The resignation of Steinhoff CEO Markus Jooste (and his Hansie Cronje-like letter to staff: "I made some big mistakes ... I never meant to cause any of you any harm") confirmed that the free fall of the Steinhoff share price was a calamity waiting to happen. The trashing of the share indicated that, in a sense, the fall of Steinhoff was priced in but not yet executed.

The share had an almost unbroken rise, from less than R20 in December 2008 to R91.80 in March 2016. But the questions kept mounting about Steinhoff: a series of rapid and not always explicable acquisitions, high debt levels, an unusually low tax rate and a lack of transparency. The share declined slowly and was sitting at R55.81 on Friday December 1. Seven days later it was at R6. The market had sensed something was wrong; last week it knew for sure.

We do not yet know exactly what happened at Steinhoff — and who in high places knew what, and when they knew. Again, questions have to be asked about the role of auditors and directors.

This could be SA’s largest, most expensive corporate fraud, with further contagion still possible and incalculable. The firm could also recover — there is a view that the operations are largely sound (though when questions are asked about the numbers, everything is thrown into doubt). Some investors see opportunity. The share rose by R3 or 32% to R12.35 in half an hour on Tuesday, before falling back.

But there have been damning allegations that Steinhoff desperately needs to refute. Directors such as Johan van Zyl and Steve Booysen (former CEOs of Sanlam and Absa respectively) must be embarrassed at what happened on their watch. And they will want answers.

A lengthy and detailed analysis published last week by Viceroy Research says Steinhoff’s "acquired businesses are struggling, but net income has been artificially propped up by a massive web of undisclosed related-party transactions ... it is possible this is just the tip of the iceberg. Considering Steinhoff’s poor cash-flow conversion it is impossible to determine from the outside what real profit is being generated".

This seems to be yet another case of investors (and directors) having fallen in love with a sweetheart CEO and a darling chairman. Even when some senior analysts expressed their misgivings, the market gave Steinhoff the benefit of the doubt.

Both Jooste and chairman Christo Wiese started as entrepreneurs, and there is respect for those who have become hugely wealthy from nothing. There seems to be some misconceived notion that, because they are so rich, they are somehow immune from normal standards of behaviour — as long as they keep delivering profit growth and dividends. The vulgarity of Jooste’s racecourse lifestyle, the fact that Wiese was caught in 2009 trying to board a plane from the UK to Luxembourg with US$1m in bank notes — such excesses are forgiven.

The thing is, boards must remember they are watchdogs, not cheerleaders.

Does the Steinhoff case demonstrate that our corporate sector is irretrievably corrupt or poorly governed? No. We have many fine businesses and people of integrity who run them. But what does seem to be true is that the erosion of the state’s investigative and prosecutorial capacity has bred a national culture of impunity. It would be surprising if this had not infected private business to some extent, but it means ruthless vigilance and action is required to restore corporate SA’s reputation.

A demonstration of humility from the likes of Wiese (and Koos Bekker, who has some tough questions to answer about MultiChoice’s defence of its monopoly) is long overdue.