By Ryan Brunette
On Tuesday, 5 December, global retail group, Steinhoff International, headquartered in South Africa, announced the resignation of its CEO, Markus Jooste. A white South African, Jooste, resigned in connection with a German accounting fraud investigation, involving significant overstatements on revenue and assets. One asset manager noted of Steinhoff that it was “as close to a corporate-structured ponzi scheme as one can get.”
What followed has been heralded as one of South Africa’s biggest ever corporate scandals; its largest corporate collapse. Steinhoff is registered in the Netherlands, its primary listing is on the Frankfurt Stock Exchange in Germany and its secondary listing on the Johannesburg Stock Exchange in South Africa.
Within three days of Jooste’s resignation, Steinhoff was downgraded by Moody’s to junk status. Its stock declined in value by 88 percent, causing contagion across the Johannesburg Stock Exchange, undermining South Africa’s economy in the process, devaluing millions of pensions, as well as threatening the jobs of 105,000 employees worldwide. South Africans are rightly appalled. As the Daily Maverick columnist Richard Poplak tweeted: “The rage streaming toward Steinhoff (and friends) has everything to do with the fact that corporate South Africa has long positioned itself as the antidote to corrupt government. The racial implications should be obvious. The bankruptcy (pun intended) of this notion even more so.”
