Making its way in the previous month to the top as South Africa’s biggest corporate scandal ever is the Steinhoff saga, a catalyst of an alleged accounting fraud probe by German investigators involving the value of international assets and revenue.
Compared to the Gupta-orchestrated state capture scandal that estimated losses to South Africa, the Steinhoff scandal holds far greater losses to the country, as South African civil servants whose pensions were invested through the Public Investment Corporation lost billions.
This crisis, has led to the near extinction of its entire market capitalization as the accounting scandal has taken $11.4 billion off the value of the global furniture and questioned the role of Steinhoff’s accountants Deloitte, who for years have signed off on their financial statements.
Disclosure of its accounting irregularities had also prompted a plunge in the share price of Frankfurt- and Johannesburg-listed Steinhoff, subsequently leading to the sells of the European Central Bank (ECB) bond of the company; a potential loss of over half of the bank’s investment.
Confronted by the choices of risking the conversion of its investment into shares or a possible further dwindle, the ECB decided to sell its bond having purchased Steinhoff’s debt.
Steinhoff’s bond was priced at meager 45 percent of the value issued last July, when it was purchased by the European Central Bank.