Steinhoff Gets $3.6 Million Fine Following Accounts Scandal
Steinhoff to Get Record $3.6 Million Fine After Discount
(Bloomberg) -- South Africa’s financial regulator fined Steinhoff International Holdings NV a record 53 million rand ($3.6 million) for failing to properly disclose accounting problems and is probing at least 10 individuals in connection with the late-2017 scandal.
The Financial Sector Conduct Authority reduced the penalty from an initial 1.5 billion rand in light of the retailer’s precarious financial position, according to Brandon Topham, divisional executive for investigations and enforcement. The FSCA is concerned that putting too much pressure on Steinhoff’s balance sheet could result in job losses, he said.
“This is a record fine, but we did have to reduce it quite significantly,” Topham said in an interview. “We had to consider shareholders and employees who have already taken a lot of pain.”
The fine is Steinhoff’s first sanction by regulators or legal authorities for improper disclosure since the emergence of an accounting scandal in late 2017, though numerous investigations are taking place around the world. The owner of Poundland in the U.K. and part of Mattress Firm in the U.S. lost 98% of its market value after the crisis erupted and has been battling for survival ever since.
The FSCA announced the fine on Thursday, ahead of a press briefing at its office in Pretoria. Steinhoff has previously incurred smaller penalties for the late reporting of financial statements.
“We are pleased that the matter has now been brought to a conclusion and that the FSCA has recognized our full cooperation with the investigation,” Steinhoff Chief Executive Officer Louis du Preez said in a statement. “There are no further enforcement FSCA actions outstanding against the Steinhoff Group.”
Jooste Case
The regulator is also pursuing a civil case against former CEO Markus Jooste, who quit the day the scandal broke, and will support criminal prosecutors in their efforts to make a case against him and others who played a role in the wrongdoing, Topham said.
The former CEO is one of a several people being probed, including the eight Steinhoff identified in March as being behind questionable transactions that brought the global retailer to the brink of collapse.
“There are at least 10 people that may have reasonably had knowledge -- and the majority are outside the country,” Topham told reporters, adding that leniency would be considered for those willing to exchange information.
Steinhoff has managed to stay afloat and last month secured a crucial deal with creditors, enabling the company to skip principal and interest payments on about 9 billion euros ($9.9 billion) in debt until December 2021. However, several outstanding legal claims endanger its ability to continue as a going concern.
The FSCA is also investigating potential insider trading ahead of the 2017 share-price collapse. The probe is currently centered on allegations against an individual and should be finalized in the next two months, Topham said.
Last year, Bloomberg News reported that Jooste advised friends to sell Steinhoff shares days before the stock collapsed.
To contact the reporters on this story: Franz Wild in London at fwild@bloomberg.net;Janice Kew in Johannesburg at jkew4@bloomberg.net
To contact the editors responsible for this story: Anthony Aarons at aaarons@bloomberg.net, ;Heather Harris at hharris5@bloomberg.net, John Bowker, Jennifer Ryan
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