Steinhof beats the Guptas in the corruption race

A Steinhoff International Holdings NV logo sits on display outside the company's offices in Stellenbosch, South Africa, on Wednesday, Aug. 17, 2016. Acquisitions including Pepkor Holdings Pty Ltd. and French furniture chain Conforama France SA have transformed Steinhoff International Holdings NV, which employs 90,000 people and has more than 6,500 stores in 30 countries from the U.K. to Australia. Photographer: Waldo Swiegers/Bloomberg via Getty Images

The year 2017 was a year in which white big business laid its claim to leadership, this time of corruption in South Africa. Up to 2017, big business had been the leaders of the struggle against corruption. Steinhoff, a global retailer, was the darling of South African business. Like similar businesses, Steinhoff had powerful friends in high political places, including Jayendra Naidoo, an anti-apartheid struggle stalwart, and Christo Wiese, a business leader widely respected who are both on the board of Steinhoff.

Behind the scenes, however, a crisis and a scandal of major proportions had been slowly building up at Steinhoff International. The first shots were fired when the German authorities raided the offices of Steinhoff in Germany on 26 November 2015 to investigate possible tax fraud. Like some of the major corporations that had made their money on the back of South African workers, Steinhoff was off to greener pastures in Europe. The ANC government had over the years allowed important companies like De Beers and Old Mutual to move their headquarters overseas, meaning the profits they make end up overseas.

It took two years before the whole crisis broke. In early December 2017, Deloitte, the auditors of Steinhoff refused to sign their financial statements. This led to panic in the financial markets and to the collapse of the value of Steinhoff. In two days Steinhoff lost more than R194 billion in its share value, equal to over 750 Nkandlas. Government workers lost pension money equal to almost 50 Nkandlas, about R12 billion. No one knows how much private sector workers lost in their pensions investments.

When the scandal broke Steinhoff boasted one of the strongest business leaders on its board, with years of experience in companies such as Absa and Sanlam. It would seem that the Steinhoff debacle and the business practices that led to it were acceptable in business leadership circles. Already, questions are being raised about the role of the auditors in the Steinhoff scandal, when it emerged that Deloitte had signed the financials for the previous years before 2017. It has now had to withdraw its opinions on the 2016 audits and said these and others should be re-examined.

Even though Steinhoff is the biggest scandal in South African business history, the big press that friends of Steinhoff own continues to call it an ‘irregularity’, or simply claim no one knows what is going on. One thing is for sure, Steinhoff showed that corruption lies deep in the bones of white big business South Africa.

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