Steinhoff – if nobody knew nuffin’ how did they justify their salaries?

According to Moneyweb, both Steinhoff’s former chairman Christo Wiese and their former chief financial officer Ben la Grange told Parliament they had no idea that there was anything wrong with the company’s books.

In fact the entire supervisory board insisted none of them knew anything about accounting irregularities until they were ‘discovered’ in December.

My Take

I remember when Christo Wiese slammed the obsession people have with attacking the rich, as quoted by News24.

“The question government must ask is: ‘What better person is there to be managing and investing money than a person with a proven track record to earn it justly?’”

An Oxfam report had found at the time that he was one of three South Africans who own about as much as the bottom 50%.

Now he’s claiming ignorance about how his company worked, or that there was anything wrong with its books.

This is a bit strange considering that according Fin24, German authorities had searched Westerstede offices of Steinhoff Europe Group Services, a German subsidiary, in November of 2015.

The Daily Maverick reported that Sygnia Group CEO Magda Wierzycka stated the following about the saga:

“Off-balance sheet companies were set up to hide losses, executives collaborated with each other to defraud investors, and debt was taken on at a massive pace. The warning signs were all there. The most obvious of those was the cynical move by shareholders in PSG to, in a sleight of hand, swap their shareholding in PSG shares in South Africa for a suddenly-Frankfurt-listed Steinhoff, thereby externalising their wealth without the need for foreign exchange controls approvals.”

Yet, nobody knew nuffin’.

What basically happened with Steinhoff was that they started a company buying spree – acquiring companies outside of South Africa.

These companies were struggling, and in order to make them look better – they traded with undisclosed related parties.

Normally according to IFRS these would have to be consolidated so that investors could see the big picture – but the companies’ ownership was structured in such a way as to obscure the fact that Steinhoff was basically trading with Steinhoff. That took infrastructure and planning.

And all of this was done, with nobody knowing nuffin’.  Sure.

Then how could any of the bosses justify their massive accumulation of assets? If they were so ignorant that this happened right under their noses without any of their knowledge, well, what were they actually doing for all of that money?

Assuming that Weise wasn’t lying like a dog, would you say that it would be possible for him to have earned that money “justly”, while remaining so ignorant of his own company’s dealings?


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