RESERVE BANK HAS BLOCKED R5.52BN OF STEINHOFF FUNDS

The South African Reserve Bank (SARB) has declined to comment on whether it froze funds in five accounts connected to troubled company Steinhoff’s local operations. The Daily Maverick, an online publication, reported that the central bank had frozen approximately R5.5 billion of Steinhoff’s funds.

Steinhoff, which owns stakes in various companies including Pepkor and Pepco, as well as Mattress Firm and Greenlit brands, is facing significant financial difficulties due to accounting fraud allegations. In its latest financial statements, Steinhoff did not explicitly disclose that its accounts had been frozen by the central bank. The company mentioned that certain accounts holding €285.6 million (R5.52 billion) were subject to SARB approval for withdrawals. The details of any conditions for withdrawal approval and the timeline are unknown to the company.

Steinhoff’s troubles began in 2017 when it was embroiled in a major accounting fraud scandal, resulting in criminal charges against its former CEO, Markus Jooste, and other executives. The SA Reserve Bank had previously published an order showing that Jooste and other individuals were suspected of violating foreign exchange regulations, and the bank was in the process of seizing Jooste’s assets. While the National Prosecuting Authority has not made any official announcements regarding Jooste, a German court has issued an arrest warrant for him.

The investigation into Steinhoff’s financial misconduct involves both South African and German authorities. The recent court ruling in the Western Cape High Court dismissed an application by Berdine Odendaal, reportedly Jooste’s girlfriend, seeking the release of R150,000 per month from frozen funds and coverage of her legal expenses. The court found no grounds to grant her request for fund release.

Meanwhile, the group has been struggling with debt and faces a credit default and possible liquidation after its shareholders recently voted against a crucial restructuring plan. The retailer owes its creditors €10bn (about R200bn), and cannot pay it. The group might move to delist.