Markus Jooste, the former Steinhoff CEO, said on Wednesday that he did not know of any accounting, or other, irregularities at the firm. Appearing before a joint meeting of four parliamentary committees looking into what has been described as South Africa’s biggest corporate scandal, Jooste stayed on message even as MPs from across the party political spectrum bluntly told him they did not believe his story. Jooste has joined a long queue of I don’t knows, it wasn’t me.
Last week ex-Steinhoff chief financial officer Ben La Grange told MPs: “I do not think I did anything deliberately wrong.”
Earlier in 2018 ex-Steinhoff board chairperson billionaire businessman Christo Wiese, who resigned in the wake of the accounting saga that saw share values massacred, told MPs he did not know.
And on Wednesday it was the turn of ex Steinhoff CEO Markus Jooste to say that he didn’t know.
“When I left Steinhoff on the 4th of December (2017), I was not aware of any accounting irregularities,” Jooste told MPs, adding only that it was “sad” that colleagues and people had lost money.
But there had been that SMS sent to some former colleagues in which Jooste talked of “big mistakes” and consequences. MPs were told that the consequences were Jooste resigning, and the big mistake actually dated back to 2007.
That mistake was the 2007 strategic partnership with businessman Andreas Seifert that unravelled in 2015. It was then that the German tax authorities, other regulators and the media got on to Steinhoff.
“Seifert was the guy, who went with all our information… and he provided that information to the German tax authorities, which let to the investigations (and then the accounting irregularities allegations),” the former Steinhoff CEO replied to MPs questions.
In early December 2017 Steinhoff ‘s share value collapsed after the annual financial statements were not released on time amid word of accounting irregularities. Tens of billions of rand were lost, including R15.6-billion by the Public Investment Corporation (PIC) that manages R1.2-trillion assets, overwhelmingly made up of government workers’ pension and savings.
In Jooste’s playbook, that share collapse was the consequence of the Steinhoff board not heeding his advice: release the unaudited financial statements on 6 December, ditch Deloitte as auditors, get a new auditor to finalise the financial statement by the last possible day, 31 January 2018.
That advice was given because of concerns about negative impacts on the share price and on the confidence of lenders and investors if there was an announcement of yet another new investigation. Since 2015 the German tax authorities had looked into the company, as had regulators and the media. Steinhoff had appointed two German firms whose report in November 2017 indicated there was no evidence of accounting irregularities. “(They) confirmed… stated categorically the following: We have not found any evidence that the accounting… was not in compliance,” was how Jooste put it to MPs.
Instead the Steinhoff’s board went with the request from Deloitte in the Netherlands, where the main company is based, for another investigation. The share value collapsed. At the point, Jooste said he “had enough” – and resigned.
MPs were not taken by Jooste’s answers, and several bluntly told him there was little new that he was recounting. His statement under oath to MPs amounted to little more than a “whitewash” that would have been shown up by this second investigation was how IFP MP Mkhuleko Hlengwa put it: “With one decision you up and go. I’m not convinced.”
And while ANC MP Nyami Booi said it seemed “on the day of your resignation that’s the last day your memory worked”, Jooste argued he had lost all his documents, telephone and other records from Steinhoff, who his lawyers have instructed not to communicate directly with him.
Finance committee chairperson and ANC MP Yunus Carrim told Jooste he was making himself look like “the Mother Theresa of Steinhoff”.
While there were considerations not to incriminate oneself – regulators are probing as the Hawks also confirmed a case although investigations appear moribund – it was also a case of accountability, which CEOs must take.
But Jooste stuck to the playbook. “The audit function of the group… is not part of CEO responsibility. I personally was satisfied (with what I saw),” said Jooste. “I can only say I am trying my best to answer the questions…”
The former Steinhoff CEO had snubbed Parliament’s finance committee invitations to brief it in January and again in March, as have the Hawks, the company’s new supervisory board and regulators. Parliament’s subpoena was challenged in court in August and in a court-approved settlement, it was agreed Jooste would answer on questions to identify any institutional flaws and challenges in the financial regulatory framework, and what may have given rise to the collapse of the Steinhoff share value.
And it was that remit, Jooste stuck to. Strictly. There was no rising to MP’s remarks that the company he worked at for 29 years was a Ponzi scheme, operated like a spaza shop. But it wasn’t quite the conversation Themba Godi, chairperson of the Standing Committee on Public Accounts (Scopa), suggested that should be had in the committee.
The joint meeting of the committees of finance, trade and industry and public service and administration and Scopa ended on schedule at 1pm. There was a thanks to the committee chairpersons and then Jooste, accompanied by his four lawyers, walked out – stone-faced and silent. DM
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