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Steinhoff Seeks Fresh Start, Nominates New Auditor

Janice Kew

(Bloomberg) -- Steinhoff International Holdings NV nominated Mazars LLP’s Netherlands unit as its new group auditor as the South African retailer looks to make a fresh start after it was almost destroyed by an accounting scandal.

Mazars accepted an offer to replace Deloitte LLP, Steinhoff’s board said at its annual general meeting in an Amsterdam hotel on Friday. Shareholders will able to vote on the proposal at a later date.

Deloitte’s refusal to sign off on Steinhoff’s financials for the year through September 2017 ultimately brought to light a web of inflated asset values and dubious third-party transactions that caused the share price to collapse. However, it later emerged that the firm had signed off on audits from previous years that were similarly flawed, and Deloitte is being investigated by accounting regulators.

Shareholders present at the meeting were quick to question how Steinhoff had come to select Mazars and whether the firm is up to the task. While Deloitte has reviewed and restated earnings for 2017 and 2018 after months of work, little more than 50% of investors voted to approve the results, with many abstaining.

“We hadn’t expected this surprising announcement of the selection of Mazars as the statutory auditors for the coming year,” Armand Kersten, head of European relations at Vereniging van Effectenbezitters, the Dutch firm leading a class-action lawsuit against Steinhoff in the Netherlands, said at the meeting. “I would really like to hear who the other firm is that was also in the running and why the particular choice has been made for this audit firm.” He also said that when shareholders vote on the appointment of the auditor, he believes they must be given at least two choices.

The Dutch Mazars audit team will work closely with colleagues in the U.K., South Africa and France and where possible, in other countries where Steinhoff operates, Steinhoff’s head of the audit and risk committee, Steve Booysen, said. Through a temporary agreement, until the shareholders can vote, Mazars has already started working on the accounts.

“The management board and supervisory board are not only very pleased with the nomination, but are also grateful to Mazars for being willing to accept engagement as our auditor under our present circumstances,” Booysen said.

VEB also urged Steinhoff’s management, led by Chief Executive Officer Louis du Preez and Chairwoman Heather Sonn, to release the full version of a forensic report by PwC into the financial transactions behind the crisis.

The executives reiterated that the results of the probe could not be released due to ongoing legal action against the company. Equally, publication may jeopardize Steinhoff’s claims against former managers, company officials said, including ex-CEO Markus Jooste.

(Updates with investor group comments from fifth paragraph.)

To contact the reporter on this story: Janice Kew in Johannesburg at jkew4@bloomberg.net

To contact the editors responsible for this story: Eric Pfanner at epfanner1@bloomberg.net, James Amott

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