Steinhoff CEO Louis du Preez addresses investors in Cape Town on August 13. Picture: REUTERS/MIKE HUTCHINGS
Steinhoff CEO Louis du Preez addresses investors in Cape Town on August 13. Picture: REUTERS/MIKE HUTCHINGS

There was a sense of more corporate history in the making at Steinhoff’s first results presentation since the dramatically historic event of December 2017.

Inevitably this first public account of what has been going on behind the scenes for the past 20 months was a riveting event. Stakeholders globally got a sense of the near-heroic efforts being made to rescue some value from the destruction allegedly caused by former CEO Markus Jooste and seven associates.

It has become fashionable to respond to every stark piece of communication released by the Steinhoff board with jaded cynicism, as though proving that we are now far too sophisticated to be duped by Steinhoff again. And so, a collective shrug of shoulders has tended to greet the more than 100 densely legal Sens statements of the past 20 months. Even the remarkably constructed 2017 and 2018 annual reports were dismissed as little more than interesting historical documents.

The Steinhoff team’s task is undoubtedly made all the more challenging by the constant realisation that it might indeed all be for nothing — no value saved, no-one found guilty.

For those who have lost large portions of their wealth, the billions of rands being spent on advisers and auditors may only add insult to considerable injury. To them, the remarkable efforts of the Steinhoff board and a team of about 150 employees may seem like little more than a vanity project if nobody ends up in jail or if no value is rescued.

The Steinhoff team’s task is undoubtedly made all the more challenging by the constant realisation that it might indeed all be for nothing — no value saved, no-one found guilty.

For now — and until December 2021 — the creditors have been stabilised, but with an attendant cost of almost €1bn a year this is a play for time rather than a solution.

And as the creditors are shunted — temporarily — from centre stage, litigation to the tune of billions of euros rushes in to take their place. The next several months will undoubtedly be focused on reaching what CEO Louis du Preez describes as a “strategic solution” to this litigation risk. This could be a considerably more challenging process than reaching a solution with creditors.

For creditors all that was at stake was substantial amounts of money. For the individuals heading the list of litigants — including Christo Wiese, GT Ferreira and Jaap du Toit — there is much more. They have not only lost money, but their reputations have been sullied. They were allegedly duped by Jooste who, with the considerable benefit of hindsight, seems a somewhat tawdry character.

Similarly, emotion might get in the way of persuading many of the shareholders involved in class actions to accept a “strategic solution”. For Du Preez and his board colleagues the really tough negotiations may only be starting.

The team certainly comprises a world-class group of individuals. The results presentation provided “outsiders” with a glimpse of their skills and commitment. That nobody has yet pressed the liquidation button is testimony to those skills and commitment.

The substance of the presentation will undoubtedly be the subject of accounting and corporate governance lectures for decades. Former accounting professor and Steinhoff non-executive director Alex Watson, who must have interrogated some extremely imaginative financial statements during her years of lecturing, described Steinhoff’s as the “most complicated you’d ever come across”.

Remarkably, given the huge amounts of time and money spent unravelling the events that led up to Steinhoff’s collapse in December 2017, Watson says they have still not been able to identify some of the parties on the other side of transactions.

But this unprecedentedly complex and costly exercise needs to be more than merely fascinating. It must provide us with some insight into how it was that highly regarded professionals globally were duped. It’s understandable that bankers and lawyers, with an eye on attractive fees, would have been easy fodder but Steinhoff’s victims extend far beyond bankers and lawyers. How was it that a supervisory board with some of SA’s top business names failed to see this wreck rumbling towards them?

Perhaps the most we can hope for from chair Heather Sonn and her team is that their findings will help to protect us from another Steinhoff. But how sad is it that human greed will mean this protection may not last long.


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