South Africa: Steinhoff Corporate Fraud Beyond What Anyone Envisaged, Inquiry Hears

Markus Jooste, Steinhoff International's former chief executive officer

Lancaster Group's investment into Steinhoff in 2016 was "disrupted" by the corporate fraud at the multinational retailer, the PIC commission of inquiry heard.

The inquiry, led by Justice Lex Mpati, wrapped up its public hearings on Wednesday. The inquiry has heard evidence from 77 witnesses over the past eight months and the commissioners will be working to finalise its report for submission to the president by October 31.

On its final day of hearings, co-founder of the 100% black-owned company Lancaster, Jayendra Naidoo appeared before the commission. He testified on his role in the Steinhoff-Lancaster transaction in which the PIC was involved. The PIC had provided a loan of R9.35bn Lancaster needed to acquire a 3% shareholding in Steinhoff. Subscribe to Fin24's newsletter here

In December 2017, Steinhoff's share value plummeted by as much as 98% over accounting irregularities. Lancaster has been in a process to recover R12bn (including interest accrued) from the Steinhoff investment.

Naidoo said that at the time when the investment was made, the commercial reasons were compelling and there was optimism over Steinhoff's future. "[The investment] was done at the time when we were very optimistic of Steinhoff's future heading to prime position of the top 10 SA listed companies. This investment has been disrupted by the corporate fraud, [it is] most unfortunate but external to what anything anyone envisaged,'" Naidoo said.

In hindsight, what happened at Steinhoff is now "widely understood to be the biggest corporate fraud in South African history," Naidoo said. He admitted that based on the loss of Steinhoff's share value, the losses to Lancaster and in effect the PIC, would be "quite a lot".

When asked by assistant commissioner Emmanuel Lediga if the share value of Steinhoff could perhaps turnaround for the better, Naidoo said he would not want to speculate on it.

"I think the new leadership team at Steinhoff did an excellent job to keep the ship afloat," Naidoo said.

"We have a substantial claim at Steinhoff and we will be pursuing the claim vigorously," he added.

Fin24

See What Everyone is Watching

More From: News24Wire

Don't Miss

AllAfrica publishes around 700 reports a day from more than 140 news organizations and over 500 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.