Steinheist. Rob Rose
of the crisis committee to the war room. And then they waited.
An hour later, at 9.48 am, Steve Booysen got an SMS in Afrikaans from Jooste. Steve, I’m just finalising the last two documents, but I think you’ll appreciate that, given the seriousness of the allegations, I’ll have to take legal advice. It was in that instant that the shot went off inside Booysen’s head, when weeks of woolly concerns coalesced into certainty. He put the phone down, and looked at his colleagues, the veteran accounting guru Len Konar and the former banker Theunie Lategan. He’s getting legal advice, Booysen told them. We all know what that means. You don’t get legal advice if you’ve done nothing wrong. Over the next few hours, Booysen got a number of other SMS’s from Jooste, saying he was on his way, he was just putting together the files, he was sorting out the documents. But these messages were all in English – a sign he’d probably crafted them with his lawyer.
Elsewhere in that office, Wiese was waiting, still hoping that Jooste would come through. But 11 am came and went; so did 12 pm and 1 pm, with no word from Jooste. Perhaps Jooste was simply still organising all the documents at home, thought Wiese. By his reckoning, there certainly were enough documents for him to need to order them.
Earlier that morning, Steinhoff had put out an announcement saying it planned to release “unaudited results” that coming Wednesday, December 6th. It said this was because Deloitte had “not yet finalised their review of certain matters”.
By this stage, from the trading desks inside Joburg’s big banks to the money managers in Cape Town, investors had begun to smell blood. Something was going awry in Steinhoff’s kitchen, they figured. It almost never happens that a company is forced to put out “unaudited” accounts. So, the panic selling began: the price of Steinhoff’s shares on Johannesburg’s stock exchange, the JSE, began to deflate. By the end of Monday, the stock had lost 9.9%, tumbling from R55.81 per share to R50.25. In round numbers, Steinhoff’s total value had dropped by R23.9bn that day, from R236bn.
Meanwhile, in Stellenbosch, Wiese was still clinging to hope, a little naively. He still believed “unaudited results” were the way to go. After all, Jooste had assured him that any “unaudited” accounts would still pretty much reflect the same reality as any “audited accounts” signed off later. Sure, it wasn’t ideal, he thought, but it wouldn’t be an utter disaster.
Finally, at 5 pm, one of the FGS lawyers called Wiese: Christo, are you at the office? he asked. Stay there. I’m on the way with “a message”. Then Wiese knew.
After about twenty minutes, the lawyer walked into Steinhoff’s offices, where he was greeted by dozens of unblinking eyes in the boardroom. The news he conveyed was sensational: Markus is at the wine farm Lanzerac, and he’s a mess. Unshaven, sobbing uncontrollably, Markus is tearing his hair out, saying he screwed up. The lawyer told Wiese: Markus has asked me to give you this message: he is offering his resignation, and you must decide whether to accept it. It’s up to you.
It was the ice-water-down-the-spine moment that Wiese had always feared. The worst-case scenario had come about, and there was no way round it. A board meeting was scheduled for the next morning. Wiese and Booysen prepared themselves to break the bad news.
Tuesday, 5 December 2017
That Tuesday morning, Bruno Steinhoff and his daughter Angela landed at Cape Town International Airport to attend the board meeting. On the way to Steinhoff’s offices, Wiese told them the whole story. They were shaken. Just three days before, they’d seen Markus in Germany, and he hadn’t breathed a word of how, back in South Africa, the company was burning.
The board meeting was to be held at Steinhoff’s headquarters in Stellenbosch, a sprawling university town about an hour from Cape Town. While some of South Africa’s most successful businessmen have gravitated towards the town, including Johann Rupert, GT Ferreira and Jannie Mouton, Steinhoff had become the dominant corporate presence in Stellenbosch. The town had been soaked in Steinhoff’s familiar burgundy colours, with the university’s cricket fields and the Danie Craven rugby field draped in Steinhoff branding.
As Steinhoff’s directors began to drift into the boardroom at De Wagenweg Office Park, none of them, at that point, had any idea just how appalling the news really was. Heather Sonn, a feisty 45-year-old and the retailer’s youngest director, walked in and saw the solemn faces. She turned to Theunie Lategan and said in Afrikaans: “En nou? Wat gaan hier aan? Dit lyk soos ’n begrafnis.”
Lategan looked at her gravely. It pretty much is a funeral, he said.
* * *
Over the next few months, Sonn would play a vital role in trying to save the company. But on that day in December, she had no clue of what she was about to confront.
Wiese and Steve Booysen kicked off the board meeting by relating the entire story of the previous week, as well as Markus’s offer to resign. We have to make an important decision right now, Wiese said. But my feeling is that we should refuse to accept his resignation: after all, he’s the only guy who knows what happened here and what he did. We need him to help us fix it.
After two hours of haggling – not everyone thought it wise to keep a compromised CEO on the board – there was a broad consensus around the need to ask Jooste for help. So, Wiese stepped out of the meeting and called Jooste on his cellphone.
Where are you? Wiese asked.
I’m at my lawyer’s office in Cape Town, Jooste replied.
Wiese continued: Look, what you’d done, you’ve done. There’s no turning back on that. But at least come and help us sort out the mess so that Steinhoff can publish its accounts. Because, without its accounts, it may not even survive. Are you prepared to do that?
Jooste responded: Yes, I will. I’ll see you in two to three hours.
Jooste hung up – and that was the last time Wiese heard from him. Just as before, he didn’t arrive. This time, however, he didn’t even bother sending a message. Instead, he simply melted away into infamy. His final interaction with most of those directors was, appropriately, a lie.
Inside Steinhoff’s offices, the company’s 150-odd staff figured that something was up, given the number of earnest men in suits, with lever-arch files precariously balanced in their hands, half jogging in and out of the building. Then a message popped into some of their inboxes. It was from Markus Jooste. “Hi there. Firstly, I would like to apologise for all the bad publicity I caused the Steinhoff company the last couple of months,” it read. “Now I have caused the company further damage by not being able to finalise the year-end audited numbers, and I made some big mistakes and have now caused financial loss to many innocent people. It is time for me to move on and take the consequences of my behaviour like a man. Sorry that I have disappointed all of you and I never meant to cause any of you any harm. Please continue to live the Steinhoff dream and I must make it very clear none of Danie, Ben, Stehan and Mariza had anything to do with any of my mistakes. I enjoyed working with you and wish you all the best for the future. Best regards, Markus.”
The people he referred to formed his inner circle: Danie van der Merwe, Steinhoff’s chief operating officer; Ben la Grange, its finance director; Stehan Grobler, its group executive for finance; and Mariza Nel, the corporate services executive.
It’s unclear why Jooste sent that admission. Perhaps he was trying to pre-empt fingers being pointed at the others, or perhaps it was written for him by someone he trusted. Whatever the reason, at the Stellenbosch HQ, when it became clear that Jooste wasn’t coming, Steinhoff’s board prepared to tell the country what had happened.
At 8.44 pm in Germany, Steinhoff issued an announcement to the world bearing the grim headline: “Steinhoff announces investigation into accounting irregularities and resignation of CEO”. It was just ten words, but it was to precipitate bloodshed across the stock market. In an abbreviated series of staccato sentences, Steinhoff declared stiffly that “new information has come to light today which relates to accounting irregularities requiring further investigation”. It added that Jooste “has today tendered his resignation with immediate effect and the Board has accepted the resignation”.