Parliament hears Wiese: ‘It was literally a bolt out of the blue’

Business

Parliament hears Wiese: ‘It was literally a bolt out of the blue’

Ann Crotty

At 9.45am on Monday December 5 Christo Wiese’s world collapsed. Steinhoff International’s CEO Markus Jooste had just sent an SMS to some of the board members, the details of which were not made public but apparently included the words “goodbye” and “sorry”. 
They didn’t realise it at the time but this was the closest thing to confirmation the Steinhoff supervisory board was going to get about “accounting irregularities” from Jooste. Some on the board still believed Jooste would arrive at the Stellenbosch offices with a presentation that would explain the irregularities that had been uncovered by the audit committee in the previous few weeks. By the end of the day with no sign of Jooste the by-now infamous SENS announcement was issued and the multibillion-rand freefall began.
On Wednesday an appropriately sombre Wiese told MPs from three different committees it was like a bomb had exploded. “It was literally a bolt out of the blue.” Wiese said during his 50-plus years of building businesses he had always worked on the basis that there must be full trust in management, “I don’t know how else to build a business”.He had invested R55-billion in Steinhoff in 2015 when he was 75, “I was happy to do it, I was happy with management and we shared a vision with the other large shareholders,” said Wiese.
During the day’s proceedings he tried to explain to increasingly sceptical and frustrated MPs why it was a bolt out of the blue. “Steinhoff, like most groups, is hugely complicated, it operates in 33 countries and has multitudes of subsidiaries. How can management run such a company? The only way is in a decentralised fashion”.
Given this decentralisation the Steinhoff team says detecting fraud is almost impossible, especially when the CEO and some managers and external parties are involved.
Without Jooste, remarked one of the Steinhoff team on the sidelines, it was almost impossible to know what had happened. His disappearance from the scene of the crime has meant that international audit firm PwC had to be called in to try and piece together the accounting events of the past three years. Such is the extent of the challenge the audit firm has been given an entirely open mandate without any time restraint.
As the day progressed there was a sense of increasing frustration among the MPs as it became chillingly clear there weren’t going to be many easy or quick victories in this battle against corporate malfeasance.By the end of the day it was even becoming difficult to believe that any of the directors, other than Jooste and possibly former chief financial officer Ben Le Grange, could be successfully charged with even a misdemeanor. The initial question whether the other Steinhoff directors were complicit in the “accounting irregularities” soon morphed into questions about whether or not they even knew about the accounting irregularities.
In terms of German regulations members of the supervisory board have such limited powers and responsibility even not knowing might have been acceptable, or at least that’s what the members of Steinhoff’s supervisory board claimed. The company has its primary listing in Frankfurt, its registered head office in Amsterdam and its operational head office in Stellenbosch so a battle over the precise parameters of their responsibility could get dragged out in many courts for many years to come.
The EFF’s Floyd Shivambu was determined to get something concrete out of the day’s proceedings and pushed to know when the Steinhoff audit committee first suspected something was wrong. After much hesitation the committee chair Steve Booysen said after articles in a German magazine and on Reuters the committee undertook an investigation.
That investigation led to Jooste’s SMS.

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