The Struggle Of Steinhoff

Scandal-hit retailer Steinhoffcontinues to fight multiple battles in court, including with its former chairman, South African billionaire Christo Wiese.

- Ancillar Mangena

This one is for the history books.Steinhoff was one of Africa’s fastest-growing furniture retailers. Its board comprised some of the continent’s richest people. It had accumulated more than 12,000 stores in 30 countries over five continents and employed 130,000.

It was the darling of investors until people found out it set up companies off the balance sheet to hide losses and inflate earnings. Its share prices dropped in Frankfurt and Johannesburg nearly 90% and the company earned itself a spot on the lists of the most scandalous companies of 2017.

Since the news of accounting irregularities broke in December 2017, many thought the company would close its doors but it remains a stubborn survivor.

“The goal is to find out exactly what went wrong. I think auditors didn’t ask the right questions because at the end of the day, all you can do is rely on audited numbers. If that is not done correctly, it doesn’t bring confidence to the investment community. I also think directors didn’t look enough at what Markus Jooste was saying. A few people I have spoken to say Markus Jooste was a very charismatic and convincing man. Many people took what he said on face value and didn’t look further,” says Michael Treherne, Portfolio Manager, Vestact.

Now, Steinhoff is fighting many battles in court and on the stock exchanges to keep its doors open. One of the battles is with its former chairman Christo Wiese.

In an unexpected turn of events, Wiese served summons on Steinhoff International Holdings, a company he was part of until his resignation in December when the scandal broke. Through his company, Titan Group, he is claiming R59 billion ($4.37 billion) for investments made in 2015 and 2016.