Germany charges ex-Steinhoff managers with balance sheet fraud
BERLIN - German prosecutors have filed charges against three former managers at South African retailer Steinhoff for balance sheet fraud, three years after the company first revealed holes in its accounts.
The Oldenburg prosecutor’s office said on Thursday it had
filed charges against the trio for allegedly manipulating the balance sheet by
including fictitious transactions worth more than 1.5 billion euros ($1.8
billion).
The managers, who were not named, are also accused of
over-valuing real estate by 820 million euros, investigators said.
The German regional court must now decide whether to open
proceedings against the managers. Balance sheet manipulation is punishable by
up to three years in prison.
Steinhoff, which has its operational headquarters in
Stellenbosch near Cape Town in South Africa and traces its roots to Westerstede
near Bremen in Germany, declined to comment.
Steinhoff first disclosed the hole in its accounts in
December 2017, shocking investors who had backed its reinvention from a small
South African outfit to a multinational retailer at the vanguard of the
European discount furniture retail industry.
In the country’s biggest corporate scandal, an investigation
carried out by PwC found in 2019 that the firm recorded fictitious or irregular
transactions totalling 6.5 billion euros between its 2009 and 2017 financial
years.
The PwC investigators found a small group of former
Steinhoff executives and individuals from outside the company, implemented the
deals, which substantially inflated the group’s profit and asset values.
The retailer, whose budget furniture, clothes and homeware
businesses span four continents, is now focused on lowering its nearly 10
billion-euro debt by selling assets and parts of its core businesses, like a
potential listing of Pepco Group in Europe.
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