South African Authorities Launch Investigation Into Steinhoff International
By Alexandra Wexler
JOHANNESBURG--South Africa's Minister of Finance said Thursday that the government has launched an investigation into possible false and misleading reports from Steinhoff International Holdings NV.
Steinhoff said earlier Thursday that accounting irregularities it disclosed Wednesday along with the resignation of its CEO could affect the valuation and "recoverability" of as much as $7.09 billion worth of assets--extending a stock market rout that has sent shares down 74% over two days.
South African Finance Minister Malusi Gigaba said in a statement on Thursday that the country's Financial Services Board had instituted an independent investigation into Steinhoff, in addition to an internal investigation by the Johannesburg Stock Exchange to probe the extent of the accounting irregularities.
This investigation comes months after German prosecutors began investigating whether the company, which has its primary listing in Frankfurt, used off-balance sheet entities to hide losses in its operations and artificially pump up its valuation. Steinhoff had previously denied those allegations, but on Wednesday said it had hired outside accountants to assess its books.
The disclosures from Steinhoff this week have stunned global institutional investors, and local shareholders big and small. South Africa's main government pension fund is one of the biggest holders of Steinhoff stock.
"The Minister is mindful that many retirement and savings funds may be adversely affected by the loss in the value of Steinhoff shares; therefore, members of retirement funds should e reassured that current regulations limit the extent to which any one fund may be invested n any one company," the statement said. "That notwithstanding, the Minister has requested the retirement funds [regulators] to provide him with a report on the extent of exposure for retirements funds."
Write to Alexander Wexler at email@example.com
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December 07, 2017 10:56 ET (15:56 GMT)Copyright (c) 2017 Dow Jones & Company, Inc.