With several of its former executives facing criminal charges, Steinhoff, renamed Ibex, will have to hand over to Arena Holdings and the amaBhungane Centre for Investigative Journalism copies of the PwC report into the mass fraud that took place at the company and which brought it to its knees, costing investors billions of rand.
This after the Supreme Court of Appeal (SCA) on Wednesday confirmed the high court order that Ibex had no legal basis not to release the full report, which the company has kept under wraps since 2019, having only made a summary of the report public.
The release of the report to Arena, owner of Financial Mail and Business Day, and amaBhungane, should Ibex not appeal the SCA’s decision to the Constitutional Court, is likely to reveal the true extent of the fraud allegedly masterminded by former CEO Markus Jooste, who took his life earlier this year as law enforcement closed in on him.
The company has to date provided the public and investor community with just an 11-page “overview” of the PwC report, said to run into 4,000 pages and 3,000 pages of annexes.
One of the arguments advanced by Ibex before the SCA was the report’s annexes contain personal information or data of the people involved in, or who had knowledge of, the accounting irregularities.
Another leg of Steinhoff’s argument was litigation privilege, which attaches to communications between a litigant or its legal adviser and third parties if those communications were made for the legal adviser’s information for the purpose of pending or contemplated litigation.
The SCA found Steinhoff had waived the privilege that it now wants the court to assert by publishing the overview, arguing that by merely stating in the overview that the report was confidential does not invoke privilege.
“Given the nature, extent and purpose of the voluntary disclosure in the overview, Steinhoff’s submission that the overview is not a summary of the report, is untenable. The effect of the disclosure was, and was intended to be, a short, clear description of the accounting irregularities and the irregular transactions in which the wrongdoers had engaged, and their impact on the Steinhoff Group, as contained in the report,” the unanimous judgment reads.
“In my judgment, on the totality of the evidence, the inference must in fairness be drawn that Steinhoff impliedly waived privilege in relation to the report.”
“It would not only be unfair to allow Steinhoff to use part of the report while claiming privilege over the remainder of it; but also inconsistent with the confidence preserved by any privilege, since Steinhoff has voluntarily disclosed the gist or substance of PwC’s findings — the irregular transactions and their impact — the very reasons for the forensic investigation and the existence of the report.”
The SCA also found that the release of the report was in the public interest, overriding all other considerations.
“Billions of rand were wiped off the JSE and the pension funds of millions of ordinary South Africans suffered huge losses. Steinhoff was once regarded as one of the most successful companies in SA, with a strong commitment to corporate social responsibility. There is simply no basis to shield the report from public scrutiny.”
The SCA judgment comes as SA’s authorities ramp up the pressure on the characters behind the scandal.
The SA Reserve Bank in October seized more than R66m belonging to former Steinhoff executive Stephanus Grobler.
Grobler is facing criminal charges over the fraud that sank the company in what became SA’s largest corporate fraud case in history.
Grobler, who also uses the name Stéhan, was arrested a day after Jooste committed suicide in Hermanus nine months ago.
Steinhoff is demanding Grobler pay back nearly R300m he was paid in salaries, bonuses and other incentives.
Former Steinhoff CFO Ben la Grange was in October sentenced to 10 years in prison, five of which were suspended, after pleading guilty to one charge of fraud in the Steinhoff saga. He promised to testify against Grobler, who is set to appear again in court next year.
Jooste’s suicide came a day after Financial Sector Conduct Authority fined him R475m for misleading the market about furniture retailer Steinhoff in 2014-17 — monies it said it would pursue from his estate.
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