Johannesburg – The JSE should take more decisive action against international retail holding company, Steinhoff, said the Federation of South African Trade Unions (Fedusa).
The federation met with the Public Investment Corporation (PIC), which serves as an investment agent of the Government Employee Pension Fund (GEPF) on Monday. The purpose of the meeting was to find ways to safeguard the government employee pensions against similar events in future.
Steinhoff’s share price plummeted 91% last week, following the resignation of CEO Markus Jooste over accounting irregularities which are being investigated.
Fedusa and its affiliates met with PIC CEO Dan Matjila and his advisors over concerns of the damage the “corporate scandal” would have on the GEPF.
GEPF, jobs safe
“The federation would like to assure GEPF members and pensioners that their funds are fully protected based on the fact that the GEPF is a defined benefit fund.
“Market fluctuations do not affect the quantum of pension benefits, and therefore public servants can be reassured about the security of their funds,” the federation said in a statement.
That said, PIC’s losses have not yet been confirmed, but estimates of its exposure range between R10bn and R15bn.
The PIC is involved in a separate JSE listing of Steinhoff Africa Retail (STAR), which had not suffered as much as much a decline in share price as Steinhoff.
“The majority of the Steinhoff employees sit under the STAR listing as opposed to Steinhoff International. This provides a certain level of comfort for job protection in South Africa,” said Fedusa.
Directors in question
Steinhoff directors are considered to be responsible for the “gross lapses in corporate governance” at Steinhoff, said Fedusa. For this reason, Fedusa proposed that the directors be investigated to determine if they are fit and proper to hold their positions. Fedusa particularly took aim at chief financial officer Ben Le Grange who did not follow Jooste’s suit and resign.
“The PIC and Fedusa expressed disappointment at the lack of auditor rotation at Steinhoff, an issue that the PIC has raised with management several times.”
Fedusa also proposed that a completely independent investigative commission be appointed, in addition to the current investigations. "Nobody can be a judge in their own case," Fedusa General Secretary Dennis George told Fin24, referring to Steinhoff's appointment of PwC, after auditing firm Deloitte would not sign off on the financial report.
German authorities who are conducting the investigation confirmed to Fin24 that “four current and former managers of a group” are being probed for possible accounting fraud. In a note to shareholders on Monday Steinhoff also confirmed that PricewaterhouseCoopers (PwC) has commenced its investigation of the accounting irregularities.
On corrective action to be taken, Fedusa added: “Corruption is corruption, fraud is fraud and theft is theft.” George explained that corruption in the private sector was just as bad as that in the public sector. "We must stand and fight it with all our might," he said.
The JSE in turn has not halted the trading of Steinhoff’s shares. “We believe that under the circumstances where Steinhoff International has disclosed as much price sensitive information as it is able to, it would be detrimental to the interest of investors to prevent them from trading Steinhoff International shares on the JSE,” it said in a media statement.
The JSE also confirmed that it had launched an investigation to determine if Steinhoff had been in breach of its listing requirements.