Steinhoff’s Blue Bloods waited four months to respond to red flags

JOHANNESBURG – It took Steinhoff’s board of blue blood business people four months to respond to a red flag. Reports surfaced in Germany, in August, saying CEO Markus Jooste was being investigated by prosecutors for accounting fraud. Jooste leaving Steinhoff has certainly sent shockwaves through the market.

 The company has commissioned PwC to investigate “accounting irregularities”, this is after Deloitte refused to sign off on its financial statements, prompting the first market jitters. Steinhoff is a German listed company, but based in South Africa.

 It’s reported that both Jooste and Steinhoff chairperson Christo Wiese pooh-poohed the reported when they first surfaced. German authorities searched the company’s offices in Westerstede in connection with alleged tax evasion, in December 2015.

 “This is big, this isn’t some minor tax issue. There is clearly serious accounting fraud involved and Jooste might well be considering his options as far as jail time is concerned” said Magda Wierzycka, CEO of Sygnia Group.

 She added: “Steinhoff has involved itself in some shady dealings which involves accounting irregularities and overstating profits. I believe it is a case of greed overtaking reason… why otherwise would the company’s leadership decide to list in a place like Germany, where authorities take this sort of thing very very seriously?”

 Wierzycka also questioned the way in which Steinhoff acquired 20% of wealth manager PSG in 2012 when the company swapped some of its shares for PSG shares.

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