September 5, 2018 / 10:03 AM / 2 months ago

Steinhoff's former CEO says not aware of accounting irregularities

CAPE TOWN (Reuters) - Steinhoff’s (SNHJ.J) former chief executive Markus Jooste was not aware of any accounting irregularities when he left the retailer in December, he told a South African parliamentary inquiry on Wednesday which is examining an accounting scandal that rocked the company.

Steinhoff's former Chief Executive Markus Jooste appears in parliament to face a panel investigating an accounting scandal that rocked the retailer in Cape Town, South Africa, September 5, 2018. REUTERS/Mike Hutchings

Jooste, who is also under fraud investigation by South African police, resigned in December after the company uncovered accounting irregularities.

The scandal hit Steinhoff’s shares and left the company scrambling for working capital.

Jooste was instrumental in transforming Steinhoff from a small Johannesburg furniture outfit into multinational retailer with more than 40 retail brands including Conforama in France, Poundland in the UK and Mattress Firm in the United States.

In his first public testimony about the scandal, Jooste said he never lied about activities of the company and neither sold his shares in Steinhoff nor held a short position on its stock.

He told the parliamentary inquiry that he lost 3 billion rand ($193 million) due to the fall in the company’s shares after the scandal was uncovered.

“I must place on record that when I left Steinhoff on the 4th of December, I was not aware of any accounting irregularities they are referring to,” Jooste said.

“I don’t blame anybody for what happened at Steinhoff.”

Steinhoff’s battered shares rose at much as 5 percent as Jooste gave his testimony to the parliamentary committee. It traded 3.82 percent higher at 2.72 rand by 1236 GMT.

In July, creditors agreed to hold debt claims for three years, removing a imminent threat of default that would have tipped the company into bankruptcy.

Steinhoff’s chairwoman Heather Sonn a week ago told the parliamentary committee that its board would meet to discuss asset sales to boost cash flow and pay down debt, months after creditors of the South African retailer threw it a lifeline.

On Tuesday, Steinhoff said a subsidiary had agreed to sell a 50 percent stake and related properties in German furniture chain POCO to Austrian businessman Andreas Seifert for 271 million euros ($313 million).

Steinhoff last week reported a 2 percent rise in sales to 12.9 billion euros ($15 billion) for the nine months to June 30 helped by a strong showing at its listed African unit Pepkor (PPHJ.J).

Jooste said his main mistake during his tenure was agreeing to a joint venture with Seifert, adding that Steinhoff probably grew too quickly.

SWIFT ACTION

After the hearing ended, Yunus Carrim, the Chairman of the Standing Committee on Finance, the parliamentary committee hearing Jooste’s testimony, said its members felt that the former Steinhoff CEO could have been more forthcoming.

“His account to parliament reinforces our call that the regulatory bodies and other state agencies should act swiftly and more decisively,” Carrim said.

Carrim said the committee recognized the complex and global nature of corporate scandals such as Steinhoff’s and the huge amount of forensic and other investigative work needed to establish exactly what happened, but he said there should have been more progress 10 months after the Steinhoff scandal was uncovered.

“More can and needs to be done,” said Carrim.

He also said the panel wanted to see more cooperation between the relevant state agencies in South Africa and Germany, the Netherlands and elsewhere.

($1 = 0.8640 euros)

Writing by James Macharia; Editing by Jason Neely and Jane Merriman

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