Steinheist. Rob Rose
Ikea – that they began scheming of ways to make this happen.
But the problems began in 2014 when Seifert bought the other 50% of Poco – and the battle for control took a poisonous turn. Within months, Steinhoff and Seifert were jousting publicly, both claiming they’d found various “breaches” that entitled them to boot out the other partner and take full control of Poco. Remarkably, Jooste behaved as if Steinhoff already had full control of Poco, going so far as to claim 100% of the chain’s assets in its accounts in 2015. An outraged Seifert approached prosecutors in Germany to investigate Jooste.3 And in doing so, Seifert threw open Pandora’s box.
Reports in Manager Magazin in August 2017 said that when Seifert was questioned in July 2016 by police inspectors at Osnabruck in the course of the Steinhoff investigation, he was asked to explain certain documents containing his signature. They included a contract from 2012, in which he promised a company close to Steinhoff “exclusive use of his brand Möbelix in Europe”.4 Seifert’s response was: “I have never seen these papers and did not sign them.”
It was all starting to look rather serious: allegations of forgery, self-dealing, accounting fraud. It’s the kind of thing that tends to make auditors wake up sweating at four in the morning.
So, back to that day in November 2017 at Steinhoff’s Stellenbosch HQ. Jooste’s argument was that since Deloitte’s Austrian office had acted as advisers to Seifert in his court battle with Steinhoff, the audit firm was “biased against us”. Deloitte’s independence has been compromised, Jooste said, so maybe we need to get rid of Deloitte anyway, and find new auditors. Wiese hadn’t known about this Seifert link, so he called Deloitte to ask them. And it turned out that Deloitte’s Dutch auditors had no clue about the link either, given that it was Deloitte’s Austrian office that had worked for Seifert.
Either way, Steve Booysen argued, we can’t get rid of Deloitte at this stage. He told Markus: If we get rid of Deloitte, there’s a good chance we won’t be able to find any new auditors to replace them. And even if a new auditor does accept the job, they’ll have to start from scratch and there will have to be full disclosure of what happened with Deloitte. Which means they’ll probably ask for a forensic investigation, too.
But at this stage Deloitte wasn’t budging: We still need a forensic audit, they said, as a non-negotiable starting point. So Wiese called another of the large audit firms, PwC, and asked if they’d be willing to perform the forensic audit that Deloitte wanted.
Nonetheless, Jooste had thrown enough dust into the air to shift the discussion from the “missing documents” to “auditing malpractice”. Steinhoff’s board began debating whether they needed to fire Deloitte, given the “conflict of interest” over Seifert. It looked as if Jooste’s rabbit-and-hat trick had worked, at least as far as Steinhoff was concerned.
Friday, 1 December 2017
By now, the boardroom at Steinhoff’s offices in Stellenbosch had become a war room, where squadrons of lawyers and accountants had decamped. Neither Booysen, who lives in the picturesque farmland of Irene near Pretoria, nor the lawyers had any real idea when they’d be able to go home.
But Jooste had a plan. At about 5 pm, he picked up his car keys and said he planned to drive straight to the airport to catch a flight to Germany and retrieve all the documents that Deloitte needed. Also, he said, he’d organised to meet the American lawyers dealing with the $600m Serta Simmons deal in Germany. They’d give him all the documents that Deloitte wanted. Don’t panic: I’ll be back on Monday morning with everything we need.
This comforted the increasingly gun-shy Wiese: if Markus just fetched all those documents, the whole misunderstanding could be cleared up. Booysen was less certain. The former banker’s suspicion of Jooste had been growing over the previous few days. At this point, Booysen thought, I’ll believe it when I see it.
As for Wiese, he was still struggling to reconcile what was going on. At one point, when he was alone with Deloitte’s auditors, he turned to them and said: You can accuse Markus of many things, but you can’t accuse him of being stupid. If he did everything you say he did, he’d have to be bloody stupid.
The auditors replied: No, Christo, you’re wrong. If he did all of this stuff, then he’d have to be bloody smart.
Earlier that day, Wiese and Booysen also called in Ben la Grange, Steinhoff’s young, ultra-slick chief financial officer. They showed him Deloitte’s five points.
Ben, what do you think of this? Can it be true?
La Grange flipped through the list, and shook his head. Look, I have no idea about this stuff, but I can’t see how it can be true. You’ll have to ask Markus.
Christo replied: But Ben, if it is true, how could you not know about these things?
Ben replied: Well, I’ve always trusted Markus’s bona fides. Markus is the CEO of the European business, after all, and I trust what he tells me. There’s no reason to doubt him. It was a reasonable enough answer, Wiese and Booysen believed.
PwC called Wiese back: We’ve assembled a big team to make the forensic investigation happen, and we can do it quickly. Go ahead, said Wiese.
This was also good news. It made Wiese believe that, despite new landmines exploding every few hours, maybe Steinhoff could still put out audited financials within a few days after all. So, he climbed into his Lexus SUV, and headed home for the weekend.
Sunday, 3 December 2017
Wiese hadn’t slept particularly well. He woke up early and called Jooste in Germany.
How’s it going? he asked. Have you gathered everything we need?
It’s going great, Markus replied. I’ve already met the Americans and I’m gathering all the documents together too. It’s all under control – I’m getting ready to fly home tonight, and I’ll see you Monday morning. We’ll sort this all out, he said.
Conspicuously, however, Jooste hadn’t told Wiese why he was really in Germany in the first place. The truth is, he didn’t fly there to “sort out the Deloitte problems”, as he’d implied. Rather, he’d been invited to the 80th birthday party of Steinhoff’s founder, Bruno Steinhoff, in Westerstede, on that Saturday night. Jooste had even been asked to give a speech at the party – one in which, when he stood up, he emphasised to Bruno’s guests just how fundamental the value of trust had been in building up this mighty retail conglomerate over the previous five decades. It was an odd thing not to mention such an occasion.
As it turned out, the Serta Simmons officials did actually meet Jooste in Germany that weekend – but they just never got round to discussing the $600m deal.
At midday, back in South Africa, Wiese and Booysen met with PwC for the first time to figure out what would be needed in the forensic investigation. Then Wiese convened an urgent meeting of Steinhoff’s supervisory board for later that night. The sticking point was whether, at this point, Steinhoff should issue “unaudited” accounts that next Wednesday, December 6th, given that Deloitte wouldn’t sign them off. Many, including Wiese, reckoned this was the best thing to do. Others, like Booysen, argued this wasn’t the right way to go. What happens if we published unaudited results and they change dramatically after the audit, Booysen argued – it’ll ruin the board’s credibility. Rather, let’s wait and see what Markus can give us when he arrives back tomorrow.
Not everyone agreed. Booysen, for one, didn’t believe that putting out unaudited results was the right way to go. What happens if those unaudited results change dramatically, he said – it’ll ruin the board’s credibility. Rather, let’s wait and see what Markus can give us when he arrives back tomorrow.
Monday, 4 December 2017
At 8.40 am, Jooste left a message on Wiese’s mobile phone. Christo, I’ve landed from Germany, and I’ve got all the documents that Deloitte needs. Dirk Schreiber is with me too. I’m just going home for a shower, so you can line up all the auditors. I’ll see you at the Steinhoff office at 11 am. (Dirk Schreiber, a dour East German, was the finance chief of Steinhoff Europe at