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A bolt from the blue

Accounting irregularities were completely unexpected.

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.”

Read: Steinhoff reports Markus Jooste to the Hawks

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.”

Listen: First morning at the Steinhoff hearings

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Weise you going to explain the cash in the bag?

and why did Jooste decline to appear before the enquiry.

There’s many questions about what Wiese knew. Personally I cannot see him having know about the irregularities but still attempting to consolidate virtually all his wealth into this company via the Shoprite deal. Has that deal gone through, his net worth would be 0 today.

“appointed to the board and could observe how the company was run, managed and how corporate governance was dealt with”….he must have known. Please also see my comment below.

He should have kept Pepkor…but greed to took the better of this old man…I mean at 75 how much more money does one need.

Just because he lost a lot doesn’t mean he didn’t know, just that he hoped to continue getting away with it. The balance of probability isn’t that a billionaire seasoned dealmaker with a few previous brushes with the law, and a lifelong cohort of the supposed lone perpetrator, knew nothing of this. People forget he was given a heads up by investigators months ago but elected to try discredit them rather than investigate. It was only it couldn’t be contained anymore he allowed the “bolt from the blue” to strike.

such an astute businessman with all his eggs in one basket?

I am fairly certain the Viceroy / Bloomberg article said Wiese owned the majority share in one of the entities Steinhoff used to launder its losses. Southern something or another? Not smalll change – billions of Pepkor consumer debt warehoused.

How does that square with the bolt from the blue? Or is there something entirely different (and worse) that Jooste did?

Christo Wiese is a remarkable business man, one of the best of this generation and I do feel bad for this horrible endeavor and the only mistake Mr Wiese made was too much trust but that is human behaviour. I do wish him a good recovery for 2018.

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