Retailer Steinhoff suspends former CFO's consultancy
Steinhoff International has suspended consulting agreements with former CFO, Ben la Grange, and ex-Director Stehan Grobler as an investigation by Big Four firm PwC into accounting irregularities continues at the retail group. The pair had been retained on consultancy deals in order to ensure a stable handover, as the Poundland owner looked to stabilise, having been rocked by a major auditing scandal.
Steinhoff International is an international retail holding company that deals mainly in furniture and household goods, and operates in Europe, Africa, Asia, the United States, Australia and New Zealand. The South African-based, Frankfurt-listed owner of familiar UK high-street discounter Poundland is currently embroiled in South Africa's biggest ever accounting scandal, appointing Big Four firm PwC to investigate its accounts, focusing on certain off-balance sheet structures and deals with related parties to find if some assets, revenue and profit figures had been overstated.
PwC is just one of a number of professional services firms which have been involved in attempts to salvage the firm, though. The group’s share price had already experienced a nose-dive of 85%, wiping more than $10 billion off its market value, following the disclosure of the company’s accounting problems, so Steinhoff engaged Moelis and AlixPartners “to assist on liquidity management and operational measures.” At the same time, as the organisation looked to steady the ship, it also drafted in its former CFO on a consultancy arrangement.
Ben la Grange, who joined Steinhoff in 2003, had become an executive board member and Chief Financial Officer by March 2013. Almost five years later, he resigned the role, shortly after PwC was called in, however he was retained by Steinhoff on a short term basis, alongside former fellow Director Stehan Grobler, to help complete the 2017 financial statements and ensure a smooth handover.
Now, a Steinhoff spokesperson has confirmed that both have now been suspended, in the light of the on-going investigation by the Big Four professional services firm. They stated, “Ben la Grange and Stehan Grobler (the latter via Hoffman Attorneys) have been on short-term consultancy arrangements since the beginning of the year… As part of the group’s on-going investigation the group has decided to suspend these consultancy arrangements.”
The PwC investigation and report is expected to be completed by the end of the year, and Steinhoff intends to publish the firm’s findings once it has ensured that there is nothing in the document which could jeopardise the group’s rights in any further actions. Meanwhile La Grange has appeared before the finance committee of the South African Parliament to avoid being subpoenaed, after his lawyer had informed the committee that he could not make a hearing on 29th August. The select committee investigating Steinhoff’s troubles has been keen to speak to the former CFO, as he was in charge of the finance function, at a time when the business was expanding rapidly both in Africa and internationally. He was not joined by former CEO Markus Jooste, however, who will give evidence under oath in September.
In July, Steinhoff reached an agreement with creditors on a debt restructuring plan. It is currently working on its implementation as well as agreed corporate governance changes, which should be implemented over the coming weeks. Elsewhere, Steinhoff's auditor, Deloitte, is facing several law suits from a number of angry Steinhoff shareholders. At the start of August, a consortium of law firms applied to launch a class-action lawsuit in the South Gauteng High Court on behalf of investors in Steinhoff, seeking damages that could potentially run to as much as R185 billion, on behalf of all investors who purchased Steinhoff shares in the period from at least 26th June 2013, up to the date Jooste resigned, on 5th December 2017.
