Hard to think of Wiese as a victim
Is the system of corporate governance pointless?
The response to Christo Wiese’s announcement that he has instituted a R59bn claim against Steinhoff seems to be as much influenced by personal experience of the associated financial loss as any understanding of corporate law.
Remarkably, Wiese continues to enjoy support from some investors who accept the line that he was duped by a canny and unscrupulous operator. “Why would Wiese have risked everything he built up over 50 years if he knew what Markus Jooste was up to?” is the typical response of his supporters.
If Wiese can persuade the court to accept that version of events he may be able to recoup a portion of the R59bn as well as something of his previously formidable reputation. But it will be a long process and given all the other possible claims against Steinhoff — perhaps GT Ferreira and Thys du Toit will launch their own — there may not be much to go around.
At present the more commonly held view is that Wiese, one of SA’S shrewdest businessmen, has to accept some responsibility for the events that led to the December 2017 announcement about irregularities. For those who’ve watched his career, the concept of Wiese as victim rather than perpetrator is evidently hard to accept.
“He may not have known the details of what was going on but he must have had a fairly good sense that Jooste was sailing very close to the wind,” is the view of critics.
While things remained on track Wiese may have chosen not to look too closely. He may not have noticed the puzzling changes in the financial accounts from one year to the next.
One neuropsychologist suggests Wiese has taken so many risks in the past, and won, that he has difficulty contemplating the prospect of losing. This means his appetite for risk is way beyond that of normal investors. He became rich by taking risks and winning, so he would not have been alert to the possibility of losing, is how the neuropsychologist describes it. It is a common trait among the superwealthy and accounts for much of their hubris.
Whatever one’s view on the likelihood of Wiese’s claim being successful, if pursued, the legal action will turn corporate governance on its head. The basis of Wiese’s claim is that nonexecutive directors can be misled.
There are a few problems with that claim; one is that Wiese wasn’t any old director. He was a highly paid nonexecutive chairman who appeared to have close links with the company.
And the “misleading” was of a comprehensive, sustained nature. He wasn’t misled just once or twice.
If Wiese and all of the nonexecutive directors are successful in arguing that they could not have been expected to know about the accounting irregularities, then shareholder capitalism is under threat. It relies on directors to protect the interests of shareholders from management who might be tempted to go rogue. If a meltdown the size of Steinhoff has no consequences for directors then the system of corporate governance is pointless.
Perhaps Wiese is just pointing out the obvious.
The more commonly held view is that Wiese has to accept some responsibility