By BO Staff Writer
On Wednesday, news emerged that Steinhoff CEO, Markus Jooste, had resigned amid a fraud and corruption scandal at the Johannesburg and Frankfurt listed company.
Ben la Grange, Steinhoff CFO and CEO of Steinhoff African Retail (STAR), a part of Steinhoff which includes the control of Shoprite, also resigned.
The share price dropped more than 60% after the furniture retailer said it would launch an investigation into “accounting irregularities”.
The company has been under investigation for suspected accounting fraud by the state prosecutor in Germany since 2015.
The company is now being referred to as “a giant pyramid scheme” and the scandal being likened to the Enron bankruptcy scandal of 2001.
The downward spiral kicked off when Steinhoff announced on Tuesday that auditing firm, Deloitte, would not sign off on it’s financial statements, but the company would present its unaudited results on Wednesday as planned.
Jooste and la Grange then both resigned.
Wanting to maintain its veil of secrecy intact, the company announced that
“new information” had come to light relating to accounting irregularities that warranted further investigation. One wonders what “new information” this is, when the company has been denying allegations of fraud for two years. The “new information” has not been disclosed. So much for transparency and accountability.
Accounting and stock exchange publications – which were complicit in painting Steinhoff as an incorruptible trading giant – are now saying there were fraud red flags all over the stock.
According to Moneyweb, “[t]hese included the constant acquisition of poor or deteriorating businesses whose performance seemed to miraculously improve post-acquisition, even if only on paper; cash flow trends that did not correspond to Ebitda; rampant and dilutive equity raising and a tax rate that is materially lower than European competitors.”
A report by the Viceroy Research Group alleges that Steinhoff was “artificially” inflating earnings and there was a lack of disclosure pertaining to companies it acquired – all fancy words to say that the company was indeed fraudulently cooking its numbers.
Pension funds, including those of government employees which are managed by the Public Investment Corporation, will be the largest losers from the ponzi scheme, behind the white capitalist, Christo Wiese of course.
In a leaked letter to Steinhoff staff yesterday, Jooste says he made “some big mistakes and have now caused financial loss to many innocent people.” But, like any true capitalist, Jooste firstly apologises for “all the bad publicity I caused the Steinhoff company the last couple of months” and the people come later.
As the Steinhoff debacle unfolds, one wonders what would have happened to Jooste and la Grange if they were black? What would the media headlines look like? Would they be as calm and collected as they are now? Would the inflammatory words, “corruption” and “fraud” be more frequently used, rather than the more friendly “financial irregularities”?
Some on social media, including the Black First Land First (BLF) movement, have been calling for heads to roll and for Jooste to be jailed. Will another white man get away with murder?