R27BN LOSER
But Christo Wiese says he’s hanging on to his Steinhoff stake
● Christo Wiese, the second-largest shareholder in scandal-ridden Steinhoff, will be holding on to his shares despite describing the unfolding events at the retailer — once led by his protégé Markus Jooste — as a “traumatic experience”.
Wiese, who according to the latest Bloomberg data holds 20.9% of shares in the company, was the hardest hit when it came to light that Steinhoff may be at the centre of accounting fraud after the group was alleged to have doctored the books.
As a result, Wiese’s net worth has more than halved to $2.3-billion (about R27.5-billion). Yet Wiese remains optimistic about Steinhoff’s ability to reclaim its image and inspire confidence, despite the scandal.
“All I can say is I have shares and I’m holding those shares. I can’t give any guidance on whether Steinhoff is investable for those who are not in the same position,” he said this week in an interview with Business Times.
In December, Wiese and his son, Jacob Wiese, former director of Steinhoff, were removed from the group, which was followed by Wiese’s involuntary sale of about 98.5-million of his Steinhoff shares.
Wiese added that since stepping down from his position as chairman, he has been talking to international investors.
He had asked them to look at the retailer’s position and to see whether they didn’t “want to invest in the company and to expedite its turnaround”.
“That’s all I have done and the rest is for the Steinhoff management and board to deal with, if there is any interest,” he said.
This week, the company missed its JSE deadline to release its interim results because of investigations around the accounting irregularities.
Steinhoff’s management was also summoned to parliament to answer questions about the financial irregularities that caused Steinhoff’s share price to plummet more than 80%.
The Government Employees Pension Fund, which owns about 392-million Steinhoff shares, lost about R20-billion.
Since the news broke in December, the only communication from former CEO Jooste was a poorly written letter of apology to the staff and management at Steinhoff.
“I have not seen him since 4 December, nor heard from him,” said Wiese.
Since the announcement in December, Steinhoff’s share price has declined by more than 85% on the local bourse.
Sean Ashton, chief investment officer at Anchor Capital, said it was difficult at this point to pin a reasonably accurate estimate of fair value on the company as Steinhoff will have to restate prior-year financials.
“So we don’t know what the extent of the restatement is and what off-balance sheet liabilities there may be lurking.”
Ashton added that a number of lawsuits had been brought forward from various parties around the world.
This included a Dutch and German group of attorneys bringing class-action lawsuits against the company.
“This presents a contingent liability for the company that we cannot quantify.
“For us Steinhoff is not investable simply on the basis that it is too difficult to arrive at an accurate enough assessment of fair value.”
All I can say is I have shares and I’m holding those shares. I can’t give any guidance on whether Steinhoff is investable . . . Christo Wiese Former Steinhoff chairman
● As thousands gathered near Cape Town last weekend for South Africa’s oldest horse race, five-time owner of the year Markus Jooste was nowhere to be seen. But he wasn’t forgotten.
The former CEO of Steinhoff International Holdings is at the centre of the accounting scandal that’s wiped some $14-billion (about R168-billion) off the retailer’s market value and roiled the wealthy enclave of Stellenbosch, where many prominent business leaders live, work and play. Jooste would probably have met a chilly reception at Kenilworth Racecourse this year.
“People are cheesed off,” said Heather Steel as she waited near the grandstand between races last Saturday. “He’s lost a lot of people money, a lot of pensioners too.”
Jooste led an acquisition spree that turned Steinhoff into a global retailing giant, a national champion and a source of pride in Stellenbosch, home to its plush South African headquarters.
Surrounded by vineyards and the Helderberg and Simonsberg mountains, the town’s oak-lined streets are fringed with restaurants, boutiques and art galleries. Cape Dutch architecture points to the region’s colonial history, as does the widespread use of Afrikaans. It is also home to Stellenbosch University.
Signs of Steinhoff’s presence, once splashed all over town, are diminishing in the wake of the scandal, in some cases almost overnight.
The company’s sponsorship of the university sports teams had placed its maroon branding — which matches the Maties colours — on everything from the rugby posts at Danie Craven Stadium to the scoreboards, tickets and athletes’ uniforms. Both Jooste and ex-chairman Christo Wiese are alumni of the university.
Since Steinhoff recently withdrew that sponsorship, athletes have had to unstitch its emblem from their jerseys and groundsmen to take down the posters and signs that bore the company’s name. The university is even reprinting tickets to replace those with Steinhoff’s branding.
Billboards from the rugby field lie in a dusty pile at the back of a shed, past lawnmowers and wooden workbenches, and masking tape has been used to cover the company name on the stadium bridges.
Over at the cricket field, a Steinhoff sign was draped in black cloth in a last-minute effort to ensure that first-year students arriving for their official welcome by the rector wouldn’t see the name from the stadium’s seats. With the arrival of students for the start of the academic year, the town’s population of about 160 000 swells by more than 30 000.
Much like every shopping mall in South Africa, the one in Stellenbosch houses Steinhoff-owned outlets such as Pep, Ackermans and Tekkie Town. But in this town the connection runs deeper.
Now residents are only talking about two topics: Steinhoff, and a crippling drought that’s left vineyards, golf courses and the odd vegetable garden as the only patches of green in an otherwise parched valley.
For others, the company’s woes have caused such misery that it’s a forbidden topic of conversation at the weekend braai.
Johann Rupert, the chairman of Swiss luxury-goods maker Richemont and South Africa’s richest person, was born and grew up in Stellenbosch. He is chancellor of the university, although he doesn’t live in the
Just because [of] one company . . . it doesn’t mean the whole town is rotten Rob Barrie Long-time Stellenbosch resident
town anymore.
Through Twitter, he has expressed his irritation with how the Steinhoff scandal has sullied the town’s reputation, all the more so because none of those involved were “born in Stellenbosch or grew up there”.
Rupert isn’t the only one who has expressed such feelings.
“I don’t think what has happened at Steinhoff is a true reflection of what the town actually is,” said Rob Barrie, a dentist by training who studied at the university and has lived in the area since 1980.
“Just because one company may be up to no good, doesn’t mean the whole town is corrupt and rotten.”
Since early December, when Steinhoff made international headlines by announcing the discovery of unspecified accounting irregularities and Jooste quit, the company has been scrambling to raise cash to meet its obligations.
Wiese, one of the country’s richest men and still Steinhoff’s biggest shareholder, soon left as well.
The stock has dropped 85%, leaving some Stellenbosch residents who bought into the hype poorer — and disillusioned.
“Steinhoff had a very good name in Stellenbosch,” said Shaun Scheepers, a radiologist who studied at the university and works at a private practice with offices in the town. “But the trust has been eroded.”
He owned Steinhoff shares and said he and some friends were joining a class action suit against the company.
Of course, the impact extends beyond the town and its environs. The collapse in Steinhoff’s stock price resulted in billions of rands in losses to the country’s pension funds.
On Saturday, Oh Susanna, a three-yearold filly bred and owned by Rupert’s family, won the main race to take home the R5-million prize. She beat Legal Eagle, which, until mid-December, was owned by Mayfair Speculators, the company Jooste used to manage many of his more than 200 racehorses.
Last week, Lyndon Barends, the CEO of the National Horseracing Authority of South Africa, made it clear that Jooste wouldn’t benefit from participating in Saturday’s races. “It would be hard for him to show his face again,” he said.
— Bloomberg