By Adriaan Kruger.
It has been more than seven years since Markus Jooste resigned as chief executive officer of Steinhoff on 5 December 2017 and Steinhoff’s supervisory board requested PWC’s advisory services unit to conduct a forensic investigation into accounting fraud at the former international retail giant.
The investigation took more than a year to complete and a hefty report of 7 000 pages, including 4 000 pages of supporting documentation, was presented to Steinhoff’s supervisory board in March 2018.
Immediately referred to as the PwC Report, shareholders, the general public, law enforcement agencies and the media all wanted to see the report. The main focus of interest was to see who knew what was going on and who were the main perpetrators of the accounting fraud.
Steinhoff only published a short overview of the findings a further year later, on 15 March 2019, claiming that the PwC Report contained privileged information and disclosing the full report would hamper efforts to recoup losses.
“The PwC Report is also confidential and subject to legal privilege and other restrictions. For these reasons SIHNV (Steinhoff International Holdings NV, listed in Frankfurt) does not currently intend to publish the report…” it noted in a 11-page summary at the time.
“By publishing this overview does not waive the confidentiality and legal privilege which inheres in the PwC Report,” it added.
The summary of the PwC Report acknowledged that the allegations of accounting fraud were true, but did not identify the individuals intimately involved.
“A small group of Steinhoff Group former executives and other non-Steinhoff executives, led by a senior management executive, structured and implemented various transactions over a number of years which had the result of substantially inflating the profit and asset values of the Steinhoff group over an extended period.
“The PwC investigation found a pattern of communication which shows the senior management executive instructing a small number of other Steinhoff executives to execute those instructions, often with the assistance of a small number of persons not employed by the Steinhoff group,” it said.
It added that none of the Steinhoff executives that were identified in the report were still employed at Steinhoff at the time.
“Fictitious and/or irregular transactions were entered into with parties said to be, and made to appear to be, third party entities independent of the Steinhoff group and its executives but which now appear to be closely related to and/or have strong indications of control by the same small group of people referred to above.
“Fictitious and/or irregular income was, in many cases, created at an intermediary Steinhoff group holding company level and then allocated to under-performing Steinhoff operating entities as so-called ‘contributions’ that took many different forms and either increased income or reduced expenses in those operating entities,” according to the report summary.
The total effect of these fictitious dealings was to increase income by a total of €6.5 billion from 2009 until 2017.
Still secret
The complete PwC Report is still guarded closely, despite the High Court order that forced Steinhoff to make it available to certain media outlets that took legal action in terms of the Promotion of Access to Information Act (Paia).
These include News24, publisher of newspapers and online news portals, Arena Holdings, which publishes Financial Mail, Business Day and online equivalents, and Rob Rose, former editor of Financial Mail and author of a book about the Steinhoff scandal.
Steinhoff, renamed Ibex Holdings following the restructuring of what was left over of Steinhoff and now owned by formed creditors, handed the report over to the media outlets on 18 December.
However, since then little has been made public. Maybe the newspapers are waiting for their readers to return from the holidays. Also 7000 pages are a lot go through, and there may be legal ramifications of publishing it verbatim. The media groups would likely have to run any potential stories on the full report via their lawyers first.
Ibex said in a press release that the request was brought by the media parties against Steinhoff on 23 October 2019 for access to a copy of the PwC report.
“On 10 May 2022, the High Court ruled that Steinhoff is directed to provide the media parties with a copy of the PwC Report. Steinhoff appealed to the Supreme Court of Appeal [SCA]. The appeal was heard on 27 May 2024 with judgment handed down on 4 December 2024.
“Ibex will abide by the court’s ruling and will not appeal the judgment, “it said.
Moneyweb’s request for a copy of the report was denied.
“The PwC Report remains confidential and certain of the information contained therein is subject to the legal protections required under the Protection of Personal Information Act (Popia). Accordingly, we have no lawful basis to simply give you the PwC Report, “it said.
“Any request for access to the PwC Report must be made formally and in terms of Paia. Any such request will be assessed by Ibex RSA Holdco Limited on its merits, and on a case-by-case basis,” Ibex responded through their media liaison officer.
“Please keep in mind that, in the event that you receive access to the PwC Report by whatever means, you remain responsible for the information contained therein in terms of the applicable local and foreign legislation, including Popia,” it added.
Ibex also published a separate statement to absolve itself from disclosing personal information of individuals contained in the report.
“As a result of the SCA ruling, the PwC Report will be provided to the media parties on Wednesday, 18 December 2024. The disclosure is mandatory, and Ibex is required by law to comply with the SCA ruling.
“The PwC Report contains the personal information of individuals and corporate entities [‘affected data subjects’], mainly individuals who worked for the Steinhoff Group and corporates that did business with the group. The personal information disclosed includes names, contact details, correspondence, and interviews.
“In line with the requirements under the Protection of Personal Information Act, Ibex wishes to notify affected data subjects that their personal information will be disclosed to the media parties and the terms thereof,” it said.