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Former Steinhoff CEO Markus Jooste.
Analysts say the recent settlement of the Steinhoff matter is a crucial step closer to remediation for the beleaguered company. This comes as the South African Reserve Bank (SARB) has officially “put the Steinhoff matter to bed” through a comprehensive settlement amounting to R6.3 billion, including interest.
The settlement follows years of extensive and highly complex investigations into the affairs of Steinhoff by the Reserve Bank (SARB).
Unpacking Steinhoff scandal:Dec 8, 2017
In a statement, SARB says it considers the settlement “reasonable, proportionate and justifiable” in light of the intricate and often competing interests involved in this protracted case. The settlement was reached with Ibex Group, the successor to Steinhoff.
In 2017, accounting irregularities were discovered at the Steinhoff Group. Shortly after that, the group’s share price tumbled on both the Frankfurt and Johannesburg stock exchanges, eroding approximately 90% of the company’s market capitalisation.
This ultimately led to the Steinhoff Group’s external debt owed to its financial creditors exceeding R155 billion at the time. In a statement, the South African Reserve Bank adds that the crisis threatened Steinhoff Group’s continued existence and risked consequences, including forced asset sales, significant losses to South African and foreign financial institutions and investors, and extensive job losses in South Africa and abroad.
It also risked South Africa’s reputation as one of the most robust and well-regulated financial markets in the world.
Rand Swiss Portfolio Manager, Viv Govender says the settlement amount will go to the state in a lump sum.
“About R6.3 billion plus interest was seized by the SARB. The state is going to take that pretty much in a lump sum payment and allow Ibex Group which is basically the company that’s involved in this whole situation with regards to cleaning up the mess that was Steinhoff, to fulfil the obligations it has internationally and pay off the people who need to be paid off.”
Aluwani Capital, Head of Multi Asset Strategies, Patrick Mathidi says the settlement is just a step closer to the end of the Steinhoff matter.
“If you look at the severity of the scale, you know of this financial fraud, not that many people have been held to account. Maybe a handful of people have actually been sitting in jail.
Most importantly, those who actually have suffered the losses have yet to get any remediation or compensation. So far, I would say this settlement takes us a step closer.”
In a statement, the Reserve Bank says this final settlement is in the best interests of South Africa.
