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Jooste shifts blame to strategic partner, auditors

The former Steinhoff CEO denies wrongdoing during his first parliamentary questioning.
Former Steinhoff CEO Markus Jooste says he was not aware of irregularities at the retailer when he was CEO. Picture: Moneyweb

An unrepentant former Steinhoff CEO Markus Jooste joined a string of individuals associated with the ruined company standing before parliament professing innocence and lack of complicity and knowledge of fraud and accounting irregularities. 

Even his confessional message to staff as he left the group in December, admitting big mistakes and saying he would face the consequences, was framed as one where he apologised only for his “failure to pick a reliable strategic partner”. This refers to getting into business with joint venture partner Andreas Seifert, who Jooste says caused at least two years of time and trouble in investigations into Steinhoff’s affairs, which found absolutely nothing untoward.

Jooste, speaking for the first time since the December 6 collapse of Steinhoff after a subpoena was served on him, added his voice to what appears to be a comprehensive list of people associated with Steinhoff. This includes former chairman Christo Wiese, suspended CFO Ben La Grange and past board member and current chair Heather Sonn, who have already appeared before parliament.

Jooste, who appeared with a legal team of four, said numerous times that it was the decision to get involved with the strategic partner and the souring of their relationship that he admits to, but little else, apart from growing the company too quickly in too many countries and “relying on trust” – referring to Seifert.

He also put a large part of the blame on auditor Deloitte, which, through its insistence on calling for a new investigation and refusing to sign off on accounts late last year, caused the loss of investor confidence and subsequent decline in the share price.

He also indirectly disputed earlier testimony by Wiese, saying both Wiese and head of the audit committee Steve Booysen had prior knowledge of issues Steinhoff was facing in November – at least a month before they claimed, adding that Wiese was “closely involved” in discussions with Deloitte during November.

Jooste said he and Wiese shared the view, on December 4, that a further investigation which Deloitte called for, would be “ridiculous” and delay finalisation of the financial statements indefinitely and put the group “in dire consequences” in terms of cash flow, its position with lenders and investor confidence.

Jooste believed, instead, that Deloitte’s mandate should be terminated, alternative auditors appointed, and unaudited results released.

He said that he realised the failure by the company to release financial information as expected on December 6 as a result of the auditors refusing to sign off, as well as allegations of any irregularities, would have a disastrous effect; credit lines would have been suspended, investor confidence in the group would be lost and lenders would lose faith.

He said that he made it clear that if his suggestions were not in line with the board’s view, he would not stay at the group, hence his December 6 exit.

He denied any claims of off balance sheet entities, profit inflation and bullying analysts who produced negative reports.

Further to that, Jooste said he was not in a position to comment on anything specific to Steinhoff as, because he has left, he has no files or his computer, and no access to information.

Like the others who have appeared before parliament, he outlined how the group was complex, spread across Europe, Africa and the US with each having a controlling company, board, audit committee and internal and external auditors in 30 jurisdictions subject to laws and accounting regulations, which were not necessarily the same.

He spoke about Seifert, who “turned out was the wrong person to go into business with” and how his termination of the association in March 2015 resulted in various litigations and the investigation by German tax authorities.

It was his view that Seifert was attempting to use prosecutors and the press, “to obtain information and influence the outcome of the courts”. The Steinhoff board appointed two law and accounting firms to investigate and they found nothing.

In September, a Deloitte partner in the Netherlands sent an email to Jooste, La Grange, Deloitte SA and Steinhoff Europe’s CFO saying information had been received regarding the German tax investigation, and referred to reports of possible accounting irregularities and sought comment and additional audit procedures.

A later Deloitte letter to Booysen referred to allegations relating to tax, potential incorrect application of accounting principles and related party transactions.

Booysen and Jooste replied saying the allegations were not new and represented Seifert’s unfounded attempts to influence litigation.

Deloitte said on November 23 that a new investigation should be launched, and on the 29th of that month, Jooste was informed this investigation was no longer necessary, but, according to him, Deloitte did an about turn the next day.

Jooste said that by the time he left, 90% of his time as CEO was dedicated to dealing with reports and concerns and he had “had enough”.

“I am not blaming anybody,” Jooste told parliament, and he wanted “to place on record that I was not aware of any accounting irregularity in the books of Steinhoff”.

