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Fedusa Meets PIC over Steinhoff Scandal

The Federation of Unions of South Africa (FEDUSA) and its public sector affiliates the PSA; SAOU, NAPTOSA, HOSPERSA and SAPTU met with the Public Investment Corporation (PIC) Chief Executive Officer Dr Dan Matjila and his advisors to discuss the alleged massive corruption, fraud and gross negligence concerning the accounting irregularities at Steinhoff, which has a primary listed in Frankfurt and secondary listed on the JSE.

FEDUSA is concerned about the Government Employee Pension Fund (GEPF) members and pensioners and what financial impact this alleged corporate scandal at Steinhoff would have on the fund. The Federation would like to assure GEPF members and pensioners that their funds are fully protected based on the fact that the GEPF is a defined benefit fund. Market fluctuations do not affect the quantum of pension benefits, and therefore public servants can be reassured about the security of their funds.

It is unclear what the PIC’s losses are, with estimates ranging from R10-billion to R15-billion. Steinhoff, has been battling to shake off allegations of accounting fraud and corruption after news broke that German authorities were investigating the company.

FEDUSA and its affiliates are concerned about the level of corruption, fraud and the lack of ethical corporate governance in our listed companies generally and the negative impact this has on the broader economy, job creation and in this instance, the 120 000 employees of Steinhoff.

In a move to spin off their Africa assets in Steinhoff, the PIC was involved in a separate JSE listing of STAR AFRICA RETAILERS (STAR) which owns brands such as Pepkor, Ackermans, Dunns,JD Group and Hi-fi Corp. STAR has not suffered the same extent of share price decline as Steinhoff. The majority of the 120 000 Steinhoff employees sit under the Star listing as opposed to Steinhoff International. This provides a certain level of comfort for job protection in South Africa. FEDUSA and its affiliates need to satisfy themselves that these jobs are protected.


The outcomes of the meeting with the PIC suggested that the Steinhoff board of directors is ultimately responsible for the gross lapses in corporate governance and that adequate steps need to be taken to address these concerns. As fraud and corruption are still alleged, it is prudent to analyse the outcomes of independent forensic investigations currently underway at Steinhoff by Price WaterHouse Coopers (PWC) on various practices, including rampant equity/debt issuances on the back of false accounting records.

The meeting with the PIC today suggested as the first course of action would be to investigate the eligibility of the entire board of directors as fit and proper persons. This is also exacerbated by the retention of the Chief Financial Officer, Ben La Garnge, who has not offered his resignation following that of disgraced CEO, Marcus Jooste.

The meeting also suggested that a completely independent investigative commission be appointed. The PIC has been vocal about transformation and board representations of some of its listed investments. Prior to the successful listing of STAR, the PIC had appointed a board member to sit on the board of Steinhoff. Transformation remains an important key stone of the PICs investment philosophy and FEDUSA and its affiliates echoed the call for there to be at least one worker elected board member to drive further governance.

FEDUSA and its affiliates have also made calls for the investigations to be conducted by South African regulatory and oversight bodies, as well as the international regulatory bodies with jurisdiction to Steinhoff’s dealings.

The meeting with the PIC covered the investment benchmark prescribed to them in the mandate set by the GEPF and the steps they take to adequately deliver the returns of the benchmark. The exposure to Steinhoff that the benchmark held had increased over the past few months and has adjusted accordingly given the share prices movement experienced in recent days.

As the future of Steinhoff is unclear at this point, the PIC continues to hold the shares as the benchmark prescribes. The PIC and FEDUSA expressed disappointment at the lack of auditor rotation at Steinhoff, an issue that the PIC has raised with management several times. The current auditors, Deloitte have held back on releasing the financial statements of Steinhoff.

FEDUSA and affiliates have joined hands with PIC and the GEPF to reassure members that the investment process at the PIC is sound and they will do all in their power to drive stronger and more transparent corporate governance in the listed investments.

FEDUSA calls on the JSE as the regulator to take more decisive action on Steinhoff. FEDUSA echoes the sentiment that Corruption is Corruption, Fraud is Fraud and Theft is Theft, and that the Law must prevail equally.


FEDUSA is the largest politically non-aligned trade union federation in South Africa and represents a diverse membership from a variety of sectors in industry. See for more information.

For interviews please contact:

Dennis George

FEDUSA General Secretary

084 805 1529


Chris Klopper

FEDUSA Vice President: Finance

083 708 7733


Basil Manuel

NAPTOSA Executive Director

079 508 6228