BERLIN (Reuters) – German prosecutors have filed charges against three former managers at South African retailer Steinhoff for balance sheet fraud, three years after the company first revealed holes in its accounts.
The Oldenburg prosecutor’s office said on Thursday that it had filed charges against the three for allegedly manipulating the balance sheet to include fictitious transactions worth more than 1.5 billion euros ($ 1.8 billion).
The managers, who were not named, were also accused of overvaluing real estate at 820 million euros, investigators said.
Germany’s regional courts must now decide whether to open legal proceedings against managers. Balance sheet manipulation is punishable by up to three years in prison.
Steinhoff, who has operational headquarters in Stellenbosch near Cape Town in South Africa and traces its roots to Westerstede near Bremen in Germany, declined to comment.
Steinhoff first exposed the hole in his account in December 2017, surprising investors who had supported his reinvention from a small South African company to a multinational retailer in the vanguard of Europe’s discount furniture retail industry.
In the country’s largest corporate scandal, an investigation by PwC found in 2019 that the company recorded fictitious or irregular transactions totaling 6.5 billion euros between the 2009 and 2017 financial years.
PwC investigators found a small group of former Steinhoff executives and individuals from outside the company, who implemented the deals, which substantially increased the value of the group’s profits and assets.
The retailer, whose budgeted furniture, clothing and home appliances business spans four continents, is now focused on reducing debt by nearly 10 billion euros by selling off assets and part of its core business, such as the Pepco Group’s potential European listing.
($ 1 = 0.8312 euros)
Reporting by Jan Schwarz, Alexander Huebner and Nqobile Dludla. Written by Caroline Copley. Edited by Emma Thomasson and Mark Potter