It took about five minutes into Markus Jooste’s testimony in room V454 at parliament to realise that he was not going to take responsibility, admit culpability or claim even a modicum of guilt for the disaster that was the Steinhoff crash in December 2017.
Jooste performed admirably under circumstances which, in actual fact, wasn’t that trying at all. It was clear that his powerhouse legal team, consisting of two senior counsel and two lawyers, did their preparations thoroughly, and that Jooste’s line of defence was to admit nothing, give away even less and keep a square jaw. And it was equally clear that not all MPs knew the minutiae of events in December 2017.
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The former Steinhoff CEO pinned the loss of an estimated R200bn in company value (and billions in losses elsewhere) on the failed joint venture with an Austrian partner, auditors Deloitte who stubbornly refused to sign off on the 2016 financials and the uncertainty the then-board created by agreeing with Deloitte. And he added, when he left Steinhoff, the company was in good shape, operating in 30 countries, owning 12 000 stores and employing 130 000 people.
“There are no accounting irregularities in Steinhoff that I am aware of,” he told MPs.
Battening down the hatches
It’s pretty clear that Jooste is battening down the hatches. Ten months after the disastrous week in December when the Stellenbosch-based behemoth of a company was forced to its knees, Jooste seems to be emboldened.
He told MPs he has been for one interview at the Financial Services Board in Pretoria, but that neither Steinhoff nor the investigators from PricewaterhouseCoopers have been in touch with him. And the Hawks, in the nine months since a complaint was laid by Steinhoff’s audit committee chair Steve Booysen, hasn’t moved an inch.
The odds certainly favour Jooste. And that obviously guided him and his legal team when they decided on a strategy to counter what in the end was a pretty sterile line of questioning from most MPs.
Pinning the blame
Jooste’s first line of defence was to pin the disaster on Andreas Seifert - whom Jooste initially identified as a partner to conquer the European market. Things went swimmingly at first until Seifert couldn’t come up with the cash to seal a 50:50 deal and the relationship was terminated. This led to Seifert spreading rumours and innuendo about Steinhoff which culminated in the raids on a Steinhoff subsidiary and related premises in 2015, Jooste claimed.
For the next two and a half years he was involved in endless litigation related to the termination of the Seifert partnership as well as investigations into allegations of fraud. But, he told MPs, Steinhoff commissioned two “independent” German accounting and legal firms to investigate the matter and they found no wrongdoing. He was therefore at the end of his tether in November 2017 when Deloitte, in the face of all evidence, insisted on another investigation.
Panning the auditors was his second line of defence.
“I explained that the investigation had already taken two years and that it found ‘no evidence which caused us (the investigators) to conclude that the accounting practices were not in compliance with relevant standards…,’” Jooste told MPs. Even on his own account, Jooste was livid, and demanded that Deloitte’s mandate be terminated because “they lost their independence in the matter”.
Except it seems that chairperson of the board Christo Wiese and chairperson of the audit committee Booysen didn’t agree and designated PwC to investigate the matters Deloitte identified. But Jooste was clearly determined to force the issue and get the auditors to sign off on the financials.
“We needed to get new auditors and they had to finalise the statements before the end of January,” he said.
Impact on the company
His third line of defence was to emphasise the impact on the company should they not issue audited results by the end of January 2017. He told Wiese, Booysen and MPs that failure to do so would lead to the loss of confidence in the company by investors and lenders and that it would have disastrous consequences.
On his own version it is clear that Jooste, over the weekend of December 2 to December 3 2017, was deeply troubled. He was angry at Deloitte refusing to sign the books, he was exasperated at his senior colleagues agreeing with the auditors and seemingly anxious that he was unable to change the outcome. It was within this context that he sent a damning note to colleagues apologising for “big mistakes”, “taking the consequences like a man” and attempting to absolve four senior executives.
The reason why Steinhoff’s stock declined by almost 90% was obviously because it couldn’t publish its financials – but the reasons why it couldn’t do so was because of allegations of fraud.
The company also said as much in its SENS announcement on December 6, 2017. And Jooste never once substantially addressed the overstatements of assets and profits former Steinhoff CFO Ben la Grange identified in his parliamentary appearance last week, including the allegation that Jooste withheld information from him.
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