Steinhoff removes two former executives amid accounting probe

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Steinhoff International Holdings NV suspended former Chief Financial Officer Ben La Grange and ex-director Stehan Grobler in the first action taken against current employees of the company following an accounting scandal.

While both La Grange and Grobler stepped down from their roles earlier this year, they remained employed by the South African retailer on short-term consultancy contracts, Steinhoff said in an emailed response to questions Tuesday. Those contracts have been suspended as part of an investigation by PwC into financial irregularities that triggered a share-price collapse late last year.

Their departures extend culpability beyond ex-Chief Executive Officer Markus Jooste, who quit when the scandal erupted and is being investigated by South African police. La Grange, 43, worked as CFO under Jooste for almost five years. Grobler’s positions included company secretary and an executive director of treasury and financing.

La Grange’s lawyer, Chris Hessian, didn’t immediately respond to emailed questions or return a call made to his office. Grobler said by phone he was bound by confidentiality agreements and declined to comment further.

Asset Write-Off

Steinhoff’s crisis was triggered when Deloitte LLP refused to sign off on financial results for the year ending Sept. 30, 2017. The owner of Conforama in France and Mattress Firm in the U.S. has since said its accounts will have to be restated back at least as far as 2015, and PwC is focusing its report on a string of third-party transactions and inflated profit values. The retailer has written off the value of assets by more than $14.5 billion, and has made it a priority to identify those responsible.

At the annual general meeting in April, Chairwoman Heather Sonn said that any current executive found to have been connected to the financial wrongdoing would immediately be removed.

Under Jooste and La Grange, Steinhoff pursued a breakneck international expansion that included the $5.7 billion acquisition of pan-African retailer Pepkor Holdings Ltd. and further purchases of Mattress Firm and Poundland in the U.K. While all those businesses remain in operation, Steinhoff faces an uphill battle to keep the company afloat even after agreeing to a debt restructuring with creditors last month.

The shares rose 2.3 percent in Frankfurt, where Steinhoff moved its primary listing from Johannesburg in 2015. The stock has lost 96 percent of its value since the scandal erupted on Dec. 5.

La Grange may be legally ordered to appear before a South African parliamentary committee next week after declining to attend because his lawyer is unavailable, parliament’s finance committee said earlier Tuesday. La Grange had been willing to appear this week, his lawyer told the committee, only for the hearing to be postponed because Steinhoff representatives are at a court hearing in the Netherlands.

Bloomberg News
Accounting fraud International accounting Audits PwC Deloitte