Conversations

Whichever way you look at it, that R30m Steinhoff ‘gift’ is dodgy

Steinhoff must sit on two equally shameful horns of a dilemma. The company made around R30 million available for a forensic investigation into itself. Either the money is a gift to the state, or it is an investment related to the core business of Steinhoff. Both scenarios get it into trouble. Here is how.

If it is a gift, then Steinhoff is in trouble because it should not be gifting money to others while it is under enormous financial distress with legitimate claimants waiting to be duly compensated in light of the gigantic historic fraud that led to the near collapse of this corporate giant.

It would amount to a fundamental breach of fiduciary responsibilities to be giving away this kind of money when one takes account of the pressure Steinhoff is under to reconstitute itself as a legally and ethically responsible corporate.

How can Steinhoff justify playing sugar daddy to the state when thousands of victims of its historic fraud first need to be given back money they had lost to Steinhoff’s grand fraud?

On the other hand, if the R30m is a business investment then that, in turn, raises the next question: How does giving the R30m to the state relate then to the core business purpose of the company? It is important to focus carefully on the nature of this second horn of the dilemma.

We do not know, in accounting terms, where in its books the R30m is entered. Only if we knew that would we be able, in law, to get a grip on what Steinhoff considers the legal purpose of the R30m “gift”.

If the money is classified as an investment for Steinhoff into its core business then it must be, in accounting terms, intending to make a business return on the R30m funnelled to the state via PwC.

In other words, the R30m is plainly then, in this scenario, intended to help the company increase its profitability. This is not about a selfless pursuit of justice at the expense of the company’s profitability. It is about fraudulently inducing a willingly naïve South African state effectively into a business arrangement with the controversial juristic entity called Steinhoff.

Without irony, Steinhoff has fraudulent intentions on naked display, even at the point where an incapacitated South African state is unable to see the company’s leadership as being continuous with those under Markus Jooste’s helm.

It is mind-boggling that neither the Hawks nor the National Prosecuting Authority can see the intentions of Steinhoff for what they are. Frankly, it is hard to believe that Steinhoff has anything other than a de facto intention to induce the government into a fraudulent transaction: “Here’s the deal, Hawks and NPA. We make a little slush fund available. We pretend to have Chinese walls in place by asking our business friend, PwC, to mock the public and pretend they do not speak to us but only to you.

“We also set up this nifty mechanism, so that we have plausible deniability by being able to say that no money goes from us to you directly. And… Bob’s your uncle. You win by telling the public you are on top of the investigation with the help of PwC who is ‘independent’ of us.

“We survive the scandal and continue to exist as a business. We both then scapegoat Jooste but we, in turn, can rake in billions more with the public unable to keep track of the people who worked with Jooste who are still at the centre of the ‘new’ company’s leadership. Fortunately, the public cannot keep up with all our names, so we are safe. Deal? Oh thanks! That was easy.”

It is important for the public to understand the implications of this dodgy transaction. Most importantly, the administration of justice is undermined by both Steinhoff and the NPA. You cannot be seen to be fair in the administration of justice if a suspect is effectively controlling the investigation into itself.

How can the public be confident that PwC is genuinely and fully aligned to the state’s constitutional obligation to pursue corruption effectively? PwC is in it for the money. And we know that accounting, auditing and consulting companies have been shown to be crucial to enabling and participating in corruption over the past decade.

PwC is not law enforcement. They want to do business with Steinhoff for many years to come. If the Hawks and NPA do not know whether PwC is genuinely not speaking to Steinhoff – let alone unable to know if PwC is giving it false or incomplete forensic reports into Steinhoff – then the administration of justice is undermined.

This is why the state should never have agreed to this intrinsically bad arrangement. The victims of Steinhoff are undermined by the government cosying up to the main perpetrator of gigantic fraud, Steinhoff.

The only way the government can settle the matter satisfactorily is by instituting charges against the crooks. After all, if the justification for this odious arrangement is to help the government with law enforcement, then where is the evidence of charges being brought against the criminals?

Steinhoff should be on trial and not just one Markus Jooste. It is balderdash to think that there is such a thing as “the new Steinhoff”. There is only one legal person called Steinhoff. The “current” Steinhoff is the very Steinhoff, as a matter of law, that should be in the docks for the behaviour of the company, across time and across international geographies.

Once the names of the current lot, like Louis du Preez (chief executive) and Theo de Klerk (chief financial officer), are properly known and explained to the public by the media (a media that is missing parts of the story), then the full ugly truth about the “new” Steinhoff will shatter the silly myth that a dangerous leopard can change its spots.

Not only are these gentlemen raking in upwards of an irresponsible R140m in fees – despite the financial distress of the company and claimants waiting for fair, just and equitable compensation – but these guys, crucially, also did not fall from the sky.

De Klerk, for example, is basically Jooste 2.0, having worked with him as his understudy, really, and a kind of personal assistant to him. Steinhoff now is Steinhoff from yesterday. The current board and leadership do not care for a genuine new start. They were around during Jooste’s days and are implicated in the historic fraud. They are taking away immoral amounts of bonus payments and laughing at the South African government for not knowing who they truly are.

When is the NPA going to see that Steinhoff and PwC are taking it for fools? The NPA is allowing Steinhoff and PwC to capture it. That is painfully ironic when the Zondo commission is sitting and meant to make the state aware of the modus operandi of criminals.

Yet the NPA, experts in law (supposedly), is consenting to their continued capture. This is a danger to our democracy that must be nipped in the bud immediately. The full (initial) PwC report must be made available publicly to enhance accountability.

And the full details of the nature of the R30 million “gift”, including the conditions attached to it contractually, and operationally, must be made available immediately too. Anything less will be proof of state capture continuing unabated.

  • Themba Godi is the former Scopa chairperson.

OPINION: Themba Godi