Craig Butters, a financial analyst who tried in 2009 to warn Christo Wiese against investing in Steinhoff, is alarmed by the level of impunity with which Markus Jooste operated.
“He, and the group around him, did exactly as they pleased. They put through entries of significant amounts and the other executives, the supervisory board, and initially, the auditors, simply allowed them to do this.”
This was true of the billions of imaginary euros that Steinhoff stuffed into its accounts, but it was also true of Jooste’s personal relationship with the company.
There is no more crude example of this than how Jooste ordered one of his lackeys to pay him an extra €500,000 in early 2017, supposedly as part of his remuneration, and Steinhoff’s payroll department simply did this, no questions asked.
Usually, executives are paid according to strict rules overseen by a company’s remuneration committee. Yet this minor governance inconvenience meant nothing to Jooste.
On February 28 2017, Jooste emails Dirk Schreiber, who headed Steinhoff Europe, saying: “Hi Dirk, I have switched some of my remuneration around and need to settle taxes tomorrow. Can you please arrange to deposit €500,000 in my Commerzbank personal account as part of my total package from the group please?”
Schreiber snaps to it. Ten minutes later, he emails one of his employees asking him to please make the transfer, without verifying with any of the board members or human resources executives that this is a legitimate payment. That “bonus” is duly paid.
The problem, PwC concludes, was that Jooste was “not entitled to the payment, as no evidence could be obtained to indicate that the remuneration committee and/or supervisory board approved the bonus of €500,000.”
This payment was news to the directors. Asked when this had been approved, Konar said: “I was not aware of this event until informed by PwC.”
The €1,571,008 bonus
Nor was this the only time Jooste bent the rules regarding his own pay.
In May 2017, the CEO asked Schreiber to pay him €1,571,008, meant to be his “accrued bonus” for 2015 and 2016, which was due to be paid in three tranches, with the last in 2018.
The late Theunie Lategan, who headed Steinhoff’s remuneration committee, told PwC that “neither I nor any of my fellow remuneration committee members were made aware, or had any knowledge, that bonus payments were made to MJ on May 31 2017. No doubt if we were made aware thereof, we would immediately have questioned it.”
Steve Booysen, the chair of Steinhoff’s audit committee, told PwC unequivocally that “this amount was not due and payable to Mr Jooste on 31st May 2017 and at no stage did I [or] the remuneration committee as a whole authorise or pay [this].”
It was no surprise that Schreiber made both of these payments. For years, he had done Jooste’s dirty work when it came to forging documents.
Asked about it by PwC, Schreiber said this was just how it worked at Steinhoff.
“It was quite normal that Steinhoff Europe was instructed to do payments and often no documentation was available, but [would] come later,” he said. On the €1,571,008 payment, Schreiber said Jooste “promised to provide me with an evidence document later and I have trusted this”.
In retrospect, it was of course clear that Jooste would not have been eligible for a bonus, had the true picture emerged of how cash-strapped Steinhoff really was. It was on this basis that in 2019, Steinhoff claimed back R870m from Jooste, arguing he had forged the accounts.
Jooste fought back, claiming he had “no knowledge of these allegations”. Remarkably, he also argued that, had Steinhoff taken “reasonable care”, it would have “established the facts from which their claim arose” earlier.
Steinhoff’s claim hasn’t gone away since Jooste’s suicide, but it is now just one of many such multimillion-rand claims on his estate.
Whichever way you look at it, the Steinhoff saga is a lesson in the limitations of governance theory when greed is rampant. The men of integrity on the Steinhoff board were no match for Jooste and his gang of corporate thieves – despite the early warnings that came from the likes of Butters and the authorities in Europe.
Criminal conspirators and a flamboyant CEO combined to trump good governance.
This story was produced in collaboration with amaBhungane and the Financial Mail.
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