Steinhoff advisory fees soar as accounting scandal lingers

Steinhoff, a former Johannesburg stock market darling, continues to experience fall-out from the accounting scandal unearthed in 2017. The company has teetered perilously close to collapse since then, requiring help from creditors for survival. More than two years after former Steinhoff CEO Markus Jooste walked away from the wreckage, the authorities have still failed to act with determination to bring corporate criminals to book for one of the biggest financial scandals to hit a Johannesburg-listed company. The share trades for less than R1/share. Before German authorities revealed they were probing accounting irregularities, Steinhoff was trading closer to R100/share. – Editor

Steinhoff fees jump in lingering accounting scandal fallout

By Janice Kew

(Bloomberg) — Steinhoff International Holdings NV’s annual advisory fees climbed 35% last year, pushed by costs related to a deal the retailer reached with creditors to skip debt repayments.

Steinhoff’s shares collapsed in late 2017 when the owner of Conforama in France and Pep stores in Europe and Africa became engulfed in an accounting scandal. Locked in a battle for survival, the South African company secured a long-awaited restructuring agreement in August covering about 9 billion euros ($10.1 billion) of debt.

That deal came with a cost. Creditor-advice payments accounted for about 40% of total advisory fees of 158 million euros, the company said Tuesday in its annual report for the year ended September. The Frankfurt-listed stock remains more than 98% lower than before the initial announcement of accounting irregularities.

“As in the previous financial year, the costs of these processes were substantial, and they had a significant impact on the reported results for the year,” Steinhoff said. “Every effort is being made to limit adviser costs and, with implementation of the financial restructuring now behind us, we expect the total to fall in the 2020 financial year.”

Even so, legal fees are expected to remain significant, Steinhoff said, due to lawsuits brought by those who lost out from the scandal. A plan by Steinhoff to reduce legal costs by combining some of its biggest individual claimants into one case was rejected in May.

Steinhoff has paid about 35 million euros related to an extensive probe conducted by forensic auditors at PwC. The company hasn’t publicly released those findings. Steinhoff is now paying for them to help South African anti-corruption police investigate further.

The annual report was the first audited by Mazars LLP’s Netherlands unit after Steinhoff replaced Deloitte LLP in November.

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