It may be too little, too late, but Steinhoff has launched legal proceedings against its former CEO and CFO to claw back salaries and bonuses paid to them before the eruption of South Africa’s biggest corporate scandal.
In a terse SENS announcement, the company said that on 19 June it had “launched proceedings against former CEO Markus Jooste and former CFO Ben la Grange in the Cape Town High Court, South Africa to recover certain salary and bonus payments paid to the former CEO and CFO prior to 2017.”
This was expected after the Financial Mail last week reported that the company would seek to claim R870-million from Jooste and R272-million from La Grange for “unjustified enrichment”.
It is another twist in the ongoing saga which broke when auditors from Deloitte announced they could not sign off the accounts in December 2017 because they were riddled with irregularities. A subsequent forensic probe by PwC uncovered a scheme whereby inter-company dealings were masked as external income, fraudulently boosting profits and hiding costs.
In this context, “unjustified enrichment” can be read as a euphemism for a plain racket that, when exposed, saw R200-billion in shareholder value destroyed. Much has been made of Steinhoff’s decision to go after not only Jooste’s bonuses but also his basic pay. But the company’s shareholders are baying for blood and the group is desperate for cash. And the sheer scale of the damage wrought surely raises legitimate questions about executive remuneration that goes far beyond bonus schemes.
The company also said on Tuesday 2 July that it would publish its unaudited 2019 half-year interim results on 12 July and then hold an investor presentation. This will come just weeks after the unveiling of its 2018 results, which came just weeks after the much-delayed 2017 results – you can’t make this stuff up. At least the group is now back to publishing results in a timely manner. It will also likely repeat what it has said in its previous results, that there is “significant doubt” about the “company and group’s ability to continue as a going concern beyond the foreseeable future”.
So the die has likely been cast. Seeking to recover cash from Jooste and La Grange may well be justified, but even if more than a billion rand can be shaken out of the pair, it won’t do a lot for the company’s frayed fortunes. The 2018 loss amounted to €1.2-billion – about 16 times what the company is seeking from the pair – while net debt then was €9.1-billion. For the company’s shareholders and creditors, the nightmare is far from over. But for lawyers, it is all turning out to be a wet dream. BM
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