‘STEINHEIST’ AND MORE BOOK REVIEWS
STEINHEIST - MARKUS JOOSTE, STEINHOFF AND SA’S BIGGEST CORPORATE FRAUD
ROB ROSE Tafelberg Review: Alan Peter Simmonds
ALTHOUGH hard fact, Steinheist (Tafelberg) is a heart-stopping almost fictional-feeling account of a South African corporate financial disaster – in our time.
Author Rob Rose, an award-winning journalist who documented the infamous Tannenbaum scam 20 years ago, in a superb piece of investigative journalism exposes what happened to cause shares in Steinhoff International, duallisted on the Frankfurt and Johannesburg Stock Exchanges, to lose more than 85% of their value.
It’s House of Cards, South African style – an involved spider’s web spun by the corporate Mafia,
dolce vita living and fraudulent bookkeeping.
In December 2017, Stellenbosch-based but Holland-registered Steinhoff delayed its audited financial results, then told investors its already-published 2016 financials were unreliable.
By January 2018 this list had grown to include the parent company’s financial results for 2015 and 2016, and the financial statements of Steinhoff Investment Holdings – its umbrella company.
Rose, expertly tracing the birth and growth of the company, does not shirk from using names and details never before admitted or disclosed – a fantastic piece of work from the editor of the Financial Mail.
The global furniture and household goods company’s share price suffered a precipitous decline after its board announced chief executive Markus Jooste (paid R122million in salary and bonuses for 2017 and R5m for two months in 2018) had quit.
Jooste, referred by the company to a South African police unit, said he was unaware of accounting irregularities under his leadership. He quit, he said, because the board disagreed with his plan to find new auditors to sign-off on the annual figures,
Steinhoff’s board then announced more “accounting irregularities… required further investigation”; PricewaterhouseCoopers would probe; “irregularities” had been red-flagged by auditors Deloitte.
Steinhoff had been part of the JSE Top 40 index, the JSE Top 25 Industrial index and the JSE Socially Responsible Investment (SRI) index. Its shares, at R46.24 at close of trade on December 5, 2017, crashed to just R5.50 on January 3, 2018 – a loss of more than 85% of their value – and by May 11 down to R1.60. More than R200 billion was erased from the JSE; many pension schemes and private investors lost everything.
The SA Federation of Trade Unions has joined calls for the prosecution of Jooste after the Government Employees’ Pension Fund wrote off billions of rand.
Steinhoff is facing another five probes in South Africa and Europe – including by the JSE, the Financial Services Board, the Department of Trade and Industry and the Companies and Intellectual Property Commission, and a German criminal inquiry.
Parliament’s oversight committee on finance and its Standing Committee on Public Accounts intend to call Steinhoff executives to account.
A year later Jooste, 57, is under the radar. He’s made only one public appearance in an official capacity to face questions in Parliament.
New chief executive Danie van der Merwe, who took over from Jooste on an acting basis, was paid about R24.3m for the year through September, 2018 including a bonus of R8.3m.
Can’t wait for the film – it’ll will make Enron The Smartest Guys in the Room and similar movies look ordinary.