Investigation launched into largest corporate scandal in S. Africa's history

CAPE TOWN, Dec. 12 (Xinhua) -- An investigation has been launched by the government into the largest corporate scandal in South Africa's history, it was announced on Tuesday.

The investigation will be led by the Department of Trade and Industry (DTI) and its affiliated organization the Companies and Intellectual Property Commission (CIPC), DTI spokesperson Sidwell Medupe said.

The DTI and CIPC have noted with great concern allegations of governance failures and financial irregularities at South African retailer Steinhoff, which led to the resignation of its Chief Executive Officer Markus Jooste, Medupe said.

The DTI and CIPC will investigate allegations related to non-compliance with the Companies Act and Regulations, said Medupe.

He said the DTI will suggest that the Independent Regulatory Board for Auditors (IRBA) also consider the circumstance with regard to the role of auditors in this instance.

Steinhoff International Holdings N.V. made headlines last week when its shares collapsed following the exposure of accounting irregularities.

The fallout, which started on Wednesday, has wiped off over 160 billion rand (about 11.7 billion U.S. dollars) of Steinhoff's market capitalization. Lenders and other creditors have billions of dollars exposed to the company, which has expanded aggressively around the world.

Steinhoff's meltdown has sparked fears of huge impact on pension funds and unit trusts which have invested heavily in the company.

The Government Employees Pension Fund (GEPF) could lose about 12.5 billion rand (about 919 million dollars) in investments due to the scandal, Parliament's Portfolio Committee on Public Service and Administration disclosed.

Also on Tuesday, the GEPF said it has taken note of the current concerns regarding possible lapses in governance at Steinhoff.

The GEPF assured its members, pensioners and beneficiaries that their pensions are safe.

As at March 31, 2017, the GEPF, through the Public Investment Corporation (PIC), owned about 28 billion rand (205 million dollars) in Steinhoff, which is about 10 percent of the shares of the company but 1 percent of the total assets of the Fund, the agency said in a statement.

"The impact of significant movement in the share price on the GEPF is significant but manageable," said the statement.

The GEPF is monitoring the situation while awaiting further information from investigations by domestic and international regulators, and law enforcement agencies to decide on an appropriate course of action, the statement said. Enditem