Jooste pins Steinhoff collapse on businessman Andreas Seifert

Steinhoff’s former CEO Markus Jooste has blamed the collapse of the share price on market uncertainty created by the delayed release of the 2017 financial statements due to allegations of accounting irregularities by a former business associate.

Jooste appeared before Parliament on Wednesday, where he provided evidence to a joint sitting of the committees of finance, public accounts, trade and industry, and public service and administration.

His testimony was intended only to provide insight on "institutional flaws and challenges existing in our financial regulatory framework". None of the evidence he presented can be used in court proceedings against him.

In Jooste’s version of events, his biggest mistake was when he made the decision for Steinhoff to enter into a joint venture with Austrian businessman Dr Andreas Seifert – who, in retrospect was the wrong person to go into business with, he said.

Seifert owned a large mass discount retail chain which operated in Germany and Austria and smaller Eastern European companies. At the time, Steinhoff had an investment in Germany through Poco.

The businesses entered into discussions in 2006 about a strategic partnership and signed a memorandum of understanding (MoU) in January 2007. The businesses then merged to form a 50:50 joint venture (JV).

The MoU contained conditions that the businesses could only enter into other European countries through the JV, not separately.

In 2011, the JV bought Conforama but Seifert did not have money to pay his 50% for the acquisition, according to Jooste, who only found out "days before he [Seifert] had to pay".

"We facilitated for him to participate with a convertible loan note, substantially less than the 50%." Jooste viewed this as a cash flow problem and not an "integrity issue".

Then Seifert 2013 pushed for the Kika/Leiner acquisition, Kika/Leiner was Seifert's biggest competition in Austria.

“The real red lights came up when that transaction was completed. There was again a problem for him to participate with money,” said Jooste.

This resulted in a fallout in November 2014, and the relationship with Seifert was terminated in January 2015 on legal advice, Jooste explained.

After that the litigation against Steinhoff commenced, as did the allegations of accounting irregularities, Jooste pointed out.

When probed by EFF MP Floyd Shivambu as to how Seifert is responsible for Steinhoff’s collapse, Jooste said that Seifert was the one who had taken all the information from their business engagements over eight years to German authorities, alleging misconduct in tax management and other accounting irregularities in the European subsidiary.

The probe by German authorities and two independent probes commissioned by Steinhoff in 2015 later found that there was no evidence to support Seifert's allegations. 

But Steinhoff’s auditors Deloitte did not want to sign off on the 2017 financial statements and called for further probes into allegations of accounting irregularities. This came days before the scheduled release of statements on December 6, 2017.

Jooste said that given that there had already been a probe which lasted two years, establishing another would delay the release of results which is “devastating” for investor confidence and other credit lines and the share price. He proposed that Steinhoff recruit a new auditor and that in the meantime unaudited results be released.

The idea of accounting irregularities suggested fraud.

"I was not aware of any accounting irregularity in the books of Steinhoff," Jooste insisted.

But the board did not side with this decision and the resulting uncertainty in the markets due to the delay in the release of the financial statements saw the share price fall, he explained.

Financial losses saddening

Jooste, who said he was not at Parliament to comment on the financial losses, said that he was saddened by what happened at Steinhoff and the losses to people that followed.

Jooste’s family trust which owned investment holding company Mayfair owned 68 million shares. And on the day of the collapse of the share price, it was estimated that he lost R3bn. Mayfair has since sold all its Steinhoff shares as part of collateral for financial loans from banks.

Jooste also said he didn't blame anyone at Steinhoff for what had happened.

“I did not come here to blame anybody. I personally believe all the colleagues I worked with worked in the best interests of the company. They gave their lives, it was part of the daily DNA of the business.

"I never lied about the activities of the company," he emphasised. 

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