South Africa

AMABHUNGANE

Steinhoff’s dogged battle to keep its secrets

Steinhoff’s dogged battle to keep its secrets
Illustrative image | Former Steinhoff CEO Markus Jooste. (Photo: Gallo Images / Brenton Geach) | A Steinhoff International Holdings logo at the company’s offices in Stellenbosch in 2016. (Photo: Waldo Swiegers / Bloomberg via Getty Images) | (Photo: iStock)

Almost everything we know about the R200bn collapse of Steinhoff has been uncovered by the media. Steinhoff’s continued refusal to provide access to a 7,000-page PwC report hampers journalists’ ability to tell the full story.

We all know the story of Steinhoff and Marcus Jooste. At least, we think we do. 

What we do know has been uncovered by careful and thorough investigative journalism, but the majority of Jooste’s and the company’s secrets remain locked in a vault of confidentiality imposed by Steinhoff itself. 

What we do know is that in December 2017, Steinhoff’s auditors refused to sign off on the annual financial statements, Jooste resigned as CEO and the board of directors announced that there were “accounting irregularities which required further investigation”.

This sent the share price plummeting; it eventually lost 98% of its value, which cost shareholders R200-billion.

We know that this was South Africa’s biggest corporate fraud and that ordinary South Africans were the biggest losers in the company’s collapse: the Government Employees Pension Fund and other investment groups holding individuals’ pensions were major shareholders. 

We know that Jooste is yet to face a criminal trial and remains comfortably ensconced in his Hermanus mansion. 

But we do not know the whole story of exactly how that accounting fraud was perpetrated or who else played a role.

Steinhoff and its descendant companies appear to be doing all they can to keep that story hidden.

The most detailed investigation into what happened at Steinhoff was conducted by the accounting firm PwC, which was engaged by Steinhoff in December 2017. After 14 months, in March 2019, it delivered its hefty 7,000-page report to Steinhoff.

Steinhoff, however, released only an 11-page “overview”.

And so, we have to trust Steinhoff’s claims about what that PwC report contains and also that 11 pages can sufficiently convey what 7,000 pages were needed to say. We simply cannot do that. 

AmaBhungane and our colleagues at the Financial Mail filed separate requests in terms of the Promotion of Access to Information Act (Paia) for access to the PwC report. 

Without being able to see what PwC found we cannot hope to understand everything Jooste did within Steinhoff, including who helped him and why no one stopped him. This means that the public, the victims of his actions, will not know how or why their savings took the colossal knock they did. 

Steinhoff refused both the Paia requests, maintaining that the report had been commissioned by its lawyers — Werksmans — so that they could provide legal advice to Steinhoff, and was therefore legally privileged. 

Court battle

We joined forces with Financial Mail and took Steinhoff to court, asking the Western Cape High Court to order the company to release the report to us. 

Steinhoff fought hard. 

It repeated its belief that the report was legally privileged and that it had never waived that privilege. It challenged our position that the public interest in the report outweighed any reason for keeping it hidden and denied that it was possible to remove the legitimately confidential information and provide us with the rest. 

Steinhoff argued that our right to freedom of expression was not affected by its refusal to provide the report because we — and other media — had already reported on Steinhoff’s collapse. 

Steinhoff lost.

The court emphasised that “access to information is crucial to accurate reporting and thus to imparting accurate information to the public”.

It held that the report was not covered by legal privilege and ordered Steinhoff to provide us with access within 10 days.

Steinhoff immediately appealed against the decision, which suspended its obligation to provide access to the report. 

Since then, Steinhoff has introduced new and innovative ways to explain why it can’t give us access. 

Last February, Steinhoff introduced the new argument that because the company was registered in the Netherlands, Dutch and European Union data privacy law applied. 

This meant, Steinhoff said, that because the PwC report contained personal information it would be liable to penalties for breaching those Dutch and European laws if it provided us with the report. 

We had to engage the services of a European data law expert to tackle Steinhoff’s new arguments, demonstrating why we believed those laws did not hinder the disclosure of the report in South Africa.

And then, in November, Steinhoff added that, because its descendant company — a holding company set up to accommodate Steinhoff’s liquidation — is registered in the United Kingdom, UK data privacy law also applied and similarly prevented the disclosure of the report. 

Once again, we roped in the European data law expert. 

She restated that Steinhoff had misinterpreted the law and that the foreign laws in question should not serve as a hurdle to releasing the report at home. 

What is clear is that Steinhoff has no regard for the need for journalists to be given access to information. It has no conception of the exceptions given by data privacy laws for legitimate journalistic purposes. 

It seems leery of the vital role the media plays in investigating, reporting on and holding accountable those responsible for corporate crimes. 

All access-to-information and data privacy laws — in South Africa, the European Union, the Netherlands and the UK — are explicit on the importance of providing access to nearly all information for the purposes of journalism.

As we have made clear in our court documents, our request to access the PwC report is grounded in the Constitution’s protection of the rights to freedom of expression — which includes the freedom to receive and impart information and to exercise media freedom. 

The Constitution explicitly states that everyone has the right to access information held by a private body when that access is required for the exercise of protection of any right. Our courts have confirmed that this right is triggered when journalists seek to access information.

Paia is the law that gives effect to this constitutional right. Although it does permit access requests to be refused on certain grounds, these refusals are not lawful when accessing information would be in the public interest and would reveal evidence of a “substantial contravention of, or failure to comply with, the law”. 

There cannot be a more clear-cut case of the public interest in accessing documents from a private company. 

With so many ordinary citizens and pensioners suffering because of Jooste’s conduct, and without criminal prosecutions being brought against him in South Africa, it is up to the media to investigate how Steinhoff was able to defraud investors so substantially and for so long.

