Parliament - Africa's largest asset manager, the Public Investment Corporation (PIC), on Wednesday told South Africa's members of Parliament (MPs) it could still extract value from financial scandal-ridden Steinhoff International despite a significant decline in its share price following "accounting irregularities" publicly declared in December last year.
"We don't believe that Steinhoff is necessarily worth zero. It's got some nice underlying assets," said PIC chief executive Dan Matjila, referring to the R4.7 billion Steinhoff was able to raise through selling shares it held in Stellenbosch-based investment house PSG Group to help with its liquidity issues, as well as a reported R3.8 million Euros in properties.
The PIC, which manages assets of South Africa's Government Employees Pension Fund (GEPF), joined regulators, National Treasury, the SA Reserve Bank, and Steinhoff board members in briefing Parliament's committees on finance, public accounts and public service and administration on the scandal which wiped billions off the value of Steinhoff in December.
Steinhoff told MPs it could not comment on the alleged accounting fraud until an independent probe by PriceWaterhouseCoopers (PwC) was completed. The PIC, the GEPF and regulators were also awaiting the results of the probe.
"We have to wait for the PwC investigation. We have to wait for the financial statements so that we are able to assess whether there is indeed some value left in the company. We assess whether there is indeed some value left in the company. We can only pray that this happens quickly so that we can pick up the pieces and move on," said Matjila, adding that for now the PIC would be taking the long view by not exiting Steinhoff.
While both the PIC and GEPF were at pains to explain the losses constituted only one percent of assets, the rand value lost -- estimated at some R20 billion -- was significant.
"This has been a significant loss indeed," Matjila said while explaining how the market value of shares held by the GEPF in Steinhoff declined from R27.6 billion rand in March last year to R2.9 billion by January 19 this year.
However, Matjila said the overall impact of the scandal was "minimal", saying GEPF assets had increased by 10.4 percent, or some R193.295 billion, from December 5th when the scandal broke up to date.
The PIC in December wrote to Steinhoff demanding that South African businessman Christo Wiese step down as board chairman, which he subsequently did. Other demands from the PIC were under consideration. They include that at least two independent non-executive directors on the Steinhoff board, as well as that the PIC be represented on the board.
Steinhoff board members earlier on Wednesday told MPs that it had reported its former chief executive, Markus Jooste, to the Directorate for Priority Crime Investigation, more commonly know as the Hawks in South Africa.
Jooste resigned shortly after auditors Deloitte had highlighted "accounting irregularities" which prevented them from signing off on Steinhoff's 2017 financial statements.