South Africa 6.9.2018 06:19 am

Somehow ‘nobody knew’ anything was wrong at Steinhoff

The former chief executive of Steinhoff, Markus Jooste, testifying in parliament on the Steinhoff debacle, 5 September 2018. Picture Armand Hough / African News Agency (ANA)

The former chief executive of Steinhoff, Markus Jooste, testifying in parliament on the Steinhoff debacle, 5 September 2018. Picture Armand Hough / African News Agency (ANA)

This extraordinary lack of insight by every single person leaves only two possible conclusions: they are lying, or there really was nothing wrong.

Steinhoff’s former chairperson, Christo Wiese, had no idea that anything was wrong with the company’s accounting.

He told parliament in January that the scandal around its financials “came like a bolt from the blue”.

At the company’s AGM in April, the entire supervisory board insisted that none of them knew about any accounting irregularities until they were “discovered” in December.

Former chief financial officer Ben la Grange told parliament last week that the first time he suspected something might be wrong was on December 2 last year when the company’s auditors flagged specific issues and asked for comment.

Then, yesterday, Steinhoff’s former CEO Markus Jooste told parliament that, as far as he was concerned, there was nothing wrong with the company’s financials. He said that when he resigned on December 6 last year, “I was not aware of any accounting irregularity in the books of Steinhoff.”

This extraordinary lack of insight by every single person leaves only two possible conclusions. The first is that some, or all, of them are lying. The second is that the version put forward by Jooste this week is true – that, in fact, there never was anything wrong with Steinhoff’s accounting.

The former CEO told parliament that, as far as he was concerned, it was not the existence of fraud that led to the collapse of the company’s share price, but rather the auditors’ refusal to sign off on the financial statements.

In his version, it was the insistence that there must be further investigation into alleged irregularities, and that the annual results could not be released until this was completed, that caused the evaporation in investor confidence.

Jooste told parliament that he resigned because he knew this is what would happen if the results weren’t released. Credit would be cut, lenders would recall loans, and shareholders would run for the exits.

The allegations of accounting irregularities had been around for years, and he believed that independent investigations had already found that there was nothing to them. He wanted the auditors replaced so that the results could be released and investor confidence could be restored.

“I went through a two-and-a-half year period dealing with the issues from the German tax investigation, the legal fights with [former joint venture partner Andreas] Seifert and the events that led up to the events in early December 2017,” he said.

My personal view was that the start of a brand new investigation on December 5 would not be completed quicker than two years. I knew the company would be left in limbo with no financial figures and no investor confidence.”

Moneyweb

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