Details of Steinhoff’s PwC Report Still Underwraps

More than seven years have elapsed since Markus Jooste resigned as CEO of Steinhoff on December 5, 2017, leading the supervisory board to seek assistance from PWC for a forensic inquiry into accounting fraud at the former global retail giant.

This investigation spanned over a year, resulting in a comprehensive 7,000-page report along with 4,000 additional pages of supporting documents, which was presented to Steinhoff’s supervisory board in March 2018.

Read: Former Steinhoff CEO Markus Jooste has passed away [March 2024]

It wasn’t until March 15, 2019, that Steinhoff issued a concise overview of the findings, asserting that the PwC Report held privileged information and that a full disclosure would be detrimental to recovery efforts related to losses.

“The PwC Report is confidential and legally protected. Therefore, SIHNV (Steinhoff International Holdings NV, listed in Frankfurt) does not intend to publish the report…” the 11-page summary asserted at that time.

“This summary does not waive the confidentiality or legal privilege associated with the PwC Report,” it clarified further.

Read:
Former Steinhoff finance chief Ben la Grange sentenced to 5 years in prison [Oct 2024]
Hawks apprehend Jooste’s associate in Steinhoff insider trading scandal [Sept 2024]
Markus Jooste’s death will not influence Steinhoff investigation – FSCA [March 2024]
Markus Jooste fined R475m for Steinhoff misconduct [March 2024]
Steinhoff report exposes numerous conflicts of interest [March 2019]

The summary of the PwC Report confirmed the validity of accounting fraud allegations; however, it did not disclose the names of the individuals deeply involved.

“A small group of former executives from Steinhoff and certain external non-Steinhoff executives, led by a senior management figure, orchestrated and executed various transactions over many years, greatly inflating the profit and asset valuations of the Steinhoff group over an extensive period.

“The PwC investigation identified a communication pattern where the senior executive directed select Steinhoff executives to carry out those orders, often with assistance from a few individuals not associated with the Steinhoff group,” it detailed.

It was noted that none of the Steinhoff executives mentioned in the report were still with the company at that time.

“Fictitious and/or irregular transactions were conducted with entities presented as independent third parties, which now seem to be closely linked with, or managed by, the same small group referenced earlier.

“In many cases, fictitious or irregular income was generated at an intermediary Steinhoff holding company level, later allocated to underperforming Steinhoff operational entities as various forms of ‘contributions’ that either inflated income or reduced expenses in those entities,” the summary elaborated.

The cumulative consequence of these fictitious transactions led to an income increase of €6.5 billion from 2009 to 2017.

Yet to be disclosed

The entirety of the PwC Report remains under tight control, despite a High Court ruling ordering Steinhoff to provide it to select media organizations that pursued legal action under the Promotion of Access to Information Act (Paia).

These media organizations included News24, a publisher of multiple newspapers and online portals, Arena Holdings, publisher of Financial Mail and Business Day, and Rob Rose, former Financial Mail editor and author of a book on the Steinhoff crisis.

Steinhoff, now rebranded as Ibex Holdings after restructuring the remnants of Steinhoff, transferred the report to the media outlets on December 18.

However, little information has since been made available to the public. Likely, the newspapers are awaiting their readers’ return from vacation. Furthermore, 7,000 pages is a lot to sift through, and there could be legal ramifications tied to publishing it in its entirety. Media groups would likely need to consult their legal teams concerning any potential stories originating from the complete report.

Read:
Ben la Grange – a missed opportunity for justice [Oct 2024]
JSE reprimands, fines, and ‘disqualifies’ former Steinhoff CFO Ben la Grange [Aug 2022]
Steinhoff is financing the police investigation into its affairs, not the NPA’s [March 2021]
Steinhoff/Deloitte settles R1.22bn agreement with claimants [Feb 2021]

Ibex announced in a press release that the media outlets’ request for access to a copy of the PwC report was submitted against Steinhoff on October 23, 2019.

“On May 10, 2022, the High Court mandated Steinhoff to furnish the media parties with a copy of the PwC Report. Steinhoff subsequently appealed to the Supreme Court of Appeal [SCA]. The appeal was heard on May 27, 2024, and the judgment was announced on December 4, 2024.

“Ibex will comply with the court’s ruling and will not contest the judgment,” it stated.

Read/listen:
Sarb’s revitalized focus on asset forfeiture [Oct 2024]
Fraud mechanisms yet to be unveiled in the Steinhoff case [Oct 2024]
Steinhoff accountable for R6.2bn [July 2024]
The ‘Steinheist’ saga premiering on Showmax [Sept 2022]

Moneyweb’s request for a copy of the report was denied.

“The PwC Report stays confidential, and certain content is shielded under the legal protections outlined by the Protection of Personal Information Act (Popia). As a result, we lack the legal authority to simply provide you with the PwC Report,” it explained.

“Any request for access to the PwC Report must be formally submitted according to Paia. Each request will be assessed by Ibex RSA Holdco Limited based on its merits on a case-by-case basis,” Ibex communicated to Moneyweb through their media contact.

“If you obtain access to the PwC Report by any means, please be aware that you will be responsible for the information contained within it, in accordance with applicable local and international laws, including Popia,” it added.

Read:
As Steinhoff exits the market, find out who profited billions [July 2023]
Steinhoff: Deloitte under investigation [July 2021]
Steinhoff’s inception in deception – report [Nov 2018]
The magnitude of the Steinhoff deception [July 2018]

Ibex also issued a separate statement outlining its stance on the disclosure of personal information of individuals included in the report.

“Following the SCA ruling, the PwC Report will be provided to the media parties on Wednesday, December 18, 2024. This disclosure is mandatory, and Ibex is legally obligated to adhere to the SCA’s verdict.

“The PwC Report contains personal information related to individuals and corporate entities [‘affected data subjects’], primarily involving those previously employed by Steinhoff and firms that engaged with the group. The released personal information consists of names, contact details, correspondence, and interviews.

“In compliance with the regulations established under the Protection of Personal Information Act, Ibex aims to inform affected data subjects about the release of their personal information to the media parties and the circumstances surrounding it,” they stated.

Listen to SAfm Market Update presenter Jimmy Moyaha interviewing Rob Rose, editor of Currency, former Financial Mail editor and author of Steinheist:

https://iframe.iono.fm/e/1513375

You can also access this podcast on iono.fm here.

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