Former Steinhoff chief executive Markus Jooste has testified under oath in Parliament that he never knew about “accounting irregularities” at the global furniture giant, and that the blame for the company’s share price collapse lay with a disgruntled former partner.
Jooste was appearing before three committees in Parliament in a highly anticipated meeting of the committees on finance, public accounts and public service and administration. The trade and industry committee was also expected to join the meeting.
Prior to the commencement of the meeting, finance committee chairperson Yunus Carrim assured Jooste’s lawyer Francois Van Zyl SC that the proceedings were not criminal in nature and Jooste would be protected.
“We sent you the [Parliament] rules on Monday,” Carrim told van Zyl. “You have to respect the rules.”
“We’re not a criminal proceeding,” Carrim said.
Jooste began his statement, which detailed what led to the collapse of Steinhoff’s share price in December 2017.
He said that it was the company’s decision to form a strategic partnership with Austrian businessman Andreas Seifert that led to a series of events in 2015, which would create “a perception of accounting irregularities” in the company.
When Seifert was dismissed from the company, he took the company to court and Jooste said that Steinhoff heads became aware that Seifert had made a statement to German tax authorities who were investigating a Steinhoff subsidiary.
Jooste alleged in Parliament that Seifert had made the statement to the Germans as an “unfounded attempt” to “influence the outcome of civil litigation” between himself and the company.
In September 2017 the company’s auditors Deloitte sent an email making Steinhoff aware Deloitte was initiating an “additional investigation” following media reports and information the firm had received from Seifert.
This led to a meeting with Deloitte in Stellenbosch where the audit firm was assured that an investigation by German firms had already been commissioned by Steinhoff into the “accounting irregularities”. Jooste said that he understood accounting irregularities “to mean fraud”.
When Deloitte refused to sign off on Steinhoff’s financial results in December, the firm was sacked because Wiese and Jooste doubted its independence.
“I’m not blaming Deloitte for anything, it was a process,” Jooste said.
He did however say that because Deloitte refused to sign off on the results, they were not released on time in December 2017 and this led Steinhoff’s shares to crash on December 6.
He then made a claim that at the time of his resignation, Jooste didn’t know anything was amiss — despite being the alleged mastermind of a scandal that swindled pensioners out of their money.
“By the time that I left Steinhoff, I was not aware of any accounting irregularities,” he said.
In a testimony to Parliament in August, Steinhoff former chief financial officer Ben Le Grange in August pinned the blame on Jooste, saying assets were acquired by third parties because of Jooste’s influence.
Jooste also denied that his admission that he made a “big mistake” to staff in an SMS was about any criminal involvement on his part in the share collapse. He instead said that the “mistake I made was the choice of Seifert… that cost the company… all its financial losses”.
He resigned after the supervisory board of the company, led by Christo Wiese, had decided to appoint a new investigation into the irregularities.
DA MP David Maynier had asked about the SMS and also asked whether Jooste had violated Steinhoff’s code of conduct by being dishonest.
“I have never lied about the activities of the company as the allegations were made,” Jooste answered.
Jooste’s statement did not deal with the losses incurred by pension funds – including those of government employees – except to say “it saddened me”. He also did not take any responsibility for the crisis, as the company’s chief executive, saying it was the audit committee in the company who was dealt with the audits.
“I was satisfied with what I saw,” Jooste said.
Jooste also did not concede that Steinhoff’s bookkeeping was suspicious.
“What surprises me most about your statement is that there’s no contrition, no apology,” Maynier said.
Jooste’s testimony continues.