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Steinhoff Seeks $59 Million From Ex-CEO After Accountin...

Business Maverick

Business Maverick

Steinhoff Seeks $59 Million From Ex-CEO After Accounting Crisis

Steinhoff International Holdings NV has a rich history in the town of its head office, Stellenbosch, outside Cape Town, South Africa. The community has been hit by the sudden lack of Steinhoff involvement in local sports teams and university bursaries. Sponsorship signage has been taken down at the University of Stellenbosch's sports fields, while the cricket field still has some on display. Photographs taken on Friday, January 26 2018. Pic: Waldo Swiegers / Bloomberg
By Bloomberg
27 Jun 2019 0

Steinhoff International Holdings NV is seeking more than 850 million rand ($59 million) from former Chief Executive Officer Markus Jooste for his role in the accounting crisis that triggered the retailer’s near-collapse.

The owner of Conforama in France and Mattress Firm in the U.S. is looking to claw back base salaries, bonuses and other incentives paid to Jooste over several years from 2009, according to legal papers filed to the High Court in Cape Town. Ex-Chief Financial Officer Ben la Grange is being sued for about 271 million rand as part of the same case.The lawsuit leaves little doubt that Steinhoff’s current management holds Jooste chiefly responsible for the series of dubious third-party transactions and artificially inflated asset values at the South African company. The ex-CEO and La Grange were among eight people named by Steinhoff in March as being allegedly behind the irregular deals, which ultimately forced it to restate years of financials.

The shares have collapsed by 97% since the crisis erupted in late 2017, while Steinhoff remains locked in talks with creditors about the restructuring of $12 billion of debt. The company is being investigated by regulators and authorities around the world, including South Africa’s anti-graft police unit known as the Hawks.

Mistaken Belief

The payment of salaries and bonuses to Jooste and La Grange was dependent on “the sound and successful financial performance” of the retailer, according to the court papers. Had the company been aware of all the facts, the remuneration committee would not have recommended any payment, they said. Steinhoff was under the “reasonable, but mistaken, belief that such base salaries were due,” the documents said.

Jooste didn’t answer a call or text message to a mobile-phone number he has used in the past. His lawyer, Callie Albertyn, didn’t immediately respond to an emailed request for comment.

“I have received the summons and we are currently working through it,” La Grange said by text message. “I don’t wish to comment on the claim other than by way of the legal process.”

Steinhoff didn’t immediately respond to a request for comment.

As part of the more than 850 million-rand claim against Jooste, Steinhoff is seeking about 2.1 million euros ($2.4 million) in bonuses that the ex-CEO received in 2017 without prior approvals. Those payments were first disclosed in Steinhoff’s annual report for that year, which was belatedly released in May.

Read More: Steinhoff Says Ex-CEO Got $2.4 Million Bonus Without Approvals

Jooste has 10 days to respond to the legal claim, while La Grange has one month. The case was first reported by the Johannesburg-based Financial Mail.

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