Steinhoff tanks 57% as CEO leaves amid accounting probe

A Steinhoff International Holdings NV logo sits on display outside the company's offices in Stellenbosch South Africa on Wednesday Aug. 17 2016. Acquisitions including Pepkor Holdings Pty Ltd. and French furniture chain Conforama France SA have

Steinhoff shares have crashed after the firm revealed accounting irregularities and its CEO quit, shocking investors who had backed its rapid expansion from a South African furniture chain into a global retail empire.

The board has appointed Steinhoff's chairman, the South African retail billionaire Christo Wiese, as executive chairman on an interim basis following Mr Jooste's departure.

Steinhoff said the discovery of "new information" prompted the firm to draft in PwC to perform an "independent investigation". Steinhoff's Markus Jooste has stood down after nearly 20 years in the job.

The group said in a stock exchange announcement: "Steinhoff will update the market as the aforesaid investigation proceeds".

It said that Wiese and the board will supplement the management team and will embark on a detailed review of all aspects of the company's business with a view to maximizing shareholder value.

After initially falling 60 per cent to a seven year low, the shares in Steinhoff, which owns 40 local brands in more than 30 countries, later recovered but were still down 52%. Shares in Frankfurt were down 58 percent. That report said Jooste is among employees being investigated by German prosecutors in a 2015 case linked to possible accounting fraud.

Jürgen Kolb, an analyst with Kepler Cheuvreux said in a note recently that Steinhoff's tax rate was "very unusual" and that any risk to the rate in future could hit the company's cashflow.

It is being reported Steinhoff did not tell investors about transactions amounting to almost $1 billion (R13,5-billion).

It is not now clear what "accounting irregularities" the company is referring to in its statement. A spokesman declined further comment and attempts to contact Jooste were not successful.

"In light of these developments at Steinhoff, STAR's existing CEO, Ben la Grange has made a decision to step down as CEO of STAR", the company said in a statement.

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