Markus Jooste pleads innocence in Steinhoff meltdown
The disgraced former CEO of retailer Steinhoff blames a former partner and Deloitte for the ‘uncertainty’ that caused the slide in the share price
Markus Jooste, the disgraced former CEO of retailer Steinhoff, tipped his hand on Wednesday to his likely defence when the Hawks eventually get around to asking him to explain his role in SA’s largest corporate collapse.
On Wednesday Jooste appeared for the first time in public since allegations of fraud on December 4 caused a R185bn rout of Steinhoff’s share price — damaging SA’s reputation as an investment destination — and led to market panic.
Until now, Jooste has resisted all efforts to explain what happened at Steinhoff, Europe’s second-largest furniture retailer after Ikea. Jooste appeared flanked by four lawyers after parliament subpoenaed him.
But rather than explaining his role in the fraud, he insisted: “I did not know of any accounting irregularities.” Instead, he blamed a former European partner and auditing firm Deloitte for the “uncertainty” that he claims caused the slide in the share price.
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Jooste’s version is that Andreas Seifert, one of his former European partners, complained to the German authorities in 2015, which led to the prosecutors cooking up a case against him. He said Deloitte had insisted on a forensic investigation into Seifert’s claims, which Jooste thought was unnecessary, as German law firm FGS had already found no evidence.
He said this would have delayed the release of Steinhoff’s audited results, which would have led to “dire consequences”. So he proposed firing Deloitte and hiring new auditors who would have been willing to sign off the accounts.
“I made it very clear that if that was not the way the board wanted to go, I did not see my way forward to go through this, after I had been through this for three years of my life fighting and explaining the transactions,” Jooste told MPs.
But this appears to contradict an SMS he sent to colleagues on December 5 2017, in which he admitted to “big mistakes” and said: “I must make it very clear none of Danie [van der Merwe], Ben [la Grange], Stehan [Grobler] and Mariza [Nel] had anything to do with any of my mistakes”.
Grilled about this SMS, Jooste claimed that he was referring to the 2007 deal with Seifert as his “big mistake” — an explanation that MPs struggled to buy.
Jooste said that all those Steinhoff executives he named knew about the historical issues with Seifert.
Steinhoff insiders say that what really happened was that on December 4 Jooste was due to arrive to provide documents to Steinhoff’s audit committee, but he never arrived. Instead, he sent a lawyer to meet Steinhoff’s former chair, Christo Wiese, and offer his resignation.
Few MPs bought Jooste’s explanation. Yunus Carrim, the chair of the parliamentary inquiry, described Jooste’s answers as “incredulous” and said there was “not an inkling of regret or a sliver of acknowledgement” of his responsibility for what happened.
Jooste’s testimony also directly contradicts the explanations offered by Steinhoff, which went so far as to lay a criminal charge against Jooste for fraud in January, and that of La Grange, Steinhoff’s former CFO, in parliament last week.
Jooste’s claim that there were no errors in Steinhoff’s books also appears flimsy in light of the fact that since he left Steinhoff has “restated” its accounts, while dramatically slashing the value of its property portfolio by half, to €1.1bn.
Before Jooste’s resignation, Steinhoff claimed it had made a €711m profit for the six months to March 2017.
This figure has since been “restated” as a €362m loss — a €1.07bn swing in what was originally reported. This shows massive errors in the accounts during Jooste’s tenure.
Craig Butters, a portfolio manager at Prudential Investment Managers, said it was difficult to believe much of Jooste’s testimony, especially as Steinhoff had since also had to write off another €10.9bn in equity from those previously reported numbers.
“It was also very revealing that when Deloitte didn’t want to sign off the 2017 financial statements, Jooste’s solution was to fire Deloitte and change to auditors that would sign off the accounts,” he said.
Jooste, however, insisted his only mistake had been that he “chose the wrong partner”, and Steinhoff “grew too fast, too quickly”.
The hearing was attended by representatives of Steinhoff, who will have taken note of how the former CEO effectively branded them as liars, as well as from the Hawks, the crimefighting unit that told parliament last week it did not have enough evidence to act against anyone.
In closing proceedings, Carrim implored them, “surely there’s enough here for you to act … parliament can do so much, but ultimately it’s the regulator and the Hawks and the NPA [National Prosecuting Authority] that must do their jobs”.
Correction: September 6 2018
This article was amended to clarify that Steinhoff is Europe's second-largest furniture retailer after Ikea, not second-largest retailer.