Johannesburg - The composition of the Steinhoff board leaves much to be desired when it comes to transformation, according to Deputy Finance Minister Sfiso Buthelezi.
He was speaking at a briefing on the Steinhoff crisis, along with Finance Minister Malusi Gigaba. Treasury met with leaders of the JSE, the manufacturing sector, the CEO Initiative, the Black Business Council and the Independent Regulatory Board for Auditors to find ways to protect the interests of the South African public.
Steinhoff’s market value dropped substantially after former CEO Markus Jooste resigned over accounting irregularities.
Gigaba spoke on how the fallout impacted the “man on the street”. Of particular concern was the pension funds of both government employees and private sector employees who were invested in Steinhoff.
Buthelezi, chair of the Public Investment Corporation expressed shock at how the investment manager, which is the second biggest shareholder at Steinhoff, had no representation on the board of the international retail holding company. The PIC is the primary investment agent of the Government Employee Pension Funds (GEPF).
Buthelezi shared that the absence of the PIC’s representation on the board is not because there was a lack of trying, according to Steinhoff management. PIC members were nominated on the board, but were not voted into positions. “That is an issue, we are definitely going to follow up on that one,” he said.
“The shareholder is an important stakeholder of any company which must be taken seriously and listened to, let alone the second biggest [shareholder] such as the PIC,” he said.
Representation on the board is important, as board members have the ability to influence policies of a company and has access to other information and not just what is available to everyone else through financial statements.
As a shareholder the PIC has access to financial statements which informs it on decisions to invest. If the same financial statements are put into question, it makes the problem even bigger.”
Lack of transformation
Buthelezi also spoke on the limited transformation of the board. “You do not have to be a rocket scientist to look at the board and see it is a white, male denominated board … Talking of black people on the board, it is left very wanting,” Buthelezi said.
“If such an important company in the economy is not doing that (transformation), God help us all.”
Chairperson Christo Wiese stepped down from the board, Steinhoff announced to shareholders in a note issued on Friday. Wiese stepped down to address issues of conflict of interest with him remaining on the board. His son Jacob Wiese also resigned from the board.
When asked if Jooste and Wiese’s resignations were enough to address the issues at Steinhoff, Buthelezi said that government could not dictate to the company what it should do.
“The concern for all of us is there should be stability in the company to create certainty of what is happening in the company.” Stability and certainty is necessary for investment, he explained. “We have [the] responsibility to protect all investors of the country.”
Buthelezi explained that a number of investigations by regulators had to be completed before further action could be taken.
IRBA, the South African Revenue Service and the Financial Services Board will establish a regulatory task team to deal with the matter, Gigaba had explained. They are also working with German and Dutch regulators. Steinhoff is listed on the Frankfurt Stock Exchange in Germany and the company is registered in the Netherlands.
If the allegations are found to be true, and happened under the current board, then it will raise an issue of confidence of the entire leadership, Buthelezi warned.
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