N$700m pensioners money at risk

LAZARUS AMUKESHETHE Government Institutions Pension Fund is suing the South African company, Steinhoff Holdings International, for possible losses of around N$700 million invested in the company since 2014.

Steinhoff Holdings International is a global retailer with more than 40 brands in over 30 countries.

Some of Steinhoff’s outlets are Incredible Connection, Hifi Corp, Hertz Car Rental, Timbercity, Pep Stores, Dunns, Shoe City, Pennypinchers, Tekkie Town and Ackermans, among many others.

The company was hit by a N$100 billion fraud that wiped out about N$15 billion of South African government workers’ pensions and social savings.

GIPF invested N$400 million in Steinhoff in 2014, which according to chief executive David Nuyoma, had grown to N$700 million when the fraud was uncovered.

Although Nuyoma said GIPF’s exposure was minimal and would not strongly affect their financial position, he insisted they would sue to recover whatever was lost. Nuyoma did not say how much GIPF had lost.

“It is important to note that Steinhoff is not among GIPF’s top 20 holdings and thus its exposure is much smaller to the total fund. The total shareholding is less than 1% of the Steinhoff market cap,” he said.

Nuyoma said there is no need to sell their shares in Steinhoff now since the company was “currently operating and trading”.

“Thus, GIPF has not sold their shares. Steinhoff as a business is still profitable and prominent, and successful companies such as Pepkor are still operating,” he said.

Nuyoma also said GIPF is teaming up with other affected companies to sue Steinhoff to recover a portion of their losses.

“GIPF is participating in the class action (which implies collectively suing Steinhof for any losses that may be realised) known as the BarentsKrans by various creditors. Any recovery will only be determined once the process has run its course,” he said.

It is not clear how much GIPF has received as dividends from Steinhoff shares since 2014.

The Namibian reported in 2017 that many pension and long-term insurance funds that had invested in Steinhoff and related entities were exposed.

Economist and co-founder of Cirrus Capital, Rowland Brown, told The Namibian at the time that Steinhoff’s collapse would affect Namibia.

“Unfortunately, Namibia will be exposed to this collapse, as many pension and long-term insurance funds, as well as discretionary investors, will have had sizeable exposure to the company and related companies (that also have experienced declines as a result of the Steinhoff fallout),” he said.

A report released by PricewaterhouseCoopers (PwC) said two weeks ago some company directors fabricated transactions worth more than N$100 billion.

Former Steinhoff chief executive Markus Jooste and a clique of executives reportedly entered into a series of illegal transactions that included the creation of false assets and incomes that pushed up the company’s profits and asset value between 2009 and 2017.

Profits and asset values are among other factors that can influence share prices and investors confidence in a company.

Jooste is painted in the South African media as the kingpin behind Steinhoff’s dodgy dealings.

A 2018 investigation by South Africa’s centre for investigative journalism, amaBhungane and Financial Mail found that Jooste held secret stakes in companies that traded with Steinhoff for years to Jooste’s covert benefit. These deals’ true beneficiaries, according to that report, were hidden from investors.

“This new evidence suggests Jooste (57) used Steinhoff to secretly enrich himself and Bruno Steinhoff’s family at the expense of shareholders, who were none the wiser about this “self-dealing,” the investigative story said.

PwC is conducting the second phase of investigations, which Steinhoff said could reveal more information about the fraud at the company.

Analysts said Steinhoff’s recovery would be difficult if more financial foul play is identified.

Steinhoff is under investigation in South Africa, the Netherlands and Germany over corruption, tax evasion and violation of commercial laws.

The company has been selling off non-core assets including its stake in wealth management and financial services firm PSG, that raised about N$7,1 billion for a firmer financial standing.

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