So, we now know that during the time when Steinhoff was cooking its accounts, from at least 2009 until 2017, its CEO Markus Jooste was taking home R448.3m in salaries and bonuses from the very shareholders he was fleecing. Of that rather tidy sum, the "bonuses" paid to Jooste for his exceptional diligence during that time amounted to more than R205.8m.
Thankfully, Steinhoff has now indicated it plans to go where only a vanishingly small number of SA companies dare go: it plans to "claw back" this money from Jooste. In one small corner of its immense and wholly impressive 344-page annual report for 2017 (only 18 months late), the furniture retailer Steinhoff details the immense amounts it paid Jooste last year. Then it adds: "Both the current management board and supervisory board confirm their respective commitment to make use of their clawback rights where appropriate."
You can see why the board, chaired by Heather Sonn and run by Louis du Preez, would want to reclaim Jooste’s swag. For a start, the Pretoria-born Stellenbosch University graduate was the central figure in magicking up than R106bn in "fictitious and irregular transactions" since 2009, as PwC’s forensic report tells it.
Second, last week’s annual report reveals, in yet another eviscerating blow to the myth of Steinhoff’s internal controls, that Jooste managed to get the company to pay him R33m in bonuses during the 2017 year, even though he wasn’t entitled to it.
This included a payment of €500,000 (R8.46m) made to him on March 1 2017. That bonus "was neither proposed by the human resources and remuneration committee, nor approved by the supervisory board", the report said.
It’s important that Sonn’s board does demand repayment of the bonus, as it will set a precedent for other companies
Then there was another €1.57m which was approved by the board and due to be paid in three tranches over three years. But true to form, Steinhoff "accelerated" this payment when it shouldn’t have. "The accelerated payment of this amount on May 31 2017 before it was due was not approved."
It was a free for all. Jooste, it seems, could have almost hired a private army and invaded Lesotho before anyone in accounts mustered the courage to ask for the courtesy of an invoice. Steinhoff seems to have had all the governance restraint of Nomvula Mokonyane e-mailing her grocery list to Bosasa’s HQ.
Now, it’s easy amid all Steinhoff’s jaw-dropping gore to ignore the small matter of a R33m bonus. After all, it’s a drop in the ocean when you’re writing off R246bn from your assets because of all Jooste’s alleged fibs. But it’s important that Sonn’s board really does act, and demand repayment of the bonus, as it will set a precedent for other companies to follow.
Reading through the annual report, it’s striking how many of Steinhoff’s top brass were exploiting the company for their personal advantage at every turn.
Take the bizarre situation with the Portuguese golden visas. In that case, the report says that "in deviation from best practice", several Steinhoff managers bought a property in Portugal from Steinhoff’s French grocery chain Conforama for €7m. They then rented it back to Conforama. The purpose of this property shuffle was to allow the Steinhoff managers to get "golden visas" — which Portugal grants to foreigners who invest in property worth more than €500,000.
These are just a few of the intriguing wormholes in the report. It might have taken Steinhoff until 10 minutes before midnight before an election public holiday to release it, but it’s a masterful document.
In the end, just about nothing in Steinhoff’s audited financial accounts, going back years, could be believed: famously, even Steinhoff’s audited "cash and cash equivalents" number in its accounts is wrong.
Most accountants will say it should be almost impossible to fake cash. Not even Enron did this.
It was a free for all. Jooste, it seems, could have almost hired a private army and invaded Lesotho before anyone in accounts mustered the courage to ask for the courtesy of an invoice
Even Christo Wiese, when he was first told by Deloitte’s auditors on November 29 2017 that Jooste was manipulating Steinhoff’s cash flows, couldn’t believe it. Cash is cash, he said. Surely you just ask the bank what’s in the bank account, he said.
Well, not at Steinhoff. Last week’s audited numbers show how Steinhoff’s "cash" was inflated by an immense €2.2bn by September 2016.
Technically, what happened is Jooste claimed Steinhoff was part of a "buying group" that negotiated discounts and supposedly passed them on to the company. Only this never happened. Any "payments" made to Steinhoff actually came from within the group, through a convoluted web of loans. "There was no substance to the income or reduction in costs recognised by Steinhoff," it says.
This is just one vignette from a document that will be studied in forensic accounting classes for years to come, painting a macabre picture of just how a small German furniture company merged with Ga-Rankuwa lounge suite-maker GommaGomma, and ultimately became SA’s Enron.
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