PIC finalises court papers seeking full PwC report on Steinhoff

State asset manager the Public Investment Corporation says it has finalised court papers for its application to get a full disclosure of PwC's forensic report on multinational retailer Steinhoff.

Members of the PIC board and senior executives on Tuesday briefed the Standing Committee on Finance on steps taken to recover as much as R20bn lost by state pensioners, whose funds were invested in Steinhoff via the PIC.

The PIC invests on behalf of the Government Employee Pension Fund, and manages around R2.1trn in assets. 

Since Steinhoff's former CEO Markus Jooste abruptly resigned at the start of an accounting scandal in December 2017, the Stellenbosch headquartered retailer's share price plummeted by 95%, resulting in the loss of tends of billions of rands in book value to shareholders, including the pensioners.

On Tuesday at 13:28, Steinhoff shares were trading at 94 cents per share. 

Parliament has previously heard that the lost value to pension funds may be permanent, as the share price might never again reach the same value as during its peak, Fin24 previously reported.

According to the PIC's presentation to Parliament on Tuesday, the GEPF's exposure to Steinhoff International as at October 31, 2019 amounts to an unrealised loss of R19.22bn (the committee has taken to referring to the loss as roughly R20bn). The PIC further confirmed that the unrealised loss to the GEPF through its unlisted exposure to Steinhoff investment through a Lancaster deal amounted to R6.2bn.

'Someone must be responsible'

SCOF chairperson Joe Maswanganyi on Tuesday stressed that Parliament wants to know what the PIC and GEPF is doing legally to recover money belonging to pensioners.

"It is not our money, it is not the PIC's money. It is the money of pensioners. Someone must be responsible," Maswanganyi said.

In response, the PIC's acting head of legal Lindiwe Dlamini gave an update on processes pursued against Steinhoff.

Most notably, the PIC wants the PwC to disclose its 3 000-page forensic report into Steinhoff, which it says includes information the state asset manager needs in order to lodge applications to have implicated Steinhoff directors declared delinquent, Dlamini said.

Report is 'critical'

The report is "critical" for the PIC to understand what happened at Steinhoff, she said. "We have finalised papers to compel disclosure of the report. It will help us identify those responsible for the malfeasance at Steinhoff, and who we can pursue on a delinquency process," Dlamini said.

Having access to the report would enable the PIC to take the action required, she added.

Steinhoff has said it will not be making the full report public, as it is confidential and subject to legal privilege. In March it published an 11-page overview of the report

Separate to the PIC, the Financial Mail and amaBhungane Centre for Investigative Journalism have launched a joint application to the Western Cape High Court for Steinhoff to disclose the report, with the view that the matter is of public interest, the publications previously said in an op-ed published in Business Day.

PIC board member Sindi Mabaso-Koyana emphasised the asset manager needs to go through a legal route to compel PwC to disclose the report, because up until now the PwC has a confidentiality responsibility to its client - Steinhoff.

'Hide and seek'

Koyana said despite this, the matter is in the public interest and the PIC needs to access the report. "We found it mischievous of Steinhoff to hold back the report," she said.

Maswanganyi said that Parliament has interest in the PwC report because it is of public interest. He said Steinhoff is "playing hide and seek" by preventing access to the report.

In the meantime, the PIC has also joined a class action lawsuit, through its legal counsel Grant and Eisenhofer (G&E), against Steinhoff and its related parties. G&E also represents various institutional investors who have joined the class action lawsuit.

G&E has advised the PIC to postpone its petition against Steinhoff, in order to go through a mediation process where a settlement can be reached with Steinhoff. Dlamini stressed the postponement is not a withdrawal of the petition.

As recently as last week, Steinhoff made an offer to the PIC, which it is still considering, Dlamini said.

The PIC said it is also cooperating with law enforcement agencies in their investigations into Steinhoff.

The PIC's interim chairperson Reuel Khoza said that the asset manager takes the matter seriously. "There is no reluctance from us to pursue that which we need to pursue on behalf of pensioners, widows and orphans. We understand the duty we have," he told members of Parliament.

PIC's investment committee chair and trustee of the GEPF, Bhekithemba Gamedze, said that the GEPF takes the issue of "accountability" very seriously.

In terms of the GEPF taking action against PIC, for the investment, Gamedze said it is important to wait for the Mpati Commission's final report on its inquiry into the PIC. The Mpati report is expected to be handed over to president Cyril Ramaphosa by December 15, Fin24 previously reported.

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