Former Steinhoff chair Christo Wiese appears to have been completely blindsided by the crisis at the global retail group.
Despite being named in connection with numerous related-party transactions in Steinhoff’s just released 2017 annual report, the retail magnate told parliamentarians at a hearing in January 2018 that the events at Steinhoff hit him like a "bolt out of the blue".
Wiese was the most frequently mentioned name in the annual report, receiving considerably more mentions than even former CEO Markus Jooste. The annual report, which was released just before midnight on Tuesday, took 17 months to be completed by Deloitte.
On Wednesday Wiese did not immediately respond to requests for comment on the dramatic document.
Wiese’s name is mentioned 72 times in the report, in many instances in relation to complex related-party transactions. The transactions are identified in detail at the end of the 329-page report. They include the November 2017 prepayment by Steinhoff to Wiese for his Shoprite shares as well as trading in a valuable block of Brait shares between 2014 and 2016 by Steinhoff and Upington Investments, a company controlled by Wiese.
By contrast Jooste is mentioned just 48 times.
In April 2018 Wiese, who became the single-largest shareholder in Steinhoff after selling Pepkor to the group in 2015, lodged a R59bn claim against Steinhoff for the value of his Pepkor investment.
One analyst said it was evident from the report that Steinhoff’s most significant asset in terms of generating cash profits is Pepkor.
"The report makes clearer than was previously apparent that the other assets are not making much contribution. This might concern the group’s creditors who recently signed a voluntary debt standstill agreement with Steinhoff," said the analyst.
The group’s other major assets include France-based furniture retailer Conforama, US group Mattress Firm and the UK’s Poundland.
The much-awaited 2017 annual report is a smorgasbord of convoluted related-party transactions and instances of ineffective corporate governance oversight that presents a damning picture of many of the parties involved in the group’s rise and dramatic fall.
Related-party sales of properties used for hunting, the acquisition of a Conforama-owned Portugal-based property to enable Steinhoff executives to obtain "golden visas" from that country, Jooste’s unauthorised payment of a multimillion-rand bonus to himself and the related party purchase and subsequent sale of a 4.9% stake in Brait are just some of the transactions detailed in the report.
Armand Kersten, head of European relations at Dutch Investor Association VEB, which has launched a class action against Steinhoff on behalf of shareholders, describes the report as unprecedented.
Kersten notes that at the end of the report the auditors state they cannot give an opinion or assurance on the information contained in the report. "I’ve rarely seen an unqualified opinion like this before. It’s one large red flag," said Kersten.
In one demonstration of corporate governance weakness, Jooste was awarded, on the basis of his own instruction, a €500,000 bonus in 2017. The bonus was not proposed by the remuneration committee nor was it approved by the supervisory board. Shortly after, also on his own instruction, Jooste received an additional €1.57m.
Tyrrel Murray, a Steinhoff spokesperson, told Business Day on Wednesday the release of the report could not have been delayed to accommodate the public holiday in SA as it had to follow the rules of German and European regulators.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.