Ben la Grange (pictured), Steinhoff’s former chief financial officer, was today (3 October) sentenced to 10 years’ imprisonment, with five years suspended for five years.
The suspension is conditional on his avoidance of fraud during this period and his co-operation as a witness for the State in future criminal cases involving directors, officers, and employees of the Steinhoff group.
La Grange was scheduled to appear in court tomorrow (October 4) alongside former Steinhoff director Stéhan Grobler (64) on charges of racketeering, three counts of fraud totalling R21 billion, manipulating financial statements, and failing to report fraudulent activities.
However, a joint press release from the National Prosecuting Authority (NPA) and the Directorate for Priority Crime Investigation (DPCI) disclosed that La Grange has entered a plea and sentence agreement with the State for one count of fraud exceeding R367 million, related to the manipulation of financial statements and the failure to report fraudulent activities. He has been convicted accordingly.
In August 2022, the JSE disqualified La Grange from acting as a company director for 10 years and fined him a total of R2m for breaching the exchange’s Listings Requirements for processing a handwritten invoice for €23.5m (about R376m at the time) handed to him by then chief executive Markus Jooste in 2016. The JSE found the invoice was bogus.
The JSE found that La Grange, who claimed he was not aware at the time that the invoice was false, should have made more of an effort to check whether it was genuine.
Read: JSE fines former Steinhoff CFO a total of R2 million
Steinhoff, a multinational holding company listed in Germany and South Africa, was officially liquidated on 13 October 2023. The company primarily held investments in the retail sector, focusing on furniture and household goods, and included a 43.8% stake in the Pepkor group.
In the statement, the NPA and DPCI state that from November to December 2016, Jooste and La Grange defrauded a Steinhoff subsidiary, Steinhoff At Work, the board of directors of Steinhoff Manufacturing and Steinhoff South Africa of more than R367m.
Jooste committed suicide on 21 March. The day prior, Jooste and Grobler were officially notified to present themselves to the DPCI in Pretoria on the following Friday morning.
According to the two legal entities, on the instruction of Jooste, La Grange created documentation of transactions that supported the fraudulent transactions used to inflate and falsify the annual financial statements of the Steinhoff Group for the 2016 financial year.
Read: How the Steinhoff Group propped up its profits
The NPA’s first indictment presented in the Steinhoff case in the Pretoria Specialised Commercial Crimes Court on 26 June during their court appearance details how Grobler and La Grange were generously paid to manipulate the financial statements of Steinhoff International Holdings Limited (SIH) and Steinhoff International Holdings NV (SINV).
Read: Steinhoff former execs accused of reaping hundreds of millions through ‘fraudulent efforts’
In the indictment, the NPA describes how the Steinhoff Group falsified profits through two elaborate schemes: the TG Group fraud and the BNP Paribas commission transactions. Together, the schemes allegedly generated more than R20.7bn in fake profits from 2014 to 2016.
The NPA claims the TG Group fraud aimed to inflate the Steinhoff Group’s financial position and profits by treating loans as assets and fictitious payments as revenue, without corresponding costs. The BNP Paribas commission transactions, like the TG Group fraud, were fraudulent transactions processed through SIH’s accounting systems.
Read: How the Steinhoff Group propped up its profits
This is the second conviction in South Africa in connection with the Steinhoff saga.
Read: First Steinhoff conviction: insider trader avoids jail but must testify against accomplices
Last week, the Specialised Commercial Crimes Court in Pretoria sentenced Dr Gerhardus Diedricks Burger (79) to five years in prison, suspended for five years.
As part of his role within Steinhoff, Burger accompanied company directors on international trips to oversee their health.
Burger pleaded guilty to three counts of insider trading and was convicted of the same.
The suspension is conditional on his not being convicted of violating section 78(2) of the Financial Markets Act during this period. Additionally, Burger is required to testify in the criminal proceedings against his accomplices.
Grobler is set to appear in court tomorrow (4 October).
How will the non-executive directors be impacted in relation to their oversight role?