Steinhoff paid Jooste R34m without approvals
Steinhoff's former CEO Markus Jooste received the equivalent of about R34m in bonuses without required approvals in the months before the global retailer almost collapsed. Jooste was awarded €500 000 on 1 March 2017 from Steinhoff’s European unit on his own instruction, according to the company’s 2017 annual report released late on Tuesday.
This payment was neither proposed by the human resources and remuneration committee nor approved by the supervisory board, the retailer said in the publication, notes a Fin24 report. The ex-CEO then got another €1.57m from the same unit on 31 May of that year, also on Jooste’s instruction.
While the board had approved this amount, Jooste received the payment up front and in full, rather than over three scheduled tranches in October 2017, November 2017 and in October 2018.
‘Management could not find evidence of approval by the remuneration committee authorising this upfront payment,’ Steinhoff said in the report. Fin24 says the findings raise further questions about the role Jooste played in the origins of Steinhoff’s scandal.
The ex-CEO resigned in December 2017, when the group reported accounting irregularities that went on to wipe 96% off the share price. He’s since been named in a forensic report commissioned by Steinhoff as one of a small group of people allegedly behind questionable transactions that brought the global retailer to the brink of collapse.
The delayed financial accounts showed alleged fraud that drew comparisons to Enron and raised questions about the viability of what was once the world’s second-largest furniture retailer, according to a Business Day report. The company’s shares were down almost 8% in Frankfurt, leaving it with a market valuation of just €490m (about R7.9bn) – from more than €14bn just before the accounting scandal broke in December 2017 – after it said the value of its assets had dropped by about R250bn compared with previously released 2016 numbers.
After the write-downs, the firm was left with a €4.03bn loss, a swing of nearly €5.5bn over the previous period.
‘Sadly, in my opinion, there is no value left,’ said Peter Armitage, founder of Anchor Capital. ‘It’s hard to believe it is so big. Remember the world’s biggest fraud was R650bn,’ he said in reference to Enron. Enron was a Houston-based energy trading company that used off balance sheet entities in much the same way as Steinhoff is alleged to have done to hide debt and cover up losses. Two of its senior executives were found guilty of fraud. Kenneth Lay, the founder, died of a heart attack in 2006, weeks before his sentence was to be announced.
It required 17 months of investigations and number crunching to produce the 343-page report, but Deloitte says on page 316 that it is still not prepared to give an audit opinion as there was not enough auditing evidence to comply with Dutch laws and standards, Die Burger reports. The external auditors – who also refused to sign off the statements in December 2017, triggering the financial crisis – raise several concerns, not least concerns about the going concern status of the company.
Current assets (€4.4bn) are dwarfed by current liabilities (€14bn).
The auditors also flag pending litigation against the group as a wildcard for the continued existence of the company. The managing board says in the report a ‘solution’ should be found to the litigation. The tax implications of the massive restatements remain a great uncertainty, according to the financial statements.
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