The Supreme Court of Appeal is due to hear Steinhoff’s appeal in the first half of this year. It will be the next chapter of our continuing fight to tell the whole story of the Steinhoff implosion. 

Let’s hope it will be the last. DM

Gallery

Comments - Please in order to comment.

  • Bill Nash says:

    One has to wonder what is so damning in that report that they are fighting so hard to bury!
    The Stalingrad defence rears it’s head again!

    • Johan Buys says:

      Bill: I suspect that the individuals and their structures that should have been sued by the company can now buy all the shares in the company for a tiny fraction of the claims against themselves, thus owning your (potential) creditor and how/whether it pursues you. That is even more offensive than the original actions.

      It is shocking that the board and all those comfy related party transactions have not been criminally or civilly prosecuted. Steinhoff’s former board hopes that it will all eventually blow over.

      The only people that might realistically sue the crooks are shareholders that lost big money and those people don’t have access to the report.

      This company’s results had Dodgy written all over it for years before the “bolt from the blue”. Have the auditors been sued?

  • Anesh Govender says:

    Have they not learned anything at all. Be transparent and take accountability. Whatever is in that report should be made public for the benefit of everybody that has lost their money and to ensure we can create controls that it does nit happen again. Jooste must spend time in jail to deter all those errant CEOs that believe they above the law… OUTA let’s land this one soon.

  • Fanie Rajesh Ngabiso says:

    Well done Amabhungane. Drag it out of its hidey hole.

  • david clegg clegg says:

    I agree it would be nice to know, but I have some sympathy for the group’s leeriness over the dangers of ignoring EU laws which might restrict them from releasing the documents. Whether those laws do that, I know not, but it may be more a case of their lawyers crying wolf than the company wanting to protect a wolf.

  • Francois Smith says:

    And I thought Ramaphosa was an embarressmunt. Marcus, you have always claimed you were innocent. Show the documents!

    • Iam Fedup says:

      It’s not just Jooste: it’s the whole board that needs to be challenged, if for nothing else except the sheer incompetence of not knowing what was going on in the company. Of course, the cynic would argue that the billionaires are all protecting themselves.

    • Iam Fedup says:

      Of course, PwC is also complicit. Pay back the money.

  • Paul Davis says:

    It would appear that there must be “other” parties involved that will shock all of us. There must be a third force that is pushing for this. Why would current Steinhoff directors be fighting this! Surely they have nothing to lose?

    • Rod H MacLeod says:

      If you believe that the board of Steinhoff (including prominent South African business leaders) knew nothing of the shenanigans, you obvs believe in the tooth fairy and the fundamental goodness of mankind. That, the knowledge of others (read Board members), is what is in the report. Personal information on complicity.

  • Koloi Khumbane says:

    That PWC Report must contain some explosive information that led to the total implosion of Steinhoff, But I thought that public interest in a matter like this one trumps all. We’ll see if the appeal will succeed!

  • Geoff Coles says:

    We shall see, Steinhoff acts as if it was the SA Government and Ministers and Civil Servants, answering seemingly to nobody

  • Rae Earl says:

    Yes indeed Amabhungane, as you stated “Marcus Jooste remains comfortably ensconced in his Hermanus mansion”. A disgusting and arrogant attitude by a man who is a liar and a thief. Unfortunately our pathetic ANC government is so well aligned with corruption in its own ranks that it sits and does nothing about forcing legal action to speed up investigation in such matters.

  • Garth Hempel says:

    This might be a bit naive, but surely the audit report of a publicly listed company is in the public domain, and any attempt to prevent access to these documents is against the law.

  • Dermot Quinn says:

    There must be some smelly stuff in that report….

  • Richard Sohn says:

    At least prescription of claims against wrongdoers should only commence once new facts emerge from the report, once disclosed, that form the basis of those claims. Hopefully shareholder apathy will not whither in the meantime! Patience dear shareholders: your time will come.

  • Sid Peimer says:

    Never mind Steinhoff – that’s history and where there are creditors, it is kept alive.
    What about our future: the fact we are now owned by Iran? Why are the journalists silent?
    Surely it can’t be that difficult to trace the payment to the ANC.
    I realise this this goes against the popular narrative that the media tries to keep alive – the Jews as the bad guys, but for heaven’s sake people – we have a new boss!! And it’s not Cyril.

    • Kanu Sukha says:

      Even though the ANC is deeply misguided and or corrupt, your attempt to keep up the ‘election was stolen’ conspiracy and diatribe, it will only entrench your bigotry ! By the way … CR has enough personal wealth to ‘bail out’ the ANC … if he wanted too ! Maybe that is what sits uncomfortably in your craw ?

    • Mkili Muzenha says:

      Nothing this evil can be classified as human.

  • Alex Nagel says:

    Possibly the content of the report being published may compromise their criminalcase against the errant Directors. It will give the infamous Marcus Jooste and his cabal insights into what the Board knows or does not know

    • MT Wessels says:

      Good point. Also interesting that the errant directors, while harping on their own victimhood as shareholders, have had access to this information but do not want other shareholders to get access. Makes one suspicious about the likes of Wiese et al potentially hiding their own complicity – and actions to save was they could for themselves first – behind all teh shouting about their own losses. Mmmmh.

  • johnwilksitis says:

    So, Steinhoff has taken lessons from Zuma & Mkhwebane.

  • drnussie56 says:

    Kudus to you for persisting in the name of transparency , public interest and justice ! !

  • Gerrie Pretorius says:

    jooste and his whole board should be locked up, as neighbors of jacob and his parliament.

  • Viv Naidoo says:

    Excellent work by the journalists not letting up on finding out the truth.

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