Steinhoff’s revelations

According to a current director, Steinhoff’s former chair and largest shareholder Christo Wiese asked the company to cover a margin call on his behalf, after CEO Markus Jooste’s resignation and the corresponding collapse in Steinhoff’s share price.

A “margin call” usually applies to situations where investors borrow money from financial institutions to buy shares. The investor makes a “deposit” – cash, or in Wiese’s case, shares – that is used as collateral.

With deposited shares, the value of the collateral fluctuates with the share price. If the value falls below a threshold, the lender contacts the borrower (investor) and asks them to “top up” the collateral’s value by depositing cash or more shares. This is known as a “margin call”.

African Rainbow Capital coCEO Johan van Zyl recently attended an investor roadshow, where he was asked questions relating to his role as a Steinhoff director, according to people present at the closed lunch.

Van Zyl indicated that in the days following Jooste’s resignation, he and Steinhoff audit committee chair, Steve Booysen, were made aware that Wiese had instructed Steinhoff to pay a margin call that one of his nominated investment vehicles had received due to the Steinhoff share price collapse.

According to our sources, Van Zyl and Booysen confronted Wiese about this and threatened to resign unless the instruction was cancelled or reversed. It appears Wiese complied.

Ultimately, Wiese stepped down as board chair on December 15. The Sens statement published at the time said he offered to step down “to reinforce the independent governance of the company”.

But Wiese was a forced seller of 98.4 million shares the day before he resigned. The reason in the Sens was “involuntary sale of shares by funders under security arrangements”. This suggests he had not met the margin calls.

Van Zyl, Booysen and African Rainbow Capital declined to comment on the accuracy of the revelations. Wiese denied asking Steinhoff to pay his margin call, adding “there was no transaction to be reversed”.

Steinhoff said: “Steinhoff did not provide any funding to Wiese-related entities in December 2017. Entities within the Steinhoff group concluded commercial agreements in October and November 2017 with Wiese-related entities.”