Steinhoff scandal shows need for more activist shareholding, says JSE CEO
Speaking at Davos, Nicky Newton-King says that, ‘particularly’ in cases with charismatic leaders, ‘there is a need for more vigorous oversight by boards’
26 JANUARY 2018 - 11:36
An accounting scandal involving retailer Steinhoff has highlighted the need for more activist shareholding and more vigorous oversight by boards, the CEO of the JSE said on Friday.
Steinhoff, which owns more than 40 brands including Poundland in Britain and Mattress Firm in the US, admitted "accounting irregularities" last month. This prompted an 85% share price slide that wiped more than $10bn off the value of a company listed in both Johannesburg and Frankfurt.
"There is definitely a recognition of a need for more activist shareholding," said Nicky Newton-King, the JSE’s CEO, speaking on the sidelines of the World Economic Forum (WEF) in Davos.
"There is a recognition that, particularly in cases where you have very charismatic leaders, there is a need for more vigorous oversight by boards," she added.
Steinhoff’s top two executives have resigned, as well as its chairperson, and the group is currently being run by an acting CEO.
The company is battling a liquidity shortfall following the accounting problems. On Monday it sold a stake in investment firm PSG Group for R7.1bn ($600m), after securing €60m ($75m) from South African lenders the previous week.
"It is not a uniquely South African issue, but it is incredibly disappointing for this to have happened in an environment that we are so proud of," said Newton-King.
Despite the problems at Steinhoff, Newton-King said the "South African narrative is definitely feeling on the up", after Cyril Ramaphosa narrowly won the race to succeed President Jacob Zuma as head of the ruling ANC.
"I would think that in a more positive environment, certainly one in which people are wanting to raise capital for long term investment, both the number of initial public offerings (IPOs) and capital raised will trend in a positive direction," she said.
During his ANC leadership election campaign, Ramaphosa — a former trade union leader and one of the country’s wealthiest businessmen — vowed to address record unemployment and a sluggish economy.
Markets have rallied since Ramaphosa’s victory as he says SA wants to attract foreign investors to help kick-start economic growth. He has also promised to crack down on corruption. SA’s Reserve Bank governor, also speaking in Davos, said Ramaphosa’s appointment had removed political uncertainty that contributed to the depreciation of the rand.
www.businesslive.co.za/bd/companies/...eholding-says-jse-ceo/
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