Shares of Steinhoff International has crashed by close to 50% after the company announced the resignation of Markus Jooste, its chief executive over financial irregularities.
The company said it will be stopping the release of its results while PwC will be doing forensic investigations into the books of the company.
In a detailed statement, Steinhoff said the Supervisory Board of Steinhoff advised shareholders that new information has come to light which relates to accounting irregularities requiring further investigation. The Supervisory Board, in consultation with the statutory auditors of the Company, has approached PWC to perform an independent investigation.
“Markus Jooste, CEO of Steinhoff has tendered his resignation with immediate effect and the Board has accepted the resignation”.
Steinhoff promised it will update the market as the aforesaid investigation proceeds. The Company will publish the audited 2017 consolidated financial statements when it is in a position to do so. In addition, the Company will determine whether any prior years’ financial statements will need to be restated.
“The Supervisory Board has appointed its Chairman, Dr Christo Wiese, as Executive Chairman (Delegated Supervisory Chairman) on an interim basis. In addition, Pieter Erasmus, the previous CEO of Pepkor Group, has agreed to join Dr Wiese in an executive advisory capacity to assist with managing the group’s various retail interests around the world. Dr Wiese and the Board will supplement the management team and will embark on a detailed review of all aspects of the Company’s business with a view to maximising shareholder value”.
“Shareholders and other investors in Steinhoff are advised to exercise caution when dealing in (sic) the securities of the Group,” the company said.
It would be recalled that a German business magazine reported that Markus Jooste and some other senior managers at Steinhoff in connection with suspected accounting fraud, monthly Manager Magazine reported, citing no sources.
The magazine said prosecutors in the northern German city of Oldenburg, near where Steinhoff’s European business is based, have since 2015 been looking into whether revenues had been inflated in the South African retail group’s books.
Steinhoff did not immediately respond to a request for comment. The Oldenburg prosecutors office had no immediate comment.
Tax investigators searched the German offices of Europe’s second-largest furniture retailer after IKEA late in 2015, sending the company’s stock lower.
The company said at the time that authorities were reviewing the balance sheet treatment of certain transactions involving transfers of participations and intangible assets between its European business and third parties.
Earlier this month, Steinhoff made an offer to acquire controlling stake in Shoprite Holdings, its major rival in Africa after a merger deal failed earlier this year.
Mr. Markus Johannes Jooste, BAcc, CA(SA), has been the Group Chief Executive Officer of Steinhoff International Holdings N.V. since 2013 and has been its Member of Management Board since November 30, 2015.
Mr. Jooste serves as a Managing Director of Steinhoff Europe AG. He serves as the Chief Executive Officer for the Steinhoff’s northern hemisphere operations. He serves as a Director at Mayfair Speculators (Pty) Limited.