Corporate scandal threatens S. African pension system

CAPE TOWN, Dec. 11 (Xinhua) -- A corporate scandal, believed to be the largest in South Africa's history, is expected to wipe off billions of rand from South African's pension funds, South African Parliament said on Monday.

Members of the Government Employees Pension Fund (GEPF) could lose about 12.5 billion rand (about 919 million U.S. dollars) in investments due to the scandal involving Steinhoff International Holdings N.V., a South Africa-based furniture and clothing retailer, according to Parliament's Portfolio Committee on Public Service and Administration (PCPSA).

Steinhoff's shares collapsed last week following the exposure of accounting irregularities.

The fallout that started on Wednesday has wiped off over 160 billion rand of Steinhoff's market capitalization.

Steinhoff CEO Markus Jooste has resigned over the scandal.

Steinhoff is included in the Top 40 share listing on the Johannesburg Stock Exchange (JSE) and is one of the 15 biggest companies on the exchange.

Steinhoff's meltdown has sparked fears of huge impact on pension funds and unit trusts that have invested heavily in the company, seen as a star performer. The scandal is the largest ever experienced by the JSE.

Lenders and other creditors have billions of dollars exposed to the company, which has expanded aggressively around the world.

"This is a sad state of affairs when it involves years of pension savings of public servants," the PCPSA said.

This can lead to instability within the public service, and would impact negatively on service delivery on important government programs and projects, PCPSA Chairperson Cassel Mathale warned.

The PCASA calls upon all regulatory authorities and the criminal justice system to investigate this matter and come up with truth, Mathale said.

"This would allay fears among public servants and all concerned, as well as prove that the public service is an entity of integrity," he said.

An investigation by international consulting firm PricewaterhouseCoopers (PcW) is underway to uncover details behind the scandal that has led to an 84-percent share-price plunge in three days.

The JSE has also launched an investigation into whether Steinhoff had breached its listing rules, including "previous financial disclosures made to the public" before the announcement of accounting regularities.

Also on Monday, the ruling African National Congress (ANC) said corporate corruption is set to come under scrutiny during the party's national conference this weekend. Enditem