Ibex, formerly Steinhoff, has dropped its legal challenge to the forfeiture of more than R6bn to the state in a settlement that ended its long-running dispute with the SA Reserve Bank over infringements of the country’s exchange control rules.
The Bank on Thursday said it had reached a settlement with Ibex, which included the prohibition on Ibex to trade in Pepkor shares, ending the costly dispute.
“Pursuant to legal advice received and after careful consideration by the Reserve Bank, all the disputes between Ibex and the Bank were ultimately resolved in a comprehensive settlement,” the Bank said in a statement.
“In coming to the settlement agreement and fully and finally resolving the disputes between them, the Bank and Ibex considered the public interest, the Bank’s mandate of enforcing exchange control regulations, and the importance of enhancing investor confidence in SA and promoting regulatory certainty by allowing Ibex to settle its contractual obligations to its foreign financial creditors.”
Part of the settlement saw the Pretoria high court, after agreement between the warring parties, set aside the prohibition orders restricting Ibex’s ability to deal with certain of its shares in Africa’s largest retail group, Pepkor, which owns Pep and Ackermans among other brands.
Ibex wasted no time in trading in Pepkor shares after the settlement. The group this week exited 28% of its stake for about R28bn.
“Ibex has reduced its beneficial interest in the issued ordinary share capital of the company from 28.48% to 0.19% of the company’s issued ordinary share capital,” Pepkor, worth R100bn on the JSE, said in a regulatory filing on Wednesday.
The Public Investment Corporation on Thursday increased its stake in Pepkor to 15.46%. The Bank acknowledged the fraud perpetrated at Steinhoff risked significantly affecting SA’s reputation as one of the “most robust and well-regulated financial markets” in the world.
“Considering the long history of the Steinhoff-Ibex matter, the wider ramification of the continued dispute between the Reserve Bank and Ibex for investor appetite for future investments in SA, and the interests in finality, the Bank and Ibex consider this final settlement to be in the best interests of SA,” the Bank said.
A PwC report into the collapse of Steinhoff laid bare the fraud that took place at the highest levels of the group, with then CEO Markus Jooste fingered as the mastermind behind the multiyear fraud that duped investors.
PwC identified design deficiencies in and around the European consolidation in that “journals can be deleted and changed after having been posted”.
The PwC report was kept secret from 2019 until the Supreme Court of Appeal recently ordered its release to media houses that demanded it. The report shows the late journals (accounting adjustments from Europe operations), some made up of fictitious transactions, were at the heart of the deception and fraud.
For example, the Steinhoff Group in 2015 reported €1.2bn (R24.9bn) in profit before taxes. But as the PwC report shows, the real profit was €860m if late journals are discounted.
PwC noted late journals of €460m in the 2016 financial year and €760m the next year. The 2017 late journals raised the suspicion of the company’s auditors Deloitte, who in their presentation to the group’s then audit committee chair, raised concern about the “significant” effect of late transactions (accounting adjustments) in the group’s consolidated profit.
Less than two weeks later, Jooste resigned, opening a Pandora’s box that saw Steinhoff’s market capitalisation plunge more than R230bn in a matter of days.
The Bank has also seized about R60m in cash and properties from Berdine Odendaal, who is said to have been Jooste’s lover, for the money she allegedly received from Jooste in 2011-15.
Jooste took his own life last year on the eve of his arrest.
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