Steinheist author speaks at iLembe Business@Breakfast

Award winning journalist and author Rob Rose held a captive audience as he recounted the story behind South Africa’s biggest corporate fraud at the iLembe Business@Breakfast morning hosted at Exclusive Books, Ballito Junction last Thursday.

In his most recent book, Steinheist: The inside story behind the Steinhoff scandal, Rose examines the details behind the Stellenbosch-headquartered multi-billion dollar global furniture and household goods group whose large-scale deception wiped more than R200-billion off the Johannesburg Stock Exchange and knocked the pension funds of millions of ordinary South Africans.

Formerly one of the JSE’s ten biggest firms by market capitalisation with 130,000 employees worldwide, Rose layed out the events which led to the catastrophic Steinhoff crash of December 2017.

For years, its former CEO Markus Jooste and his inner circle wove an intricate web of obscure deals hidden from shareholders to covertly enrich themselves.

Founded in 1964 by German businessman Bruno Steinhoff, based on the simple model of buying furniture cheaply in communist East Germany and selling it in the relatively richer West.

In 1989, following the fall of the Berlin Wall and the reunification of Germany, Steinhoff acquired a number of businesses in the former East Germany. He later expanded to Poland and Hungary.

One of his close friends was German industrialist Claas Daun, who had bought a number of furniture companies in SA and invested in Gommagomma, a furniture company run by Marcus Jooste in the early 1990s.

In 1995, Daun sent Jooste to visit Bruno to go and have a look and see if there was something they could create between the two businesses.

The three formed a joint venture in SA that would become the platform for the modern Steinhoff.

The company moved its headquarters to South Africa in 1998, attracted by the low production costs, and went public on the Johannesburg Stock Exchange that same year.

A massive multinational company with over 12 000 stores in over 30 countries, these stores belonged to some 40 local brands. In South Africa these include Ackermans, Pep, Tekkie Town, Russells, HiFi Corp, Incredible Connection and Hertz car rental, among others.

In 2015 it acquired South African tycoons’ Christo Wiese’s Pepkor Holdings for around R60 billion. This meant that Wiese become one of Steinhoff’s largest shareholders, although the value of his shares have fallen sharply in line with the groups share price decline.

The former chairman has filed a R59 billion claim against Steinhoff after losing billions of his net worth following the spectacular crash.

Having conducted in-depth interviews with key players in Germany, the Netherlands and South Africa Rose questioned whether Steinhoff’s high-powered board were deceived or party to the play?

“Despite the fact that Steinhoff had one of the most qualified boards of directors, boasting three persons with doctorate degrees in accounting, Jooste insiders still managed to shift nasty liabilities off Steinhoff’s balance sheet to secretive companies overseas in order to present a false picture of the profits,” said Rose.

“Perhaps the board of directors did not apply enough skepticism. This is once in a generation fraud and it is important that there is accountability.”

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