Read: Jooste says he was not aware of accounting irregularities at the company

Chair of the standing committee on Finance Yunus Carrim told Jooste he was coming across “as the Mother Theresa of Steinhoff”, without showing “an inkling of regret or sliver of acknowledgement of the severe gravity of what happened here.”

Jooste remained steadfast. He would only admit that he felt “totally responsible” only for choosing the wrong partner and going “into territories we shouldn’t have”.

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Leaving a ship. Famous sight in sailing times when shipwrecked. All animals with the long tail leaving first. Modern times shows not much change other as a horse tail. At least the Titanic captain stayed on board to face the ocean, coming for him.

It was negligent, reckless, and unprofessional of Deloitte to wait until December to say that they won’t sign off the accounting statements. Where were they during the whole year of 2017.
There were allegations and investigations from the German authorities since 2014 and another one by professional auditors since 2015, in which they participated in and singed off the statements of 2015 and 2016.
Now surely and especially because of these allegations and investigation and being the official auditing firm of Steinhoff they should have kept a close eye on the account statements on a day by day basis during 2017, and raise any concern immediately the same day during 2017, so that by the end of the year they can in time sign off the statements, so as not to compromise the interest of all stake holders.
By waiting until the last month, and not raising the concerns in time when any concern arise, indicates that Deloitte auditors were sleeping behind the wheel during the whole year, doing nothing useful, and then only at the last month saying they want an investigation, while they are actually the auditing firm and it’s their job to investigate the statements in time on a daily basis, way before the last month.

In the Garden of Eden, Adam blamed Eve and Eve blamed the serpent. Fast forward to 2018 and Ben la Grange blamed Markus Jooste and Markus in turned blamed Andreas Seifert. Therefore the practice of blame shifting must be as old as man himself. Nobody ever takes responsibility.

Its not personal, just business.

The CEO and shareholders of the JSE, who helped facilitate such greed, should make representation and answer some serious questions as well.

‘’Birds of a feather, they flock together’’
My view of the JSE and the ANC government is exactly the same – no ability, no skill, incompetent, ineffective, worthless, ineffectual, incapable, inept, inadequate, hopeless, weak, bad and no-good!

They are happy to not police their own rules and regulations so long as it keeps making them money.

Now there is enough conflicting statements made under oath by Weise, Jooste, Le Grange and Steinhoff to warrant for the Hawks to arrest and open charges of alleged fraud against all person(s), to investigate and interview the same person(s) under subpoenas without waiting for the PWC “report” and for these person(s) to apply for bail and surrender their passports.

boogieman, if you were the mirror in wall…. who’s testimony do you find more credible?

What an embarrassment for corporate SA – no wonder the currency is tanking. The fact that there is a parliamentary hearing in the first place is a joke – this guy and his cronies should be behind bars so the Hawks can take their time working out who is telling the fewest lies.

It’s really very simple, people: it just happened by itself. And now these poor senior execs are being blamed.

Probably just following the example of the great Jacob Zuma who still to this day cannot figure out what he did wrong.

Surely there are companies where the auditors rejected the financial accounts on first review, and where the company did not go bust once the matters were cleared up? Also, provisional unaudited statements can be released? Sounds like cheap deflection from Jooste.

It was negligent, reckless, and unprofessional of Deloitte to wait until December to say that they won’t sign off the accounting statements. Where were they during the whole year of 2017.
There were allegations and investigations from the German authorities since 2014 and another one by professional auditors since 2015, in which they participated in and singed off the statements of 2015 and 2016.
Now surely and especially because of these allegations and investigation and being the official auditing firm of Steinhoff they should have kept a close eye on the account statements on a day by day basis during 2017, and raise any concern immediately the same day during 2017, so that by the end of the year they can in time sign off the statements, so as not to compromise the interest of all stake holders.
By waiting until the last month, and not raising the concerns in time when any concern arise, indicates that Deloitte auditors were sleeping behind the wheel during the whole year, doing nothing useful, and then only at the last month saying they want an investigation, while they are actually the auditing firm and it’s their job to investigate the statements in time on a daily basis, way before the last month.

As per the Companies Act 71 of 2008 any and all directors, alternate directors, members of committees, and prescribed officers have liability under sections 77.

Weise, Jooste, Le Grange, Booysen, Van Der Merwe, Sonn all carry liability and must be held responsible and accountable for their acts and derelict of fiducial duty, and losses and costs incurred / suffered by the Company due to such behaviour……. billions

End of comments.

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