Suddenly, Jooste knows nothing

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Suddenly, Jooste knows nothing

Parliamentarians struggle to buy what he calls his ‘big mistake’ as he displays little contrition

Rob Rose and Linda Ensor


Markus Jooste, the disgraced former CEO of retailer Steinhoff, tipped his hand on Wednesday in parliament to his likely defence when the Hawks eventually get around to asking him to explain his role in SA’s largest corporate collapse.
Jooste was appearing for the first time in public since allegations of fraud on December 4 caused a R185bn rout in Steinhoff’s share price, damaging SA’s reputation as an investment destination, and led to a contagion of market panic. Until now Jooste had resisted all efforts to explain what happened at Steinhoff, Europe’s second-largest retailer after Ikea. Jooste only appeared on Wednesday, flanked by four lawyers, after parliament subpoenaed him.
But rather than explaining his role in the fraud, he insisted: “I did not know of any accounting irregularities.” Instead, he blamed a former European partner, and auditing firm Deloitte, for the “uncertainty” that he claimed caused the slide in the share price.
Jooste’s version is that Andreas Seifert, one of his former European partners, had complained to the German authorities in 2015, which led to the prosecutors cooking up a case against him. He said Deloitte had insisted on a forensic investigation into Seifert’s claims, which Jooste thought was unnecessary because the German law firm FGS had already found no evidence.
He said this would have delayed the release of Steinhoff’s audited results, which would have led to “dire consequences”. So he proposed firing Deloitte and hiring new auditors who would have been willing to sign off the accounts.
“I made it very clear that if that was not the way the board wanted to go, I did not see my way forward to go through this, after I had been through this for three years of my life fighting and explaining the transactions,” Jooste told MPs.
But this appears to contradict an SMS he sent to colleagues on December 5 2017, in which he’d admitted to “big mistakes” and said: “I must make it very clear none of Danie [van der Merwe], Ben [la Grange], Stehan [Grobler] and Mariza [Nel] had anything to do with any of my mistakes.”
Grilled about this SMS, Jooste claimed that he was referring to the 2007 deal with Seifert as his “big mistake” – an explanation that parliamentarians struggled to buy. He said that all those Steinhoff executives he named knew about the historical issues with Seifert.
Steinhoff insiders say what really happened was that on December 4 Jooste was due to arrive to provide documents to Steinhoff’s audit committee, but he never arrived. Instead he sent a lawyer to meet Steinhoff’s former chairperson, Christo Wiese, and offer his resignation.
Few parliamentarians bought Jooste’s explanation. Yunus Carrim, the chair of the parliamentary session, described Jooste’s answers as “incredulous” and said there was “not an inkling of regret or a sliver of acknowledgement” of his responsibility for what happened.
Jooste’s testimony also directly contradicts the explanations offered by Steinhoff, which went so far as to lay a criminal charge against Jooste for fraud in January, and that of Steinhoff’s former chief financial officer, Ben la Grange, in parliament last week.
Jooste’s claim that there were no errors in Steinhoff’s books also appears flimsy in light of the fact that since he left, Steinhoff has “restated” its accounts, while dramatically slashing the value of its property portfolio by half, to €1.1bn.
Before Jooste’s resignation, Steinhoff claimed it had made a €711m profit for the six months to March 2017. This figure has since been “restated” as a €362m loss – a €1,07bn swing in what was originally reported. This shows massive errors in the accounts during Jooste’s tenure.
Craig Butters, a portfolio manager at Prudential Investment Managers who was at parliament, said it was difficult to believe much of Jooste’s testimony, especially as Steinhoff had since also had to write off another €10.9bn in equity from those previously reported numbers.
“It was also very revealing that when Deloitte didn’t want to sign off the 2017 financial statements, Jooste’s solution was to fire Deloitte and change to auditors that would sign off the accounts,” he said.
But Jooste displayed little contrition. Instead, he said his only mistake was that he “chose the wrong partner”, and Steinhoff “grew too fast, too quickly”.
The hearing was attended by representatives of Steinhoff, who will have taken note of how the former CEO effectively branded them as liars, as well as from the Hawks, the crimefighting unit that told parliament last week it hasn’t got enough evidence to act against anyone.
In closing proceedings, Carrim implored them: “Surely there’s enough here for you to act … parliament can do so much, but ultimately it’s the regulator and the Hawks and the NPA that must do their jobs”.

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