Auditing Jooste’s parliamentary play reveals plot holes
What a waste of time! I actually felt sorry for our politicians, sitting there, trying their best to get something of value from Markus Jooste. But Jooste did a sterling job of saying a lot without saying anything at all.
For those who missed it, basically the version of the former Steinhoff CEO is that the true cause of this whole mess is a marriage gone sour with an Austrian businessman named Andreas Seifert, and the actual mistake that Jooste apologised to his colleagues for was introducing them to this horrible man.
Jooste was not in any way admitting to “financial irregularities”. In fact, as far as he is aware, there were no financial irregularities at Steinhoff.
It was at this point I realised that Jooste thinks either he is supernaturally intelligent, or the rest of us are supernatural imbeciles.
So, according to Jooste, Steinhoff’s relationship with Seifert turned sour when the Austrian was kicked out of the group, and started suing the company and spreading rumours that eventually led to the 2015 German investigation.
Following the investigation and negative reports, Steinhoff decided to launch its own inquiry, done by two “independent” German firms, which took two years and worked through 15,000 documents, only to find that the company was squeaky clean, all accounting treatment was in terms of international financial reporting standards and there was no evidence of any wrongdoing.
However, right from the getgo, it seems, external auditor Deloitte smelt a rat. They asked to do more procedures. Steinhoff said no. They asked for another investigation. Steinhoff said no.
This happened a few more times, until, the final straw, the audit firm refused to sign off the financials unless Steinhoff acceded to its demands.
It was at this point that Jooste decided he was done. By his own admission in parliament, he had spent at least 90% of his last three years as CEO dealing with this investigation — caused by this horrible partner, Seifert — and now the auditors wanted another investigation with two days left before the company’s results announcement?
Jooste took the unprecedented step of personally advising the board and audit committee to fire Deloitte and appoint a new audit firm that was willing to sign off the financials in the allotted time.
Apparently, one of Steinhoff’s “independent” legal advisers had concluded that Deloitte was no longer independent and should be taken off the audit.
When Jooste realised the board wasn’t buying his story, he threatened to leave.
“I wanted to force them to take the right decision for the company,” said Jooste, though I suspect he meant “the right decision for me”.
After 29 years, 200 days of business travel a year and 63-million shares worth R3bn, the prospect of this one investigation being reopened was enough to make Jooste walk away.
As hard as it may be to extract any value from this week’s Jooste show, I do think there are two important takeouts.
The first is that the man was just tired. He had worked very hard, for very long, trying to keep his Steinhoff dream alive, and now he just wanted this noise to go away. The only thing standing between him and his freedom was an irritating ex-partner and a stubborn audit firm. He was not about to relive the trauma of the past three years. This was enough for him to ask the board to fire its audit firm.
The second is that the board disagreed with Jooste. It eventually decided to grant the auditors that second investigation, and, instead of them firing Deloitte, Jooste fired himself.
What we don’t know is what exactly Deloitte found. Why did it insist on another investigation? Why was Jooste willing to lose his job over the second probe? Why did the Steinhoff board turn on its man? Why did he leave in such a hurry? What did everyone know that we, the real losers in all this, still don’t know?
It seems we have to wait for December’s release of the results of PwC’s forensic investigation.
Why was Jooste willing to lose his job over the second investigation?