Irregular accounting. Now there’s an interesting turn of phrase for what is arguably the biggest financial scandal to which many hard-working people have fallen unwitting victim in South Africa. The Steinhoff case will go down in history as one of unchecked, unregulated financial malfeasance by sociopathic gangsters in suits – nearly R164-billion has been wiped off its value since Wednesday.
The global furniture and clothing retailer (which also happens to be one of the sponsors of the Blitsboks) has as its second largest shareholder the Public Investment Corporation – the manager of the pension fund of more than one million government workers.
Also, anyone with what finance types call “exposure” to the Johannesburg Stock Exchange will be affected.
The PIC has lost roughly R14-billion this past week off of the “irregular accounting” of the Steinhoff board. The PIC owns a 7.4% shareholding within Steinhoff. Interestingly, in the culture of identity politics in South Africa, the Steinhoff board are all white, all male and all CAs. How this collective of no doubt fine financial minds failed to pick up these “irregularities” only they will know, but which will hopefully come to light in the ensuing weeks as investigators try to get to grips with this hornet’s nest (or pit of vipers).
To recap: “On Tuesday evening, Steinhoff – which is dual-listed on stock exchanges in Joburg and Frankfurt, Germany – admitted to ‘accounting irregularities’ after it had repudiated an August report from a German publication that Steinhoff employees were being investigated by prosecutors for a 2015 case of possible accounting fraud.”
The Financial Services Board is now investigating possible insider trading in Steinhoff International shares.
How was this allowed to happen? Are these companies – Steinhoff, KPMG, MultiChoice, SAP, McKinsey et al all allowed to cook the books and to get away with it?
Where is the public outcry, the protests, the press conferences of condemnation, the High Court interdicts by civil society? Shouldn’t we be saving South Africa from these ‘respectable’ business people? Or do we give them a hall pass because we believe that everything should be blamed on the government?
Legal processes are in motion and we hope those responsible will be brought to book for their “irregular accounting”.
It doesn’t help that the editor of a business publication insinuates that judicial powers have been rendered toothless under the current administration and that this has meant a lawless, corporate free-for-all where these psychopaths in suits play fast and loose with the money of honest, hard-working South Africans.
These sharks would have done so under any administration and I daresay they were allowed to get away with it under apartheid.
Their entrenched networks have pretty much stayed intact. The PIC also needs to account for it not conducting due diligence and aggressive oversight of its investments. Surely it can’t write this one off as bad debt?
What the Steinhoff scandal and the MultiChoice case illustrate is that moneyed influence in terms of government policies and legislation is not just restricted to a few black families.
These crooks have a veneer of respectability and operate in an environment where they feel and believe that they are above the law.
Political scandals give them an easy ride, they fly under the radar and cause more havoc than what people realise.
Because they speak a coded language infused with business jargon, they are allowed to hoodwink and ensnare.
They are educated thieves and should be held accountable for what they have been allowed to get away with for so long.
The veneer of respectability may have been cracked, but it is time for bodies like the FSB and Cabinet ministers like Finance Minister Malusi Gigaba to take action against corporate malfeasance and corruption. Gigaba has welcomed the FSB’s investigation and has asked the PIC for a “report on the extent of exposure for retirement funds”.
The PIC must be made to explain to its more than a million government worker clients why it allowed their hard-earned money to be treated with such reckless disregard.
Our citizenry have a rich history of mobiliing and making their voices heard when they have been collectively aggrieved, both during the apartheid years and in contemporary, post-democratic South Africa.
Corporate corruption, like state corruption, should be viewed and reacted to with the same vigour to which politicians and the government is held. For too long have these networks skirted and crossed ethical and moral lines for their own gain at the expense of the rest of us.
South Africa is a developmental state and cannot continue to sit idly by when year after year billions of rand leave our shores in illicit capital outflows, for example.
The government needs to strengthen regulatory oversight and finance vehicles like the PIC need more stringent criteria in their investment choices, and bodies like the FSB need to be given more teeth in keeping corporate South Africa in check.
The JSE has indicated that it is to launch a probe. Perhaps it is also time for the exchange to look at reforming and transforming its own house. Time is running out for these old boys’ clubs wielding unfettered and unchecked power over most South Africans.
That these so-called upstanding members of society continue to operate with impunity is what is really irregular. DM
Jessie Duarte is Deputy Secretary-General of the ANC