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Steinhoff’s former financial director has been sentenced to five years in prison, making him the highest-ranking executive ever convicted for his part in a €6.5 billion fraud at one of Europe’s largest furniture retailers.
Ben la Grange, who pleaded guilty on Thursday, was given a five-year suspended sentence in addition to the actual prison sentence. His sentence was mitigated because he had fully cooperated with South African authorities for years and “showed remorse,” prosecutors said.
The conviction of the former financial director was the second in the Steinhoff case in the past week and comes more than six months after Markus Jooste, the former CEO accused of masterminding the fraud, died by suicide.
The case sparked criticism in South Africa in the time it took to bring the perpetrators to justice. Steinhoff, which was listed in Frankfurt and Johannesburg, first admitted “accounting irregularities” in December 2017, which led to a fall in the price of 98 percent of its shares.
At its peak, the company was the largest furniture retailer in Europe after Ikea, with brands such as Pepco, Bensons for Beds, Poundland and Conforama.
PwC forensic investigators discovered in 2019 that Jooste masterminded the fraud by creating “fictitious and irregular” transactions that “substantially” inflated profits and asset values.
The former boss shot himself dead in the seaside town of Hermanus in March, a day after he and former company secretary Stephan Grobler were named as prime suspects and convicted on charges of fraud and insider trading.
In Jooste’s absence, prosecutors later added 50-year-old La Grange to the indictment, focusing on a handwritten invoice worth €23.5 million that Jooste gave him in November 2016.
The former CEO had told him that it was a “discount” that Steinhoff received from a company called the TG Group and La Grange organized for Steinhoff to process the invoice, increasing Steinhoff’s profits by the same amount. However, it was a “complete fabrication,” prosecutors said.
In his plea, La Grange said he knew this was “not a genuine invoice” and had resulted in Steinhoff’s accounts being “not truthful and correct in material respects”. He had previously said that he did not know the invoice was fake, but Jooste trusted.
Although La Grange is the highest-ranking executive to be convicted, he is not the first to be linked to the fraud and found guilty.
Two former Steinhoff Europe executives who helped Jooste create the paper trail for this fraud, Siegmar Schmidt and Dirk Schrieber, were prosecuted in Germany and received prison sentences this year.
La Grange’s conviction came a week after prosecutors secured their first South African conviction in the case. Gerhardus Burger, Steinhoff’s 79-year-old doctor and a friend of Jooste’s family, pleaded guilty last week to insider trading and received a suspended sentence of five years.
A week before the fraud came to light in 2017, he had received a message from Jooste warning him of “bad news” and advising him to sell the Steinhoff shares and delete the text message.
Christo Wiese, chairman of Steinhoff at the time of the collapse, told a local radio station last week that there will not be “full justice” in this case because the main culprit “will not be held accountable in a court of law.”
Jooste died without providing an explanation as to why he engineered a multi-jurisdictional fraud that not only put a spotlight on South African corporate governance, but also on how he managed to dupe accountants Deloitte into signing off on Steinhoff’s financial statements .
Deloitte ultimately paid a settlement of R1.3 billion (€67 million) to Steinhoff’s creditors, without admitting liability.