The Government Employees Pension Fund (GEPF) and the Public Investment Corporation (PIC) insist that they form part of the board committee investigating Steinhoff International.
Steinhoff last week announced that its CEO Markus Jooste has stepped down amid allegations of financial irregularities.
“Now, more than ever, the Steinhoff matter makes a case for the need to rotate auditors and long-serving board members in investee companies - an issue that the PIC has continuously raised,” the PIC stated.
The parties added that it would ensure that the investigation process was transparent and that the terms of reference address critical governance issues.
Meanwhile, the GEPF said its members’ benefits would not be changed by these developments, given that the GEPF is a defined benefit pension fund, adding that the investment loss recorded as a result of the Steinhoff fall-out was only 0.6% of the total GEPF portfolio.
The total GEPF equity portfolio had created a value of R140-billion over the preceding 12-month period, and had performed better than the equity benchmark, it said.
However, the parties said albeit a relatively small reduction in the total portfolio, and despite the signs of recovery in the Steinhoff share price this week, they remained deeply concerned about developments at Steinhoff.
“We agree that the recent developments point to serious governance challenges at Steinhoff,” the parties noted, adding that they would insist on the appointment of at least two independent nonexecutive directors on the Steinhoff and Steinhoff Africa Retail boards.
GEPF and PIC further said the lack of independence of the board, including the possible conflict of interest as a result of Dr Christo Wiese’s appointment as interim CEO, was concerning.
“The material shareholding of the Steinhoff and Wiese families are perceived to create the dominance of controlling shareholder representatives on the board and, as a result, potential conflicts of interest,” it highlighted.
The PIC has also raised concerns about the absence of a clear assessment of the risks introduced by the Steinhoff group’s acquisitive strategy as the company has become progressively more complex.