Steinhoff collapse set to dwarf state capture scandal

08 December 2017 - 07:22 By The Times Editorial
Steinhoff International Holdings Ltd
Steinhoff International Holdings Ltd
Image: Supplied

The meltdown of one-time JSE-darling Steinhoff has implications beyond headlines in the business pages.

Why should you care?

By close of play on Wednesday, Steinhoff's plummeting share price had wiped out
R194-billion in value for shareholders. That's a number so eye-wateringly large that it's hard to wrap one's head around. So let's give it some context.

The value destruction in the Steinhoff scandal is greater than what it is estimated South Africa lost to the Guptas and their associates in all the years of state capture.

And it was all lost in one day. So, if you are a South African with any kind of pension fund or investment, the Steinhoff nose-dive cost you real money. Almost without exception, Steinhoff, believed until Tuesday to be a blue-chip rand hedge, was part of the portfolios of investment managers taking care of your cash.

If you are a civil servant still working or retired you should be extremely concerned. The Government Employees Pension Fund lost at least R12-billion in the Steinhoff collapse but that figure at the time of writing looked set to be far greater as the share price continued to tumble in a dizzying blur.

The Steinhoff collapse is not a business gamble gone wrong. It was catalysed by alleged criminal fraud, now the focus of a probe by German authorities.

The Steinhoff saga is on a scale which threatens to leave the state capture scandal in its dust and, uncannily, has much of the same modus operandi, among them questions being asked about the role of Steinhoff's accountants Deloitte, who for years have signed off on their financial statements.

Markus Jooste, the former wunderkind CEO of Steinhoff and a central player in what he termed the "mistakes" that led to this week's collapse, needs to face the music - as do the Guptas.