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Deafening silence: Is the SA Reserve Bank captured by S...

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Deafening silence: Is the SA Reserve Bank captured by Steinhoff?


Reggie Moalusi is the Former Editor in Chief of Daily Sun, with more than 17 years’ experience in the media industry

The Reserve Bank has a rock-solid reputation and this can disincline citizens to hold it accountable. This crossed my mind recently as the fascinating and complex debate about the biggest corporate heist in the country’s history, Steinhoff’s unresolved gigantic fraud, continues to play out.

The details can be mind-numbing. Sometimes it is hard to follow the investigative news reports, the legal issues and other technicalities that seem to require degrees in finance before one can make sense of it all. 

However, detail can hide breathtakingly simple questions.

I want to raise questions about the comfort of Steinhoff in still not making amends for their illegal and unethical behaviour, and the Reserve Bank’s silence about how it features in this saga. The Bank has some basic questions to answer and their silence on this is potentially culpable (if they are propping up Markus Jooste and Steinhoff) or, at the very least, their silence is unhelpful in helping claimants to receive a just and equitable outcome.

Steinhoff took about 19-billion worth of assets offshore to Europe from 2014 onwards after getting permission from the Reserve Bank to do so in terms of exchange control laws and regulations. The mandate of the Reserve Bank is to make sure the flows of money out of the country do not harm the economic interests of the country. 

You do not want to restrict the economic freedom of either individuals or corporates. But that freedom should be balanced with the goal of keeping an eye on the likely effect on the local economy that allowing assets or monies to be taken abroad would have. 

When an entity like Steinhoff wants to list in Germany and have its headquarters in the Netherlands, with consequences for its assets here in South Africa, the Reserve Bank must determine, factually, how going abroad will affect the economic activities and value of the company in South Africa, and thereby also the impact on local stakeholders. It is a balancing act on the Reserve Bank’s part that requires access to true facts.

Here comes the nub of the issue. The only way the Reserve Bank can do its job lawfully is based on accurate information put before it. Steinhoff lied. And that is the understatement of the century. They inflated their financials in gross material respects. Steinhoff fraudulently misrepresented itself to the Reserve Bank. They did so to many companies which they induced into doing business with them. 

In fact, one theoretical possibility is that the Reserve Bank is a victim of Steinhoff’s. We would only know if that were indeed so if the Bank told us the truth instead of being so coy. 

But what is the logical consequence of Steinhoff pulling the wool over the Reserve Bank’s eyes? It is simple: the Bank took decisions based on fraudulent misrepresentation. That is not consistent with the proper application of the law and regulatory prescripts guiding exchange controls. How could the Reserve Bank ever have taken an accurate and honest decision about whether to allow money and assets to be taken out of the country if they were lied to by Steinhoff in the financials placed before the institution? It means that the initial Reserve Bank decision was itself not based on a proper consideration of the true facts. It was therefore devoid of legality. 

There are two questions the Reserve Bank must be asked by journalists immediately, and repeatedly until they answer them as a matter of urgent public interest: 

  1. Do you accept that Steinhoff fraudulently misrepresented itself to you in 2014? and 
  2. If the answer is “yes” – as we know it is by Steinhoff’s own proven admission – do you accept that the logical and irresistible consequence of such material fraudulent misrepresentation is that the Reserve Bank must either rescind or (/and) review that original decision to grant Steinhoff permission to move to Europe? 

No one is going to tell the Reserve Bank how to judge the matter now. But it has a public policy and legal duty to review a decision that cannot stand in the face of known falsehoods as its 2014 foundation.

What the Reserve Bank is doing instead is to choose silence. It is behaving as if Steinhoff did not lie to it. This undermines the credibility of the institution, including the credibility specifically of our governor, Lesetja Kganyago, as the most important leader in the organogram of the Reserve Bank. 

Why is he silent? Why is he not taking the public into his confidence? Did his predecessor, Gill Marcus, discuss the case with him since this case must surely have been, in a handover, one of the top-five issues for the Reserve Bank to still resolve? What did she know? What did she share?

Regardless of that history, now that by its own admission Steinhoff had lied to the Reserve Bank and many of the details are now public and trite, why is the Bank is refusing to tell South Africa what its position is on a decision it took in this horror story of grand economic theft, based on fraudulent misrepresentation?

If the decision to allow Steinhoff to take assets out of the country must be reviewed, then so be it. That is important to do then. The Reserve Bank must show a commitment here to not taking fraud lightly. It also must show a commitment to the principle of legality. If it leaves this 2014 decision intact (and another one in 2020 which should not have happened before resolving the 2014 one) it would be sending a message that the law does not matter, and that delinquent companies should try their luck by also presenting the Reserve Bank with fraudulent information in future and seeing if they can sneak assets out of the country under false pretences.

Many brilliant business minds were also conned by Jooste and his mates. It happens. If the Reserve Bank is a victim, it must say so. But as a critical state entity with a constitutionally crafted mandate, it must now deal, even if belatedly, with the unlawful permission it granted Steinhoff in 2014. If the Bank does not review the decision, then one will have to consider the horrible possibility that maybe Steinhoff also knows a thing or two about how to capture parts of the state.  

Kganyago should tell us if he is the head of an entity captured by Steinhoff. If not, can we have an on-the-record response from the Reserve Bank to the elementary legal question of how it is going to respond to an unlawful decision it took, courtesy of the fraudulent misrepresentations from Steinhoff. 

We wait with bated breath. DM/MC

Reggie Moalusi is the Former Editor in Chief of Daily Sun, with more than 17 years’ experience in the media industry.


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All Comments 4

  • A apt reminder of how the Madoffs (bless his soul?if he had one) of this world operate. We are never free of such pernicious & vicious influences! They are ever-present and reside quite comfortably and adroitly it seems, alongside virtue and heroism. Vigilance is our only tool to try to counter it!

  • Such a moronic and malicious statement! Hasn’t this supposed former editor with 17 years experience realised that the wheels of justice turn ever so slowly, if ever in SA. There are so many serious cases that have happened way before the Steinhof one and are yet to see the light of day. I

  • The mistake is not the fault of SARB – nor is the fact that Steinhoff advisors and directors lied. The blame rests with the directors and advisors. They all knew of these shenanigans at Executive level. They chose to go along to cover their fees and status. You want the crooks? Follow the money.

  • Jooste was clever : he exploited the carrot of “externalising” and a bunch of very clever people fell for it. Externalising was so appealing that none of them looked under the bonnet.

    But you cannot hide from the cashflow statement forever.

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