PwC investigation finds $7.4 billion accounting fraud at Steinhoff, company says By Reuters

© Reuters.

© Reuters. PwC investigation finds $7.4 billion accounting fraud at Steinhoff, company says

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JOHANNESBURG (Reuters) – South African retailer Steinhoff said an independent report found it had overstated profits over several years in a 6.5 billion euro ($7.4 billion) accounting fraud involving a small group of top executives and outsiders.

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 the firm recorded fictitious or irregular transactions totaling 6.5 billion euros over a period covering the 2009 and 2017 financial years, according to a summary of the findings posted on the Steinhoff company website.

Investigators found that a small group of former Steinhoff executives and individuals from outside the company, led by an identified “senior management executive” implemented the deals, which substantially inflated the group’s profit and asset values, the summary said.

It did not name the individuals.

Two Steinhoff representatives did not immediately respond to telephone calls and text message requests seeking comment.

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