There was an air of Greek tragedy over this week’s resignation of Heather Sonn as chair of Steinhoff after perhaps the toughest two years that any director could ever hope to endure at any company. Nobody needs reminding that Steinhoff was ground zero for the wave of corporate frauds that encompassed Tongaat Hulett and EOH and did much to dislodge the quaint notion that SA’s corporate governance was top of the pile.
Sonn, a former Merrill Lynch investment banker and the daughter of former ambassador to the US Franklin Sonn, had been on the board for four years when Steinhoff began to unravel in December 2017.
Early on Tuesday December 5, Steinhoff’s shaken directors assembled in Stellenbosch to decide whether to accept Markus Jooste’s resignation, offered emotionally the previous evening when he’d failed to pitch up to explain the "accounting irregularities".
When Sonn walked into that boardroom, she sensed the sombre mood and turned to Theunie Lategan: "En nou? Wat gaan hier aan? Dit lyk soos ’n begrafnis." And it pretty much was a funeral. That night, Steinhoff told the world what had happened, and its share price plunged 61%. It has lost 98% since that evening.
Within 10 days of that denouement, Sonn had taken over as chair from Christo Wiese.
Steve Booysen, Absa’s former CEO and another director, had urged her to take the job. "I said, Heather, you can read about this sort of thing in a hundred textbooks, but the lessons you’ll learn right here, over the next few months, you wouldn’t find that in any textbook — it’s invaluable."
Nor was it easy to adjust. "I’m a coloured woman, and I’m younger than most, so it’s been a challenge in many ways. But luckily, all I really could do was put my head down, and go to war every day, then do the same tomorrow," she told me in 2018.
Sonn was never part of the looting. In fact, those who worked with her lauded her work ethic and honesty
And she did a formidable job, placating regulators, practising diplomacy with clueless MPs and haggling with the hedge funds now calling the shots.
Yet this week, Sonn quit over a convoluted related-party deal involving her private company Gamiro.
In a nutshell, Gamiro bought a stake in a debt-collection agency called Blake & Associates, whose clients included Steinhoff’s JD Group arm. But the problem was, the company that sold Blake, named Geros, had been indirectly funded by Steinhoff.
Sonn had no idea — Geros didn’t reveal its links to Steinhoff — so she never disclosed this as a related-party deal. This week, she said "I would have made" that disclosure, had she been aware of the links.
To be fair, it was an immensely confusing deal.
Khaya Sithole, accountant and columnist, said: "You might need a PhD to understand the structure and transaction here. And, since the Steinhoff board once had more PhDs than any other board, this is as delightfully ironic as it can get."
And, critically, it’s clear that Sonn was never part of the fraud of more than R100bn that happened thanks to Jooste. In fact, those who worked with her lauded her professionalism, work ethic and honesty.
Johan van Zyl, the CEO of African Rainbow Capital, who was on the Steinhoff board at the time, tells the FM that the Gamiro deal was flagged in late 2017.
"We looked at everything anyone did, and when we picked it up, Heather herself asked PwC to look at it. We didn’t think it was anything serious," he says.
So, was it serious?
"Well, it was a very minor thing at a company where shareholders lost R200bn due to fraud. She didn’t enrich herself and she didn’t even know about this link. But since we’d fired anyone even remotely connected to something dodgy, unwitting or not, you can’t say this principle doesn’t apply to you," he says.
This week, Sonn underscored this point, saying that if Steinhoff wanted to demonstrate the highest standards of governance, "it is incumbent upon me to apply this standard to myself".
Van Zyl says that for Sonn to quit over this issue underscores her honesty, rather than undermines it.
But there is another element to Sonn’s resignation that bears mention: Steinhoff’s bid to keep the PwC forensic report under wraps. Last year, the FM, acting with amaBhungane, went to court to force Steinhoff to disclose that report. It has fiercely resisted.
But the fact that nobody knew the details of the Geros issue until now suggests Steinhoff hasn’t been fully transparent about the skeletons within that PwC report. It only makes it even more imperative that it reveals the full details of SA’s largest-ever fraud.
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