JOHANNESBURG - South African tycoon Christo Wiese resigned on Thursday as chairman of Steinhoff (SNHG.DE), the latest setback for the retail group in the throes of an accounting scandal.
Once a must-have for investors who backed its reinvention from small furniture outfit into a retail empire, Steinhoff has seen its shares crash more than 80 percent since last week when it ordered an investigation into its accounts and parted ways with long-serving chief executive Markus Jooste.
Steinhoff said Wiese, its top shareholder and chairman who stood in as chief executive last week, had offered to step down to reinforce independent governance and address any possible conflict of interest.
Wiese has been chairman since last year and a board member since 2013. He owns about 22 percent of the company, the stake he built in 2014 when he sold his clothing retailer Pepkor to Steinhoff via a combination of cash and shares.
Steinhoff named Heather Sonn, a member of the supervisory board and its independent sub-committee, as acting chairperson, and said Wiese’s son Jacob had also resigned from the board.
The accounting scandal has tarnished the 76-year-old’s credentials as one of South Africa’s most respected stewards of shareholder capital.
It has also reduced his stake in Steinhoff: the company said on Thursday that banks have sold 98.4 million shares they used as security to lend Wiese 1.6 billion euros ($1.89 billion) to fund the purchase of additional shares in Steinhoff in September 2016.
Wiese started budget clothing retailer Pepkor in the 1960s, in Upington on the southern edges of the Kalahari desert, but is best known for transforming grocery retailer Shoprite (SHPJ.J) from just six shops in the 1970s to hundreds of stores across Africa.
He was also instrumental in reinventing Steinhoff, turning it from a modest distributor of furniture made in communist era eastern Europe to a global household goods retailer, vying for market share with the likes of IKEA.
But he suffered a setback this year when Steinhoff and Shoprite, in which Wiese owns a 20 percent stake, called off a deal in February to merge to create an African shopping giant, preventing Wiese from bringing more of his retail assets under one roof.
His resignation comes a day after Steinhoff’s second largest shareholder Public Investment Corporation expressed discomfort about possible conflict of interest in having Wiese as interim chief executive.
Steinhoff, which moved its primary share listing from Johannesburg to Frankfurt two years ago, has been under investigation for suspected accounting fraud in Germany since 2015. Four current and former managers are under suspicion of having overstated revenues at subsidiaries, prosecutors said.
Steinhoff has previously said that the investigation related to whether revenues were booked properly, and whether taxable profits were correctly declared.