A man who had once been the darling of international business – the leader of one of the biggest success stories in business – was now reduced to a man hiding from the world. The former business leader, wearing a baseball cap and sunglasses, would take his own life on a lonely beach – cornered by the authorities.
This is the outcome of the tragedy of former Steinhoff CEO Markus Jooste who once headed up a corporate giant based in BRICS member country, South Africa.
Rob Rose, author of Steinheist, a book and television documentary on the global scandal, spoke to BGTN in an exclusive interview following the suicide of the former Steinhoff CEO. Rose says “Steinhoff was the world’s second largest furniture retailer and owned companies in Europe, South Africa and Australia. It was a monster”.
The company was started by Bruno Steinhoff in Germany in 1964 and continued to expand, buying a stake in South African company Gommagomma Holdings many years later. This was part of a major expansion and the company listed on the Johannesburg Stock Exchange in 1998 and ultimately in Frankfurt just before the crash.
Rose says things began to go terribly wrong in 2015 when the German police first raided Steinhoff’s offices, suspecting fraud. It was of particular interest to many in South Africa because the upper management all originated from the country’s Western Cape with the university town Stellenbosch the centre of operations.
Steinhoff sponsored the Springbok Sevens Team and was a bastion of pride in local and international circles. However, Rose says the situation soon turned into a nightmare for the company’s board headed by chairperson Christo Wiese in 2017. The board met with auditors Deloitte who refused to sign off on their results calling into question R106 Billion in sales – saying the figures had been inflated. Wiese sat with his board and the auditors, who called for an immediate enquiry into the company.
Rose says there must have been outright horror when the CEO – who Wiese had trusted for many years – failed to pitch up when summoned, saying he was on has way and would be there “in an hour or so”.
The board waited with tensions rising. It was then clear that there was something very wrong.
THE DECEMBER 2017 CRASH
Jooste was in a corner – he had lied to the board and the auditors. Rose says he took a flight to Germany, claiming that he would get documents to sort out the “misunderstanding” over the company’s results.
But there was lie after lie. There would be no clear explanation apart from that fraud had been committed.
However, Rose says there are also questions about Wiese, the board and the auditors.
“You have three accounting PHD’s on Steinhoff’s board, this is probably the most resourced board in South Africa. That’s a superstar board,” said Rose. Despite this though, the blame was squarely laid at the feet of the CEO. On the evening of Tuesday 5 December, Steinhoff released a statement saying that “accounting irregularities” were being investigated and Jooste had resigned. When the markets opened the next day, the blood bath began.
The share price was reduced to a few rands – and in time a few cents. R200 Billion Rand simply disappeared in value. Many lost their savings, investment houses declared massive losses on their shares – even South Africa’s Public Investment Corporation (PIC) shuddered on hearing the news. The PIC invests the money for South African government pensions.
Many ask how R200 Billion Rand can simply disappear from the markets – where did it go? It can’t simply evaporate – can it? Well, it did, starting in 2016 when the price was around R99 a share and then falling over the next year, until December 2017, when the price dropped at a pace that has rarely been seen in business history.
Think of it this way. You buy a car for R300 000, but then destroy it in an accident. The car is no longer worth that amount – and is now worthless. That’s exactly what happened – Jooste destroyed the shares by lying about the company’s financial situation.
“There was a massive failure at a thousand different levels”, said Rose. Over the years auditors and bankers had not picked up the fraud. There appears to have been major trust in Jooste – some say blind trust. The real horror story emerged in the next few weeks. Wiese had lost an estimated R70 Billion rand – buying shares in the Steinhoff in exchange for his luxury Lanzerac wine estate and a stake in Pepkor. Others also lost billions. But Jooste managed to sell his shares for fair market value before the collapse and was accused of alerting friends who had also invested, to sell their shares.
Some money was paid back to those who lost considerable amounts through selling parts of the company, but all lost huge amounts in the end. It is widely believed that South Africa’s investigative arm, the Hawks, had been severely crippled in the era of State Capture during the tenure of former President Jacob Zuma and did not have the financial forensic capability to prosecute the Steinhoff matter for many years. But Rose says a team of prosecutors was finally assembled and set their sights on Jooste and others deemed to be responsible.
Seven years after the dramatic collapse of Steinhoff in 2017, Jooste was told to hand himself over to the authorities on Friday 22 March 2024. However, the day before, Jooste took another option – to end his life. Despite facing arrest for many years, he had continued to live in the coastal town of Hermanus in South Africa’s Western Cape. Words such as “Fraudster” had been frequently painted on the outer wall of his house, but he had lived with the shame.
But that Thursday, 24 hours before he was told to surrender to the police, Jooste walked down to the beach at a location known as Kwaai Water (Angry Water) and shot himself. The blood stains on the rocks marked the end of the road for Jooste – but not the saga. The Hawks have their sights on other executives. But Rose agrees that blind trust in a sometimes-aggressive CEO lead to the loss of billions of rands with a lesson to be learnt.
The devil is in the detail and the figures speak louder than any words.
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