Steinheist. Rob Rose
at that point, Wiese owned the largest individual share) into a massive fund, which would then be listed on international markets. And that German bank had apparently agreed with Jooste’s valuation of the properties. But either way, he said, it can’t be too difficult to agree on the valuations.
Wiese looked at the auditors: All these five items you’ve got here, weren’t they all in the accounts in 2016, when you, Deloitte, signed them off? All except the $600m Serta Simmons deal, which is new. The thing is, Deloitte agreed on these points last year; so why are you raising them as obstacles this time round, demanding a forensic investigation? Does this mean last year’s accounts, which you signed, are wrong?
Deloitte’s auditors replied: Well, yes – probably.
At this point, FGS’s Karsten Randt chimed in: You don’t need another forensic – we’ve done all the work. Here’s our forensic report, he said, pointing to the bound volumes on the table from FGS.
We can’t use that, said Deloitte. We don’t think you’re properly independent of Markus Jooste’s management team, so we can’t make use of your report.
Randt was incensed: How can that be? We’ve never worked for Steinhoff before this. We’re a highly regarded professional firm.
Yes, the Deloitte auditors replied, but you’re in “defence mode”.
Wiese chimed in: But nobody has been charged for anything. How can you say that FGS are in “defence mode” when nobody has been charged?
Technically, this was true. Two years previously, in December 2015, police in the sleepy town of Oldenburg had raided Steinhoff’s offices in Europe, as well as the offices of its founder, Bruno Steinhoff. They’d suspected tax fraud. Then for months – nothing. Until in late August 2017, a German publication called Manager Magazin had published an article, impeccably sourced, that said the German prosecutors had zeroed in on Jooste and a few others as the main suspects in a probe into allegations of accounting fraud. Steinhoff hotly denied these “allegations of dishonesty”. It said that “no evidence exists” that Jooste, or anyone else, had done anything wrong.
Evidently, however, Deloitte had become skittish. This angered Wiese, as Steinhoff was meant to publish its full-year accounts for the year to September the very next week – but Deloitte was now refusing to sign the financials until they were “comfortable”.
Wiese turned on the auditors: Have you discussed any of these issues with Markus?
The Deloitte auditors shook their head. (In reality, Deloitte had been asking Jooste for the documents numerous times in the previous few weeks. But he bluntly ignored them.)
Wiese told Deloitte: So why are you coming here and asking me, a guy who’s only been the chairman for a year, about all this? Let’s just get Markus in to clear it all up. It’s an easy thing – let’s fix it. So, Wiese picked up his iPhone, and summoned Jooste, who was in Stellenbosch.
Jooste sounded impatient, hot-tempered and cranky: But I’ve given Deloitte all the bloody information, he said. I gave them a memory stick with many gigabytes of information. And I’ve given it to them plenty of times.
OK, said Wiese, well then, can you just come over here and speak to them about it. They’ve got a list of documents they say they haven’t been given and they’re demanding a forensic.
Jooste grumbled, but he climbed in his car and drove to Pepkor’s office in Parow to “tell them what’s what”. About forty minutes later, he walked into the boardroom and met a wall of solemn accountants and lawyers, alongside Wiese and Booysen.
Wiese said to him: Markus, I want to tell you, we’re all talking very frankly here, and you must now respond equally frankly. Here are the allegations we’ve got. I want you to respond to each of these in turn, because to me it seems very simple.
Jooste, characteristically smooth and ice-calm, didn’t blink. No problem, I understand it totally, he said. Do you guys honestly think I don’t know how a wechsel works? he asked. It’s all above board. You guys are panicking for nothing.
Calmly, and without raising his voice, Jooste gave a compelling explanation for each of the five points. He named people, he gave dates, he mentioned the specific documents that demonstrated how it was all just one big unnecessary mix-up. Simple, he said.
To which Deloitte replied: OK, fine. But, look, we just need those documents, to substantiate what you’ve just said.
Jooste fixed the auditors with his penetrating brown eyes and icy tone: it’s absolutely no problem – I’m pretty sure I’ve already given all of them to you, but to make you lot calmer, I’ll go and get them, he said. I’ll get them again.
Then the Deloitte auditors asked if they could have some privacy to consult among themselves. They went to the room next door and for over an hour were locked in intense deliberations. An impatient Jooste, meanwhile, had climbed in his car and driven back to Stellenbosch.
Finally, the auditors emerged. We have good news, they announced. We’re happy to say we’re putting our requirement for a forensic investigation on ice and, instead, we’ll focus on getting the accounts out the next week.
Wiese remembers their demeanour flipping 180 degrees from a few hours earlier. They were less edgy, less braced for confrontation. Jooste’s magic and well-reputed charm, it seemed, had worked on Deloitte.
Well, said Wiese, that’s a helluva relief. He phoned Jooste and told him that all that needed to happen was that he must get the documents to give to Deloitte. Fingers crossed, he said, we can still get Steinhoff’s year-end accounts out within a week.
Jooste seemed mighty relieved. Thank God, he told Wiese.
The crisis, Wiese believed, had passed. The accounts would be signed off, once Markus had gone through the formality of fetching the documents that proved his case. Dark phrases like “accounting fraud” wouldn’t be uttered again in his Parow office.
Thursday, 30 November 2017
The next day, just after midday, Wiese got another call from Deloitte. We’re very sorry, they said, but we’ve reconsidered. For us to sign off the accounts, we will need that forensic investigation, as well as all the documents we asked for.
This upset Wiese. He knew that the odds of getting Steinhoff’s audit finished in time so as to release the accounts the following week had just been torpedoed. There was no way that, even if they received the documents, they could work through them within a few days.
So tell me, what information did you get between yesterday and today that made you decide you now need the forensic again? he asked. This just isn’t good enough. Come talk to me, face to face, he demanded.
So, the auditors hauled themselves off to Steinhoff’s office in Stellenbosch. Here they got a hostile reception from Wiese. But Deloitte explained that when they got back to their office, and went through what they needed from Jooste, the list was far more extensive than they’d realised. Code red, again. With that, Wiese summoned Steinhoff’s top brass to an urgent meeting, including Jooste and Booysen, and told them of Deloitte’s latest demand.
It was at this meeting that Jooste floated a convenient theory for the first time: that Deloitte were “biased” because they’d been representing one of Steinhoff’s sworn enemies in Austria, Andreas Seifert. Seifert had poisoned them, Jooste suggested. To understand his argument, you’ll need some background.
The reclusive Seifert, a cantankerous 62-year-old Austrian businessman who refuses to allow any photographs taken of him, is perhaps more to be thanked for blowing apart Jooste’s apparent mythmaking than anyone else.2 The story is that in the 1970s Seifert and his brother Richard took the struggling XXXLutz, a small regional furniture company in Austria, and turned it into a pan-continental powerhouse, the second-largest chain in Europe. As it happened, Seifert’s quest for lebensraum coincided with Steinhoff’s expansion into Europe, too, and initially Jooste and Seifert got on fabulously. Then in 2007, Steinhoff bought 50% of the German discount chain Poco from its