Steinhoff: Releasing probe into accounting fraud would undermine case against Jooste, others
www.news24.com/fin24/Companies/...inst-jooste-others-20220131
Steinhoff has argued that granting the media access to a 3 000-page forensic probe into accounting fraud would likely undermine future court cases against implicated ex-executives, such as its former CEO Markus Jooste.
Investigative journalism outfit amaBhungane and media house Tiso Blackstar* (now known as Arena Holdings) want a court to compel Steinhoff to hand over the report. Steinhoff previously rejected an application by the two groups to access the report via freedom of information legislation.
While Tiso Blackstar and amaBhungane argued on Monday in the Western Cape High Court that there was "overwhelming" public interest in releasing the full probe, Steinhoff said its release would compromise ongoing legal challenges to get former executives to pay back funds.
What is the PwC report?
Steinhoff engaged PricewaterhouseCoopers (PwC) in December 2017 to conduct an independent forensic investigation into what was at the time described as "accounting irregularities". This came shortly after Jooste resigned as CEO, plunging the group's share price to an all-time low and causing an acute liquidity crunch.
The report, which covers 3 000 pages with some 4 000 documents as annexes, was handed over to Steinhoff management in early 2019. An 11-page overview was shared with the media in mid-March that year. The overview stated that a "small group" of former Steinhoff executives had inflated the group's profit and asset values by roughly R100 billion over eight years.
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While the report has been shared with the Hawks, Steinhoff has consistently dismissed attempts to access it by the media or the public, including rejecting a bid by Jooste himself.
On Monday, advocate Geoff Budlender, for Tiso Blackstar and amaBhungane, argued the report was not subject to litigation privilege, as it had not been "created with litigation as its dominant purpose".
Even if the court found the report had been subject to legal privilege at some point, he said, this had been been nullified by the publication of the 11-page overview in 2019. By not releasing the full report Steinhoff could in effect, "cherry-pick" which parts of it to release to the public, who would be none the wiser, he said.
Budlender added it was in clearly the public interest to share the report.
"Virtually every pensioner has been affected by this. It is hard to imagine a better example of public interest."
The litigation defence
André Smalberger, for Steinhoff, told the court that Steinhoff was chiefly relying on what is know as litigation privilege. This legal concept protects communications between clients and attorneys for the express purpose of litigation. He said the retailer had, from the outset, intended the report to underpin its future litigation efforts.
Smalberger also denied it would be in the public interest to have the report released. "We submit there is a very good chance it would undermine our litigation, which is ongoing, [which] would not be in the interest of the company."
Steinhoff has launched so-called "clawback" proceedings against at least two former executives, including Jooste. Jooste, who has denied wrongdoing, is fighting the application, which has not yet been heard in court.
Dario Milo, an attorney for amaBhungane and Financial Mail, told Fin24 on Monday afternoon that the case was a "critical" for the transparency of documents in the hands of private bodies which are of public interest.
"No-one can doubt the public interest in knowing the detail of what went wrong at Steinhoff – and the PwC report will reveal that detail."
Judge Lister Nuku reserved judgement.