Steinhoff fine is not enough – activist
DURBAN - Troubled retailer Steinhoff International was yesterday slapped with a R13.5 million fine by the JSE for breaching its listing requirements with inaccurate financial reporting as shareholder activist Theo Botha criticised the JSE, saying it had not done enough to censure the firm’s board and audit committee.
This comes after Steinhoff admitted to accounting irregularities in December 2017, which led to a more than 95 percent collapse in its share price and losing more than R200 billion in market capitalisation.
The JSE said Steinhoff’s previously published financial information for the 2016, 2015 and prior financial periods did not comply with the International Financial Reporting Standards and was incorrect, false and misleading in material aspects, and this incorrect information was disseminated to shareholders, the JSE and the investing public.
“In these circumstances, the JSE found that Steinhoff’s financial statements failed to comply with section 8.62(b) of the JSE Listings Requirements for the period to end June 2015 and prior financial periods; and general principle (v) for the 15 months to end September 2016,” the JSE said.
Steinhoff chief executive Louis du Preez said the group noted the fine imposed by the bourse.
“Steinhoff notes the JSE’s decision, which relates to the period predating the discovery of accounting irregularities in December 2017. We are pleased that this concludes the JSE’s process in respect of the company,” Du Preez said.
But Botha said it was wrong for the shareholders to bear the brunt for the wrongdoing committed by the management of Steinhoff.
“My problem is that there is no accountability from the side of the management. The chief executive went as far as saying he is pleased that the JSE has concluded this issue as if ticking a box. The board should be responsible for what happened, and the JSE should have held the audit committee to account,” he said.
Jordan Weir, a trader at Citadel, said: “A few more of these types of speed bumps can be expected for Steinhoff in the short to medium term.”
He said this should eventually get to a point where all past concealments and clandestine practices had been addressed and the company could then focus on a forward-looking survival and growth strategy.
Weir said the breach of the listings requirements did not necessarily mean that the past financial results could not be relied upon, as investigative auditors had been going through Steinhoff’s past tainted results with a fine-tooth comb.
“It could simply mean that they found one or two past irregularities that have now been rightfully flagged and dealt with accordingly. These fines are simply part and parcel of the ‘healing process’ that Steinhoff will unfortunately have to bear until all past financials are set straight,” Weir said.
Steinhoff is also facing allegations of insider trading. The Financial Sector Conduct Authority (FSCA) was expected to finalise its case by the end of the year. The head of investigation and enforcement at the FSCA, Brandon Topham, was not available for comment.
Brandon Topham, the head of investigation and enforcement at the FSCA, said they have already taken action against Steinhoff with the R1.5 billion fine imposed on them last year which was remitted downwards to R56m.
"Our insider trading investigation into dealings by shareholders in the Steinhoff share are completed and we are in the process of finalising the administrative processes required in terms of fair administrative law. We expect to make a public announcement in this regard imminently," Topham said.