Steinhoff’s caretaker board and management have not risen to the challenge of good corporate citizenship.
After over a year of inquiry into the country’s worst corporate fraud, it released a mealy-mouthed summary of the PwC investigation for general consumption at the weekend, and then took the same version to Parliament on Tuesday.
The arrogance of its approach, so out of touch in a time of truth, can be said to be the outcome of white privilege. Justice has been slow at Steinhoff and public opprobrium has been tamped down by public commentary that has been surprisingly muted for the scale of the crime.
It is this privilege that has allowed former CEO Markus Jooste to treat Parliament like an outhouse when he appeared in September 2018 and to refuse to account to the PwC investigators.
It is this privilege that has allowed former Steinhoff chairman Christo Wiese to repeatedly claim he knew nothing about what was happening. It’s true that Wiese lost a fortune on Steinhoff after he reversed most of his assets into the furniture retailer which had big dreams of being the next Ikea. But a smart business person like him should have asked questions about exactly where the stratospheric profits were coming from.
Jooste is not named in the report’s summary. In fact, nobody is named and shamed and the crooks are soft-soaped as, "A small group of Steinhoff Group former executives and other non-Steinhoff executives, led by a senior management executive".
Jooste is the "senior management executive" and he and his merry band were only named when the parliamentary portfolio committee of finance insisted on it on Tuesday.
The "small group" of former Steinhoff executives mentioned in the PwC report are: Markus Jooste; Dirk Schreiber; Ben la Grange and Stehan Grobler. The other executives named are: Siegmar Schmidt; Alan Evans; Jean-Noel Pasquier and Davide Romano.
As Black Twitter says, "it’s nice to be white" and saved from the naming and shaming that is now standard as South Africa ramps up its fifth year of fighting state capture and corruption.
If a report like this had emanated say from former Public Protector Thuli Madonsela when she investigated the Gupta family, the commentariat would have strung her up.
Telling it like it isn’t
Let’s look at the report summary released to the public as the promised document of accountability.
It is a censored and spun document at a time when good forensic reports are all over the place. All the reports into the various state-owned enterprises and the testimony being presented at the various commissions of inquiry now in session around the country have been horrifying but they have had one thing in common: they tell it like it is.
The PwC report tells it like it isn’t. I’m not sure whether PwC wrote the final summary or whether Steinhoff’s extremely dexterous spin doctors put it through the whitewash.
In the opening pages, it reads, "PwC was asked to assist with an investigation into the occurrence of potential accounting regularities, or potential non-compliance with laws and regulations impacting on Steinhoff’s financial statements." Seriously?
What PwC was investigating was fraud, collusion, theft, money-laundering and insider trading, among a host of other crimes allegedly committed by Jooste and his inner sanctum. The investigators, a global team of hundreds pulled from the cream of what PwC has to offer, have found fraud of 6.5bn euros (R105bn calculated at Thursday’s close) but they do not call it fraud.
I checked and you will not find the following words in the PwC summary by Steinhoff: fraud, theft, money-laundering, insider trading, collusion or any of the myriad crimes that have been committed here. Not one.
Instead, you find language designed to obfuscate like this, "The PwC report finds that certain Steinhoff Group entities recorded sales to, or received benefits of income from entities that were purportedly independent of the Steinhoff Group but which now appear to be either closely related to and/or have strong indications of control by the Steinhoff Group…". In other words, this was fraud.
Take this statement: "The PwC investigation identifies transactions that result in profit and asset creation involving brands, intellectual property and know-how….The income from these transactions was in many instances not paid by the so-called independent entities to the Steinhoff Group, resulting in loans or other receivables owed to the Steinhoff Group that had little or no economic substance…".
In other words, they were making things up and creating fictitious accounts. That is fraud, corruption and possibly theft.
And then there is this. "The resulting inflated asset values were then supported by, for example: increasing the rental to be paid in terms of intergroup rental contracts for properties based on valuations that may have not have been reliable." That is mafia type organised crime and money laundering.
I could go on but you get the picture. I find it a distasteful summary that lacks respect for the public and for the many, many hardworking ordinary working people who save and trust that companies are what they say they are.
It is the kind of treatment that an untransformed business community is used to meting out to a public that too often is indulgent of outdated business practices that would not be countenanced in many parts of the world.
Most of the major asset managers bought the Jooste bluff and took huge knocks which have been passed onto those of us who save with them. It’s how the fund managers work.
The Steinhoff caretakers have argued that the report is weak because it has to protect confidentiality. "The PwC report (and the related information gathering and investigation) is subject to legal privilege and is confidential."
Why, I wonder? The company is facing a slew of lawsuits and it’s protecting itself, but the public deserves the unvarnished truth about South Africa’s spectacular corporate fraud. This is not that truth.