Life after Jooste, Christo Wiese opens up

Once one of the richest men in South Africa, Christo Wiese lost a large chunk of his fortune following the corporate fraud at Steinhoff. The company was a hugely popular stock with investors, with thousands (including Wiese) losing out. Wiese joined the BizNews Power Hour for a special 30 minute segment, with the SA business mogul spewing nuggets of knowledge and wisdom throughout. When asked how he feels about everything that has happened he said ‘I had to look myself in the mirror. I saw 50 years of my work go up in smoke and I had to ask myself how I’m going to cope with it. I decided that I don’t mourn the loss of money’. – Jarryd Neves

Christo Wiese on Steinhoff legal claims being settled:

After the implosion in December 2017, it was only in April 2018 – some four months later – that Steinhoff acknowledged that there was fraud and accounting irregularities – or whatever they called it. At that time, I issued a summons for the money that I invested in Steinhoff, which was close to R60bn. But in issuing the summons, I wrote a letter to the company to say that on the face of it, there was no way that all the creditors and claimants could hope to recover 100 cents in the rand.

Therefore, my proposal is that as soon as possible, there should be an attempt to reach a settlement. In the event it took more than three years for other people to come to the same conclusion. During those three years, billions of rands were spent on various lawyers [and] auditors – because people did not see the sense of reaching a settlement. So finally, at least we are now at a point where hopefully a settlement will be reached.

On suggestions to others who have also lost money in Steinhoff:

If you look at what has happened, these smaller investors – they’re called market participant claimants – they’ve banded together in different class action groupings and they have, in fact, pursued their claims. Although it will be modest payouts compared to their losses – but that applies to all of us – there will be payouts to them. I think people in that position have done what they could in this unholy mess.

On what he can expect back from the R60bn loss:

I think those numbers are now in the public domain and I will get 18.7 cents in the rand. But also paid in different sorts of currencies, if you will. But that will all be in the public domain – if it is not already in the public domain. Other contractual claimants, like myself, get a higher payout, up to 29 cents in the rand. That stems from the fact that I made substantial concessions, in order to facilitate a settlement. I just made up my mind that, philosophically, I was happy to settle for a certain amount. I’m not going to walk around begrudging the fact that other people get more. It was all in an attempt to reach a settlement because it’s in nobody’s interest that the company should go into liquidation.

On the Steinhoff fraud:

How is it possible that this guy could have taken so many of us for such a ride? But then – as I have said often in the press – you’ve got to remember that these fraudsters managed to get through all the gatekeepers for a decade and more, getting through the internal auditors in Steinhoff. Getting through the various audit committees, the main board audit committee, the regulators, the external auditors, getting through the ratings agencies.

You know as well as I do that the ratings agencies look everywhere. They analyse everything to death. The bankers who lend Steinhoff tens of billions of rands – they got through all these gatekeepers. Quite frankly, what gets me very annoyed is that people say, ‘But Christo, you should have known’.

How should I have known? There’s constant reference to ‘you also did it, the chairman of Steinhoff.’ [It] is factually correct, but for goodness sake – I was chairman of Steinhof for 16 months. I was chairman of Shoprite for 40 years and chairman of Pepkor for 40 years. I was chairman of the IDC for nine years, but I am now the chairman of Steinhoff. It’s crazy how the world works.

On what he could have done:

You know, I often obviously debate with friends and  say, ‘what is it that I should have done that I didn’t do?’ I explain to people [that] I first invested in Steinhoff in 2012/13 when I sold Lanzerac – to what I thought was a consortium – headed by Jooste. The offer was that I would be paid for the estate in Steinhoff shares. Then Jooste came with a proposal – a very clever proposal – to switch my PSG shares into Steinhoff.

And here is the enigma: he had more PSG shares than I had [and] he also put his shares into Steinhoff, which at that stage was worth over a R1 billion – a billion and a quarter, if I remember correctly. That’s how I got involved. I then accepted a board appointment and I sat there for three years watching how the company was run, what their level of expertise was, how well they complied with all the regulatory authorities and how up to speed they were with stock exchanges.

Everything looked perfectly in order, as I say, including the fact that Steinhoff kept getting an investment grade rating from the ratings agencies. So I say to myself, what more could I have done? And the answer is, quite simply, I don’t know. Terrible as it may sound. But the lesson I have learnt, is if the CEO in a business himself is the main fraudster and the mastermind, you have no chance. I don’t know what must happen to prick the bubble.

On Markus Jooste:

The last time I spoke to him was on December 5th – the day of the fatal board meeting – where I had to advise the board what had happened, having become aware of it only four or five days prior to the meeting. Jooste, the previous night, sent me a message with a lawyer to say that he’s offering his resignation and I must decide whether I want to accept it. I put it to the board of Steinhoff.

I said, ‘This is now what appears to have happened and Jooste has offered his resignation. My advice is that we don’t accept it, that I call him and get him to come back and help the people sort out the mess, because nobody knows where to start looking now’. I phoned him and he said to me that he will be at the office within two to three hours and he’s going to help. That was the last to this day that I heard of him.

On Whitey Basson, Johann Rupert and Markus Jooste:

The one thing I know, [is] that Rupert and Jooste did not like each other. They clearly were not on good terms. Whitey is the only guy who, very strongly, said to me that he doesn’t like Jooste. He expressed his views very strongly. It’s rather like the Craig Butters story that regularly comes up. Butters spoke to me in 2009 and said that there were things in the Steinhoff accounts that bothered him. Now, I took note of it and as I say, when I eventually went on the board, I tried to look at these things to try to make sense of it, but I saw nothing.

Something that I pointed out – this is something that is important to remember – you will recall that in December 2015, as Steinhoff was about to be listed in Frankfurt, there was a raid by the tax authorities in Oldenburg, Germany. They made certain very serious allegations. The board of Steinhoff immediately appointed a major forensics investigation firm in Germany called FGS. They’re a firm of some 160 partners and 300 odd professionals, lawyers, accountants and company law experts, with a brief to look at every one of the allegations made by the Oldenburg prosecutor. And they, until the last day – until December 5th – had sent reports that all was in order.

There was no sign of fraud, accounting irregularities or tax shenanigans, nothing at all.

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Comment from David Melvill:

Dear Alec

I so appreciated and loved this interview last night. You excelled with “BPH last night dominated by a brutally honest interview with former Steinhoff chairman Christo Wiese.” It was one of the finest interviews I have listened to. It gave superb insights into Steinhoff’s demise, and the way forward.

The three principals that Christo shared about his moving on from the matter were invaluable:

  • Don’t mourn the loss of money, (money comes and goes).
  • Count my blessings (it could have dragged on, or even gone into liquidation, it was a quick settlement).
  • I am not going to become bitter about this loss and betrayal and let it rule me.

You did so well in drawing the full picture for us of what went wrong and how the pretences were displayed and convinced even the best auditors.

On a personal note, I had the privilege of meeting Christo some years ago in Stellenbosch. We were both standing in a long queue to register our children for studies at the University of Stellenbosch. He was registering his youngest daughter for a degree in International studies. He was most humble and gracious. I marvelled that this important man stood so patiently in the queue and furthermore he spoke so freely to all of us around him. Had I not known he was a most successful businessman, I would never have guessed it.