Steinhoff ex-CFO fined by bourse five years after accounting scam

Accounting

Steinhoff International Holdings NV former Chief Financial Officer Ben la Grange has been fined 2 million rand ($119,000) by South Africa’s main stock exchange for violating listing rules — almost five years after the company’s near collapse. 

Johannesburg’s stock exchange, in its first censure of any director at scandal-hit Steinhoff, also barred La Grange from holding an office in a listed company for 10 years, according to a statement Friday. Steinhoff lost 98% of its market value after auditors refused to sign off on financial statements in December 2017. 

Forensic investigators from PwC later confirmed that 6.5 billion euros ($6.5 billion) in fictitious or irregular income had been recorded at Steinhoff between 2009 and 2016, making it South Africa’s largest known fraud.

The headquarters of Steinhoff International Holdings NV in Stellenbosch, South Africa
Steinhoff International headquarters in Stellenbosch, South Africa

Waldo Swiegers/Bloomberg

At the time of Steinhoff’s collapse, La Grange held the highest-ranking financial position in the company, and he should have applied more scrutiny to a handwritten document that was given to him by former Chief Executive Officer Markus Jooste, and from which La Grange was told to generate an invoice of 23.5 million euro, the JSE said in the statement. 

“There was no actual transaction nor any legitimate commercial reason that supported the information or calculations contained in the handwritten document,” the JSE said. “The result of this fictitious transaction by the processing of the false invoice,” was that Steinhoff’s income was falsely inflated, it said.

The false invoice meant that the Steinhoff at Work division, which was purportedly collecting rebates from retail transactions, produced an artificial operating profit of 47.5 million rand for 2016, rather than a 329.1 million rand loss.

While La Grange was “not aware the income was false at the time”, he didn’t use “necessary due care and skill,” the JSE said. The JSE is yet to announce any sanction against Jooste, who gave the handwritten invoice to La Grange.

There are numerous investigations taking place around the world into Steinhoff, which owns Poundland in the U.K. and part of Mattress Firm in the U.S., and had been Europe’s second-largest furniture retailer after Ikea. In Germany, two people charged over the accounting scandal are to stand trial.

La Grange’s lawyer did not immediately respond to a request for comment.

The JSE said the fine and censure were tempered by La Grange’s “constructive and unwavering cooperation with the JSE’s investigation and his full and frank engagement with the JSE where he provided various additional disclosures that assisted the JSE in its investigation against Steinhoff.”

The move against La Grange follows a censure and 13.5 million rand fine against Steinhoff in October 2020 because of its infraction of the listings requirements. The JSE’s investigations into the conduct of other executives is ongoing, it said.

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