Cape Town - Minister of Finance Malusi Gigaba has asked for a report detailing the extent of the exposure of government pension funds to Steinhoff International, in the wake of its share price’s precipitous decline.
“The Minister expects that this report will give assurance that the interests of the shareholder are protected, including retirement and savings funds,” he said.
He said he had requested the retirement funds regulator at the Financial Services Board, government’s pension fund asset manager the Public Investment Corporation (PIC), and the Government Employees Pension Fund to provide him details of how many Steinhoff shares they own.
The PIC previously said it owns about 10% of Steinhoff's shares.
"At this stage the PIC is awaiting further information from investigations by domestic and international regulators and/or law enforcement agencies to decide on an appropriate course of action,” the asset manager said.
Gigaba said he was gravely concerned by the “accounting irregularities” the Steinhoff board had red-flagged in a statement on Tuesday.
The exact nature of these irregularities has not been made public by Steinhoff, leading investors to speculate what they might be.
Gigaba also said he would be having “discussions” with the Independent Regulatory Board for Auditors to assess “any likely lapses in financial and auditing reporting”.
“As a listed company on the Johannesburg Stock Exchange (with its primary listing on the Frankfurt Stock Exchange), investors rightly expect the highest degree of honesty and integrity in the financial statements and reports of companies such as Steinhoff, to protect investors from market abuse and manipulation,” said Gigaba.
On Tuesday evening in a statement Steinhoff International advised its shareholders that new information had come to light relating to “accounting irregularities requiring further investigation”.
It did not provide further information, or say whether these irregularities were linked to an on-going probe by Germany’s prosecutor’s office into Steinhoff.
The board also announced that PwC would perform an independent investigation into the company, and that its CEO, Markus Jooste, had “tendered his resignation with immediate effect”.
The announcement caused a precipitous decline in Steinhoff’s share price, as billions of rands in market capitalisation were wiped out.
It fell from around R46.50 a share on Tuesday before the announcement was made, to R10.60 at the close of the JSE on Thursday.
Gigaba said he supported decisions by the Financial Services Board and the Johannesburg Stock Exchange to investigate Steinhoff.
“South African legislation allows for appropriate action against any person who has not exercised his or her fiduciary responsibility to shareholders, some of whom are institutional and retirement funds,’ he said.
Gigaba said that while many retirement and savings funds may be “adversely affected by the loss in the value of Steinhoff shares” current regulations limited the extent to which any one fund may be invested in any one company.
He said he had requested the retirement funds regulator at the FSB, government’s pension fund asset manager the Public Investment Corporation and the Government Employees Pension Fund (GEPF) to provide him with a report on the extent of exposure for retirements funds.
The Black Business Council, meanwhile, in a statement on Thusrday condemned "in the strongest terms" what it said was "unethical and corrupt behavior of Steinhof and its executive directors".
"This corruption has caused the poor and innocent pensioners more than R10bn," it said.* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER