NEWS
20/04/2018 04:43 SAST | Updated 20/04/2018 10:33 SAST

Steinhoff Board 'Detached From Reality' As Company Heads To AGM

"The company might have been 'squeezed by Dutch law' to go ahead with the AGM."

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Embattled company Steinhoff is due to have its AGM, and Wits University School of Economic and Business Sciences head Jannie Rossouw says it is important for the company to find measures to overcome its problems.

"The previous Steinhoff board must understand the damage that they have done," Rossouw said.

He also highlighted that it was "abnormal" that the meeting was going ahead without the company's latest financials. According to the financial expert, the company might have been "squeezed by Dutch law" to go ahead with the AGM.

"Remember, they are now registered in terms of Dutch law as a public company," Rossouw told HuffPost on Thursday afternoon.

He said in order for the company to move forward, "financial statements must be issued expeditiously so that a value can be placed on the company, and there must be a clear plan on how the company is moving".

The company made headlines when allegations of financial mismanagement surfaced last year, which led to a decline in its share price and the resignation of CEO Marcus Jooste.

When the scandal came to light, the board resolved to suspend the release of financial statements for the 12 months ended September 2017.

Regulation demands that financial statement of listed companies be released within three months of the financial year-end.

The problem is the financial statements of previous years have now also been withdrawn, so there is nothing shareholders can use to get a true value of the company. That is at the heart of the problem.

Rossouw explained that the real value of Steinhoff will only be able to be determined once the financials are out.

"We will only be able to know the true value of the shares once we have financial statements. The problem is the financial statements of previous years have now also been withdrawn, so there is nothing shareholders can use to get a true value of the company. That is at the heart of the problem."

He said the meeting will include a presentation on the state of the company followed by a question-and-answer session.

Johan van Zyl resigned from the supervisory board of Steinhoff just two days before the AGM – Rossouw believes this was long overdue.

"Dr van Zyl should have resigned a long time ago, because the crisis at Steinhoff happened under [the board's] watch," he said. "Clearly they did not discharge their oversight as board members properly. I do not know what they were paid for at the time – you might remember that the board is always responsible for the financial statements of the company."

He also mentioned the proposal that was supposed to be on the AGM agenda – that board members be remunerated for extra work done during the debacle.

"This is outrageous, and it shows how detached these individuals are from reality."

READ: Steinhoff: Your Pension Isn't Always Safe

What's worse, according to Rossouw, is that the company has not revealed the person or group responsible for this request.

"That is completely outrageous – keeping that information from shareholders," he said.

Internal reviews of the accounting irregularities by Steinhoff's management team and the Pricewaterhouse Coopers (PwC) investigation are progressing, although the timeline for completion remains uncertain.