one month.
--With assistance from Renee Bonorchis.
To contact the reporter on this story: Janice Kew in Johannesburg at jkew4@bloomberg.net
To contact the editors responsible for this story: Eric Pfanner at epfanner1@bloomberg.net, John Bowker
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