Steinhoff speaks out, denies allegations of fraud against its CEO

In a swift response, Steinhoff, one of the largest retailer in Europe and Africa has denied all allegations of accounting fraud reported by Manager Magazin involving its CEO.

Manager Magzine, a local publication in Germany had 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.

See below the statement:

Steinhoff shareholders are referred to the statements made by Manager Magazin. The company rejects the allegations of dishonesty contained in the statements.

In particular substantial facts and allegation are wrong or misleading. In the information published we note that the source of some of the allegations is a former joint venture partner with whom the group´s subsidiaries are embroiled in litigation. Shareholders are also referred to the press release dated 4 December 2015 in which the Company confirmed that one of its German subsidiaries Steinhoff Europe Group Services GmbH (SEGS) has been involved in an investigation focusing on the adherence to and arms´ length valuation and proper accounting pursuant to German GAAP.

Shareholders are referred to the various updates released on this investigation confirming that the company appointed legal and external audit firms in Germany to investigate the matter independently. They have concluded that no evidence exists that any of the transactions raised by the investigation in terms of section 331 HGB can give rise to any contravention of any provision of German commercial law and were reflected correctly in the statement of financial position of the company.

The group has engaged constructively with the authorities to find a solution. No further investigations have been initiated nor any searches conducted as alleged in the article. Certain companies in the group are involved in disputes where the outcomes are uncertain. However, the directors are confident that they will be able to defend these actions successfully and that the potential impact on the group will not be material.

The Company wishes to advise that further allegations contained in the article relate to ongoing civil litigation. The existence of this litigation has previously been disclosed by the Company in various communications and publications. The group´s relationship with a joint-venture partner in Europe ended in disputes that are currently the subject matter of several ongoing legal proceedings. These disputes relate to alleged breaches arising from agreements with the former joint-venture partner, who is seeking to obtain and/or retain shares in Steinhoff entities. Management believes that the outcome of the disputes should result in monetary remedy to be paid by the group.

The payment of any such monetary remedy would not have a material adverse effect on the trading and/or financial condition of the group. Management believes that it has adequately provided for the related liabilities that could result from the dispute in the consolidated results. There is no other litigation, current or pending, which is considered likely to have a material adverse effect on the group.

It is evident that the former joint venture partner abuses the press as part of the process of litigation. The company will review all the allegations contained in the article and make further announcements as required.

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