Jooste places blame on everyone else
‘Maybe the problem for Steinhoff is that we tried to grow too fast, too quickly and to too many countries’
STEINHOFF International’s share price gained more than 5 percent on the JSE after its former chief executive Markus Jooste appeared in Parliament to answer questions about the collapse of the company’s share price that wiped more than R200 billion off its market capitalisation.
Its share price has declined by more than 95 percent since the group admitted to accounting irregularities last December.
The share closed 5.73 percent higher at R2.77 on the JSE yesterday.
Jooste told Parliament that the main reason for the share collapse was caused by the group’s reluctance to release its 2017 financial statements, which created uncertainty among investors. He said he warned the group that the share price would collapse.
“As the board, we received a report from Deloitte on September 15, raising their concerns about the financial statements. Deloitte proposed further investigations into accounting irregularities, but I felt that it would have a devastating effect on investor confidence, credit lines and the Steinhoff share price,” he said.
Jooste said he told the board to release unaudited financial statements instead, because the JSE required that the company’s financial statements must be published by the end of January 2018.
As a result, Jooste proposed that an alternative auditor be recruited and unaudited financial results to be released instead. But he said the board did not support his view, resulting in the fallout of Steinhoff’s share price.
Jooste was against the Deloitte investigation, because the firm had already commissioned investigations that took two years to complete and found no wrongdoing. “I was not aware of any accounting irregularity in the books of Steinhoff, and I never lied about the activities of the company,” he said.
Jooste added that part of Steinhoff’s problems could also be attributed to the strategic partnership it entered with Seifert Entities in 2007. “Maybe the problem for the group is that we tried to grow too fast, too quickly and to too many countries,” he said.
Seifert owned a large mass discount retail chain, which operated in Germany and Austria and in smaller Eastern European countries. The two businesses merged through the 50:50 joint venture.
“This was a wrong strategic partner and we encountered problems in 2013, which led to cancellation in March 2015,” he said.
Jooste said after that, the litigation against Steinhoff started together with the allegations of accounting irregularities.
However, James-Brent Styan, the author of Steinhoff: Inside SA’s Biggest Ever Corporate Crash, differs with
Jooste.
“I have picked up two issues that I find interesting in his evidence. Jooste blames the collapse on the Austrian businessman and, secondly, on the failure to release the financial results. If he was telling the truth, why did the other senior members who appeared before Parliament not raise it in their testimony? I find it hard to swallow that the Austrian businessman was a factor in this,” he said.
Styan added that pinning the blame on the failure to publish the financial statements was also far fetched.
“The failure could have had an impact, but not in that magnitude. I mean we are talking around the figure of R240bn that was lost and more than 1 000 pensions affected. Somebody is lying under oath. I don’t say it is necessarily Jooste, but the three of them have given contrasting evidence before Parliament. I am afraid Jooste just sold us the story that is very interesting and the judge should decide later,” Styan said.