JOHANNESBURG - Embattled Steinhoff deputy chairman Deenadayalen Konar on Friday stepped down from
his role as an independent non-executive director of Alexander Forbes, ending a 10-year relationship with the firm.
Konar will also resign from his position as chairman of the Alexander Forbes audit committee.
Carina Wessels, company secretary at Alexander Forbes, said Konar’s decision to step down followed the corruption scandal imploding at Steinhoff and that it supported his decision: “Dr Konar believes his decision to step down from the board of Alexander Forbes to be the correct course of action for himself, Alexander Forbes, its clients and shareholders at this stage.
“He believes the time required of him in attending to matters at Steinhoff may potentially impede his capacity as a board member of Alexander Forbes,” Wessels said.
Konar did not say if he would be stepping down from his other board roles in JSE-listed companies. He currently serves as a non-executive director on the boards of Lonmin, Sappi and Exxaro Resources.
He was appointed to the Steinhoff board and 1998 and is chair of the governance and nomination committees and a member of the audit and risk, and human resources and remuneration committees.
The Steinhoff board has come under increased scrutiny and criticism for its handling of what it termed as “accounting irregularities” found in the firm’s books.
The harshest criticism came on Friday from rating agency Moody’s Investor Service, which slammed the governance at
Steinhoff.
“Given that allegations of accounting irregularities were raised and rebutted in August and again in November calls into question the quality of oversight and governance at Steinhoff,” Moody’s said.
Group's junk rating
The rating agency slashed the group’s credit rating by four notches to junk. The group’s ratings were simultaneously put under review for further downgrade.
This added further pressure to the debt-laden group, which has seen more than $10billion (R136.5bn) of its market value wiped out in the wake of the corruption saga.
The group was also forced to postpone its yearly meeting with its lenders as it scrambles to get its books in order.
Steinhoff borrowed heavily to acquire a number of South African and European retailers.
Steinhoff said the meeting scheduled in London would now take place on December 19, but did not say if it would release its financial results before then.
Steinhoff's debt topped $6bn when it finalised its acquisition of Mattress Firm, its first US acquisition.
Sean Ashton, chief investment officer at Anchor Capital, said that at this stage, there were more unknowns than known information pertaining to the group’s real financial position and operations.
“The key concern investors will have now is that, short of a fire sale of the group’s non-controlled assets to reduce debt, the confidence of debt funders will have all but evaporated, and this is likely to place pressure on the group’s ability to fund itself in the normal course of business,” Ashton said.
The group has already announced measures to meet its debt commitments in the wake of the scandal that has wiped more than $10bn off its market value.
The group last week said it was seeking to recover 6bn (R96bn) of assets outside South Africa. It wants to raise 3bn through asset sales to refinance looming debt repayments - adding to growing fears about the size of the hole in its
finances.
Meanwhile, there was a glimmer of hope for Deloitte, Steinhoff’s auditors, after the Independent Regulatory Board for Auditors (Irba) said the firm might have not necessarily been in the wrong. “Accounting irregularities do not necessarily indicate an audit failure, as accountants and auditors have different responsibilities in respect of financial information.
“Also, different structures have oversight over accountants and auditors. This is further complicated where there are multi-jurisdictional listings and oversight,” Irba’s chief executive Bernard Agulhas said.