By Janice Kew
(Bloomberg) – An ex-Deloitte LLP partner is facing disciplinary action in the Netherlands for an improper audit of Steinhoff International Holdings NV prior to the South African retailerâs near-collapse more than three years ago.
The Dutch Authority for the Financial Markets accuses Patrick Seinstra of failing âto obtain sufficient and appropriate audit evidence from the annual accounts,â according to papers from the hearing.
Deloitte refused to sign off on Steinhoffâs accounts in late 2017, leading to the resignation of then Chief Executive Officer Markus Jooste and a share price slump. The firm had been auditing Steinhoff for years, initially in South Africa and then from Europe after the company moved its primary listing to Germany.
In the probe that followed the scandal, PwC uncovered âŹ6.5bn ($7.8bn) of irregular transactions between Steinhoff and eight firms between 2009 and 2017.
The AFMâs claims specifically relate to Steinhoff Europe, where the PwC forensic investigation showed a large part of the alleged fraud took place. The retailerâs European accounts were audited by Commerzial Treuhand GmbH, and the regulator says Seinstra failed to check the German firmâs submission was correct.
Commerzial Treuhand is not aware of any misconduct in its work, Managing Director Timo Cybucki said by email.
Seinstra submitted an âextensive statement of defenseâ in response to the AFMâs complaint. This focuses on Steinhoffâs background and the planning and design of the audit and the fraud, according to the AFM papers. Still, the AFM maintains that Seinstra âhas acted culpably under disciplinary actionâ.
The Auditorâs Chamber can impose measures ranging from a conditional fine to a cancellation of the accountantâs registration. Still, it canât issue an order for costs or decide compensation in the way a civil court judge can.
Deloitte Netherlands discovered irregularities at Steinhoff during the annual audit in 2017, âdespite the fact that the auditor was found to have been deliberately misled,â it said in an emailed response to questions. It then insisted on âan independent investigationâ that confirmed âthe complex management fraud.â
Deloitte has offered a contribution of âŹ77.9m toward Steinhoff legal settlements, without admitting liability and in exchange for certain waivers.
The AFM case was earlier reported by the Johannesburg-based Financial Mail.
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