Steinhoff’s biggest shareholder, Christo Wiese, told a parliamentary committee investigating lapses in oversight over Steinhoff, that the impending calamity in Steinhoff came like a ‘bolt from the blue’.
“Normally when you are in a business you can see problems coming – for instance sales go down, liquidity dries up, people start to leave – and you can take action; in this case it was a bolt from the blue.
“I’m conscious of what I’m advised not to say,” Wiese told the joint committees. “I must choose my words carefully. I became aware of the impeding problem three working days before the accounts had to be finalised for the board meeting in December. It was absolute turmoil.
“By the second day after the auditors had alerted us to alleged irregularities we decided to appoint PwC as forensic investigator alongside the statutory auditors.”
According to Wiese’s account, he was invested in Steinhoff to the tune of R55 billion, ahead of the crisis.
Wiese’s involvement with Steinhoff began in 2011 when he sold Lanzerac and a block of his PSG shares to the Steinhoff Group and became a “smallish” shareholder. “Having watched the progress of the company over the course of a few years I thought it would be a good investment. In 2013 I was appointed to the board and could observe how the company was run, managed and how corporate governance was dealt with; I noted too the calibre of the people on the board – they were highly professional with great reputations.”
Thus in 2015 Wiese sold his stake in Pepkor, which he had been instrumental in growing over the previous five decades, to Steinhoff for R30 billion worth of Steinhoff paper. In the process he became the largest shareholder in the group.
“I was confident it was the right move to make. I was 75 years’ old and my intention was to consolidate all my business interests into Steinhoff – those that fitted the mould anyway. I was happy with the management and happy with what I saw.”
Wiese shared a vision, held by other large shareholders, to build an African champion that would be internationally recognised as a sizeable retail player. “Things went very well. I then decided after two years to also sell my interest in Shoprite into the group – through a complicated structure. We were in that process when this bomb exploded.”
Wiese noted that in December 2016, over and above the R30 billion investment he made in Steinhoff as a consequence of the Pep deal, he underwrote the issuing of R25 billion capital, which was used to support the balance sheet for Mattress Firm.
“At that stage my investment in the company was R55 billion. With the collapse of the share – I’m still the third-largest shareholder – but with a reduced share price.
“I have not sold a single share in the company since I first acquired shares in 2011.”