Government nails Steinhoff for R6.2 billion

National Treasury has ordered retail group Steinhoff to forfeit around R6.2 billion to the state.

In three gazettes published on Friday (19 July), Deputy Governor of the South African Reserve Bank for the Prudential Cluster, Fundi Tshazibana, outlined the amounts being claimed.

Notice of Forfeiture to the State of money and/or goods is made in terms of the provisions of Exchange Control Regulation 22B made under Section 9 of the Currency and Exchanges Act.

The notices were served on SAHPL (Pty) Limited (previously Steinhoff Africa Holdings (Pty) Limited), SIHPL (Pty) Limited (previously Steinhoff International Holdings (Pty) Limited) and Ibex Investment Holdings Limited (previously Steinhoff Investment Holdings Limited).

The amounts total just under R6.2 billion, and include:

The claims are part of an investigation into the Steinhoff corruption scandal, which ultimately led to the group’s collapse.

The house of cards came crashing down in 2017 after news broke of major accounting irregularities in Steinhoff’s financial statements, where PwC revealed a $7 billion overstatement of group sales.

In the restated 2017 annual report, the company’s total liabilities and debt increased dramatically. Its overstated assets were also significantly lowered.

For the first time in 2019, Steinhoff’s total liabilities exceeded its assets, making the group technically insolvent.

There was no way that the group could repay its debts, and Steinhoff announced that it would restructure the company to settle its debts.

These restructured entities are now attached for the R6.2 billion owed to the state.

The claims are specifically related to violations of South Africa’s exchange control laws. The money is expected to be paid into the National Revenue Fund—the fund into which all money received by the national government must be paid.

The rise and fall of Steinhoff

The company was founded in 1964 by Bruno Steinhoff in Westerstede, Germany. He bought furniture at a low price in Eastern Europe and sold it at a premium in Western Europe.

Steinhoff moved its headquarters to South Africa in 1998 after merging with Gommagomma, a local furniture company run by Markus Jooste, who later became the CEO of Steinhoff.

The company went on an acquisition spree and became a retail powerhouse with prominent brands like Pepkor, JD Group, and the US-based Mattress Firm in its stable.

Steinhoff became a favourite among local investors as it appeared to perform well with growing revenue and turning every acquisition into a financial success.

Despite warnings from a few analysts about rising debt and accounting irregularities, investors kept piling in.

The share price peaked at R96.85, which made Steinhoff one of the largest companies in South Africa, with a market cap of R359.6 billion.

After the accounting scandal broke, the share price plummeted to R1.26 per share, and shareholders lost billions. There were many casualties, including pension funds and private investors.

Attempts were made to hold Steinhoff’s management accountable for what had transpired. However, one of the key players, former CEO Markus Jooste, ended up taking his own life in March 2024, having not answered for his alleged crimes.

Former CFO Ben la Grange and former legal head Stehan Grobler are still on the hook, with legal proceedings ongoing.

Read: Ex-Steinhoff CEO Markus Jooste dead: report