Picking at Steinhoff’s carcass

Justice would be served if some of its executives suffered consequences

So, another team of lawyers is creeping onto the Steinhoff carcass. What should we make of that, apart from the stereotypically obvious — the only people who are going to emerge richer from the Steinhoff meltdown are the lawyers and auditors who manage to secure work interrogating the meltdown?

The proposed class action by Dutch law firm Barentskrans appears to have got the backing of most of the local institutional fund managers that persuaded tens of thousands of their clients to pour their hard-earned funds into the global retailer.

While it’s sad to think that whatever pickings there are on this carcass are likely to be diminished by huge legal fees, the hope is that the involvement of entities like Barentskrans and Dutch shareholder association VEB will help to ensure that shareholders get some sort of justice.

Justice in this particular corporate context means that some of the executives involved in destroying the hopes for a halfway decent retirement for thousands of people will suffer some consequences. Even if the consequences are no more than sleepless nights for the unproven guilty.

Lots of extremely wealthy people lost lots of money as a result of the collapse in the Steinhoff share price, but more distressing are all the notso-wealthy people who lost a substantial chunk of their savings. These individuals are the backbone of the shareholder capitalist system. If over R200bn of their wealth can disappear in a puff of Steinhoff smoke then there have to be some consequences. If not, this backbone will begin to buckle.

If no-one is held accountable, it suggests the equity market is little more than a whimsical contrivance set up for the benefit of a handful of 21st-century snake-oil salesmen.

In the coming months we should get some idea of the substance that lay behind Steinhoff’s R250bn market capitalisation. The eagerly awaited PWC report is due out by December and it’s unlikely that either Louis du Preez or Heather Sonn would risk damaging the reputations they’ve built over the past nine months by allowing this deadline to be pushed out.

The hope is this report will shed light on the R100bn-plus write-off of assets: was this necessary? Or, more chilling: was it sufficient? Then there are all the related party transactions.

Hopefully, at some stage the Steinhoff board will release the findings of the various “independent” investigations set up to determine what went on. These were conducted by German law firms as well as London-based Linklaters, and some of the findings were relied on by the Steinhoff supervisory board to justify their actions in the lead-up to the December 2017 collapse. Despite their importance, at no stage have shareholders been told what the scope of those investigations were or whether it was reasonable for the directors to rely on their findings.

At his appearance before parliament, EX-CEO Markus Jooste reminded us that Deloitte was sufficiently unhappy with the earlier investigations to demand something more robust. This was days before Deloitte was due to sign off the 2017 accounts and was key to Steinhoff’s collapse.

Soon we should know whether the army of lawyers has helped to unearth the truth or bury it deeper.