Three years and three months after Steinhoff auditor Deloitte refused to sign off on the company’s accounts, triggering the resignation of the CEO and implosion of the share price, German authorities have reportedly indicted four people on charges of balance sheet manipulation. German publication Manager Magazin has reported that the German prosecutors have completed their criminal investigation into balance sheet manipulation at Steinhoff, which has a primary listing on the Frankfurt Stock Exchange. Authorities have refused to identify who exactly has been indicted; however, speculation is that former CEO Markus Jooste, two other Steinhoff insiders and one “outsider” will be charged. In Germany, a conviction for fraud can carry a sentence of no less than three years. The problem is not the operations, which include Mattress Firm in the US, Poundland in the UK and Pepkor in South Africa. It’s the €10-billion worth of debt that, while restructured, is not going away. This is not a debt that any company can easily trade its way out of. On the legal front, which is as complex, the company is now in talks to try to settle billions of dollars worth of lawsuits instituted against the retail group. It has proposed a $1-billion global lawsuit settlement plan to settle about 90 separate legal claims in the Netherlands, Germany and South Africa. The combined claims of those who have quantified their alleged damages are in excess of $9.12-billion, Steinhoff has said.
SOURCE: DAILY MAVERICK