There’s nothing quite like a sustained bear market to make the idea of using shares to guarantee a loan to buy the same shares seem like a poorly conceived idea. For years as share prices moved inexorably upwards it looked like a winning tactic for both the lender and the borrower. It must have looked like money for old rope for investors with a high tolerance for risk, a category that included Christo Wiese and many of his associates. For years it worked very well, until it didn’t.In 2017 Wiese and his banks took a multibillion-rand knock when a margin call on some of his Steinhoff shares forced him to offload them at a huge loss to repay the banks. Earlier in June, Steinhoff Africa Retail, soon to be renamed Pepkor, revealed a R500m gap in a loan facility provided to its executives in 2011. The loan was to cover the purchase of Pepkor shares and the deal must have looked like a no-brainer for much of the first six or seven years. At one stage the executives were showing a fivefold...

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