South Africa’s financial regulator has fined Steinhoff International Holdings the owner of the Dealz discount chain here and Poundland in the UK.
The fine was a record 53 million rand (€3.25m) for failing to properly disclose accounting problems. The regulator is probing at least 10 individuals in connection with the late-2017 scandal.
The Financial Sector Conduct Authority reduced the penalty from an initial 1.5bn rand in light of the retailer’s precarious financial position, according to Brandon Topham, divisional executive for investigations and enforcement.
The authority is concerned that putting too much pressure on Steinhoff’s balance sheet could result in job losses, he said.
“This is a record fine, but we did have to reduce it quite significantly. We had to consider shareholders and employees who have already taken a lot of pain,” said Topham.
The fine is Steinhoff’s first sanction by regulators or legal authorities for improper disclosure since the emergence of an accounting scandal in late 2017, though numerous investigations are taking place around the world.
The company lost 98% of its market value after the crisis erupted and has been battling for survival ever since. Steinhoff has previously incurred smaller penalties for the late reporting of financial statements.
“We are pleased that the matter has now been brought to a conclusion and that the authority has recognised our full co-operation with the investigation. There are no further enforcement authority actions outstanding against the Steinhoff Group,” said Steinhoff chief executive Louis du Preez in a statement.
The regulator is also pursuing a civil case against former CEO Markus Jooste, who quit the day the scandal broke, and will support criminal prosecutors in their efforts to make a case against him and others who played a role in the wrongdoing, said Topham.
The former CEO is one of several people being probed, including the eight Steinhoff staff identified in March as being behind questionable transactions that brought the global retailer to the brink of collapse.
“There are at least 10 people that may have reasonably had knowledge and the majority are outside the country,” said Topham.
Steinhoff has managed to stay afloat and last month secured a crucial deal with creditors, enabling the company to skip principal and interest payments on about €9bn in debt until December 2021.
However, several legal claims endanger its ability to continue as a going concern.