Steinhoff shares plunge 66% as CEO quits amid accounting scandal

  • Steinhoff shares plunge 66% as CEO quits amid accounting scandal

Steinhoff shares plunge 66% as CEO quits amid accounting scandal

Steinhoff International, the owner of US -based Mattress Firm, announced an investigation into "accounting irregularities" and the resignation of its CEO.

The Supervisory Board appointed its chairman, Dr. Christo Wiese, as executive chairman on an interim basis.

The Sandton, Johannesburg-based global home retailer also said that chief executive (CEO) Markus Jooste, had resigned with immediate effect and consultants PwC would undertake an "independent investigation".

"The company will publish the audited 2017 consolidated financial statements when it is in a position to do so". Steinhoff said at the time it was "fully committed" to support the probe.

The group said in a stock exchange announcement: "Steinhoff will update the market as the aforesaid investigation proceeds".

After initially falling 60 per cent to a seven year low, the shares in Steinhoff, which owns 40 local brands in more than 30 countries, later recovered but were still down 52%. According to the news agency Reuters, investors are now concerned that Wiese may be forced to sell shares he bought a year ago with borrowed money, which would depress Steinhoff's stock further.

The FT approached Deloitte - which was appointed the company's external auditor in 2015 and audited its accounts in 2015 and 2016, according to Steinhoff's annual reports. The company has said that move related to whether revenues were booked properly, and whether taxable profit was correctly declared.

It is unclear what accounting irregularities the company was referring to in its statement on Tuesday. A spokesman declined further comment and attempts by Reuters to contact Jooste were not successful.

Steinhoff's average tax rate over the past five years has been only 12 percent, which is about half the headline corporate tax rate in its main markets and less than half the rates paid by listed competitors including France's Casino, Germany's Metro AG and South Africa's Woolworths.

The JSE's director of issuer regulation John Burke told Reuters the bourse was in talks with Steinhoff to get answers on the investigation of possible accounting irregularities.