The encyclopedia · Finance & Accounting · Financial decision · 2017
Steinhoff inflated profits for years — then wrote off €15 billion and its CEO resigned
The South African retail conglomerate restated 2017 results after uncovering accounting irregularities stretching back to at least 2015.
Steinhoff International · 2017-12
What happened
Steinhoff International owned retail brands including Conforama, Mattress Firm, Poundland and Pepkor. In December 2017, it announced an investigation into accounting irregularities and CEO Markus Jooste resigned immediately.
PwC's investigation found a pattern of transactions with related parties that inflated profits and asset values. Steinhoff eventually restated its 2017 year-end results, cutting asset values by €15.3 billion and reporting a loss of nearly €4 billion. The share price collapsed by roughly 97%.
The scandal led to criminal charges against Jooste and others, civil litigation by shareholders and creditors, and a long debt restructuring. The case is one of the largest accounting frauds in South African corporate history and a cautionary tale about aggressive acquisition accounting.
Why it happened
- Steinhoff used off-balance-sheet related-party deals to inflate asset values and profits.
- CEO Markus Jooste fostered a culture where complex, opaque structures obscured the true financial position.
- The board and auditors failed to challenge transactions that were not at arm's length.
- Rapid expansion through acquisitions created a sprawling structure that made scrutiny difficult.
The lesson
When growth comes from acquisitions, the accounting for those deals must be as visible as the revenue they add — opaque related-party structures hide fraud.
Aftermath
Steinhoff underwent a long restructuring, delisted in 2023, and Markus Jooste died in 2024 while facing charges.
Sources
- Steinhoff announces investigation into accounting irregularities and resignation of CEO — SENS/Sharenet
- Steinhoff shares plummet after revised 2017 year-end results — CFO South Africa
- Fallen furniture giant Steinhoff writes off €12bn assets value — The National
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