Big legal team, good preparation should keep Jooste safe

● SA’s civil servants were just one group to watch with incredulity the performance of Steinhoff’s former CEO, Markus Jooste, in parliament this week, in which he pedalled to shift the blame everywhere else.

It was the first time since Steinhoff’s share collapse in December that Jooste had emerged from his villa in Hermanus, Western Cape, to give his version of events.

Ultimately, it was a version that former colleagues described as “implausible”.

Much of the questioning in parliament revolved around an SMS Jooste sent to colleagues in which he admitted to “big mistakes” and said four other Steinhoff executives had nothing to do with the mistakes.

Many Steinhoff insiders thought at the time that this meant Jooste was willing to take responsibility for the fraud, evidence of which is apparently mounting in an investigation by PwC to be released in November.

Instead, Jooste told the inquiry that “the mistakes I was referring to was the choice in 2007 [to make Austrian businessman Dr Andreas Seifert a joint-venture partner]”.

In 2015 Seifert fell out with Jooste and laid a complaint with the German tax authorities about Steinhoff cooking the books. Jooste said it was Seifert’s complaint that “led to the perception of accounting irregularities”.

MPs and former colleagues found this hard to swallow. Yunus Carrim, who chaired the hearing, described Jooste’s testimony as “incredulous”. DA MP and shadow minister of finance David Maynier said Jooste had displayed “no contrition”.

In part, this is because Steinhoff has since admitted that its property portfolio was overvalued by double, and in April it wrote off à1.1bn in assets. Also, Steinhoff initially said it had made a à711m profit for the six months to March 2017, which was restated as a à362m loss. This suggests it was more than just “the perception” of irregularities.

Jooste said he resigned because auditors Deloitte had demanded a forensic investigation, which he thought was unnecessary and would delay the release of the audited financials which were due the next week, leaving the company in limbo . . . “and obviously pointing fingers at me as CEO”.

Instead, Jooste proposed firing Deloitte and hiring another auditor who would sign off the accounts in time.

When Steinhoff’s board, chaired by Christo Wiese at the time, vetoed this, Jooste said he had “had enough”.

Bernard Agulhas, CEO of the Independent Regulatory Board for Auditors (Irba), said it would not help to fire an auditor as the outgoing auditor would have to report any problems to the new auditor and the regulator.

Civil servants exposed to the Steinhoff collapse through their pensions were not impressed with Jooste’s performance either. Fedusa, for example, paid R5.7bn for shares which are probably worth R667m today.

Dr Dennis George, Fedusa general secretary, said: “Jooste doesn’t want to take responsibility. When you’re CEO, the buck has to stop somewhere. For him to try put the blame on someone else is totally unacceptable.” George said Fedusa would wait for the PwC report before deciding on action.

Shane Watkins, founder of asset manager All Weather Capital, said it was clear Jooste had upwards of six months to prepare his response to the parliamentary committee and the size of Jooste’s legal team suggested substantial preparation.

By contrast, those interrogating him were ill-prepared. He said the Hawks would struggle to hold Jooste accountable.

By contrast, those interrogating him were ill-prepared. The Hawks will struggle to hold him accountable

Shane Watkins

Founder, All Weather Capital