The two entities also demanded the appointment of at least two independent non-executive directors on the Steinhoff and Steinhoff Africa Retail (Star) boards and questioned the appointment of Christo Wiese as the interim chief executive.
The GEPF and PIC said in a joint statement that they would insist on representation on a board committee tasked with investigating the Steinhoff saga to ensure transparency.
“The PIC would like to state that it has engaged with Steinhoff consistently but has often not received positive feedback from the company.
“Specifically, the PIC has previously pointed out structural issues relating to the material shareholding of the Steinhoff and Wiese families, which are perceived to create the dominance of controlling shareholder representatives on the board and, as a result, potential conflicts of interest,” the two said.
Steinhoff, which showed signs of recovery on Monday, yesterday retreated, closing the day 16.67percent lower at R9.80.
GEPF and PIC said they had recorded an investment loss of 0.6percent of the total GEPF portfolio on December 6 when Steinhoff fell sharply last week after the international retail giant's admission to accounting irregularities. The free fall cost Steinhoff $14billion (R190.4bn) in market capitalisation and cost former chief executive Markus Jooste his job.
The group's majority shareholder and billionaire Wiese, who also chairs the group, stepped in as interim chief executive following Jooste’s resignation. But, the GEPF and PIC have taken issue with Wiese assuming the chief executive role while he still serves as chairperson of the board.
“GEPF and PIC will highlight their discomfort with the lack of independence of the board, including the possible conflict of interest by Dr Christo Wiese as an interim chief executive.
“Furthermore, the GEPF and PIC will express their concern about the Steinhoff Audit Committee concluding the terms of reference of the investigations independently.”
Wiese’s son, Daniel Wiese, has been on Steinhoff’s board since last year. Daniel is also an independent non-executive director of Fairvest Property Holdings and serves on the boards of various publicly listed companies. He is also an alternate and/or non-executive director of Shoprite Holdings, Pepkor Holdings, Invicta Holdings and Tradehold.
The GEPF emerged as one of the biggest losers after the “accounting irregularities” scandal emerged with the group share price shedding more than 80percent in a matter of days.
With an 8percent shareholding, the GEPF is the second biggest investor in Steinhoff after Christo Wiese.
The PIC is wholly owned by the government and acts as investment manager for GEPF, the Unemployment Insurance Fund (UIF) and the Compensation Commission with nearly R2trillion in assets under management.
Steinhoff’s board has come under increased pressure for its handling of the scandal that is risking the group's implosion. Rating agency Moody’s launched a stinging rebuke on the group on Friday as it slashed its credit rating by four notches to junk.
“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.
Steinhoff deputy chairperson Deenadayalen Konar stepped down from his role as an independent non-executive director of Alexander Forbes on Friday, ending a 10-year relationship with the firm.
Andrew Lapping, the chief executive at Allan Gray, said the situation was fluid, and more information was likely to unfold over the coming weeks.
“Apart from a brief period in 2013, we have not owned Steinhoff on behalf of our clients. Often the stock looked cheap, but our analysis of the fundamentals of the business raised questions and we decided we were not being compensated for the risks,” said Lapping.
- BUSINESS REPORT