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2 minute read
15 Aug 2019
9:28 am

Steinhoff corporate fraud beyond what anyone envisaged, inquiry hears

News24 Wire

What happened at the company is now 'widely understood to be the biggest corporate fraud in South African history'.

Steinhoff. Picture: Supplied

Lancaster Group’s investment into Steinhoff in 2016 was “disrupted” by the corporate fraud at the multinational retailer, the PIC commission of inquiry heard.

The inquiry, led by Justice Lex Mpati, wrapped up its public hearings on Wednesday. The inquiry has heard evidence from 77 witnesses over the past eight months and the commissioners will be working to finalise its report for submission to the president by October 31.

On its final day of hearings, co-founder of the 100% black-owned company Lancaster, Jayendra Naidoo appeared before the commission. He testified on his role in the Steinhoff-Lancaster transaction in which the PIC was involved. The PIC had provided a loan of R9.35 billion Lancaster needed to acquire a 3% shareholding in Steinhoff.

In December 2017, Steinhoff’s share value plummeted by as much as 98% over accounting irregularities. Lancaster has been in a process to recover R12 billion (including interest accrued) from the Steinhoff investment.

Naidoo said that at the time when the investment was made, the commercial reasons were compelling and there was optimism over Steinhoff’s future.

“[The investment] was done at the time when we were very optimistic of Steinhoff’s future heading to prime position of the top 10 SA listed companies. This investment has been disrupted by the corporate fraud, [it is] most unfortunate but external to what anything anyone envisaged,'” Naidoo said.

In hindsight, what happened at Steinhoff is now “widely understood to be the biggest corporate fraud in South African history,” said Naidoo.

He admitted that based on the loss of Steinhoff’s share value, the losses to Lancaster and in effect the PIC, would be “quite a lot”.

When asked by assistant commissioner Emmanuel Lediga if the share value of Steinhoff could perhaps turnaround for the better, Naidoo said he would not want to speculate on it.

“I think the new leadership team at Steinhoff did an excellent job to keep the ship afloat,” Naidoo said.

“We have a substantial claim at Steinhoff and we will be pursuing the claim vigorously,” he added.

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