The PwC report into Steinhoff names CEO Markus Jooste and his top executives, but the biggest corporate scandal in SA happened because the "gatekeepers" didn't do their job, says corporate reporting specialist Steven Firer.
According to the summarised version of the report, the international furniture retailer created fictitious profit-boosting schemes totalling R106bn between 2009 and 2016.
"This is about the failure of gatekeepers, the audit committee, the board, the auditors," says Firer.
They're likely to argue that they complied with financial reporting standards.
"Audit firms and companies comply with the technical part of the standards come hell or high water," he says. The PwC report confirms it.
"There's nothing in the report about them departing from correct accounting standards. What we hear is fraud."
This is because the gatekeepers that investors and pensioners rely on to safeguard their money forgot about "fair presentation", which essentially means looking at the bigger picture and asking the right questions.
South Africans are world champions at the "tick-box approach" to corporate governance, "but there comes a time when fair presentation overrides everything. It's more important than applying the standards in a mere technical way."
The argument that they "complied with the standards" should not get the Steinhoff auditors and directors off the hook, he says.
"It's not a defence against criminal charges."
Firer, a chartered accountant, doctor of business administration, master of laws, former professor at the universities of the Witwatersrand and KwaZulu-Natal and consultant in commercial disputes involving the application of the International Financial Reporting Standards, believes the next Steinhoff is "around the corner" because auditors are not doing their job properly.
He suspects Jooste and his executives will argue that what they did was not illegal from an accounting point of view.
"But the question is, when they did these correct technical transactions, did they have the intention to defraud?"
This is what the auditors should have been asking.
How are auditors supposed to see the state of mind of Jooste and his team, who, judging by the report, were extremely clever at disguising their real intentions?
"The client gives you the evidence. You should be asking: is it crooked?"
Auditors say their job is to ensure that what they receive from their client complies with accounting standards.
"But there's one big auditing standard that everybody forgets," he says. "It's called professional scepticism."
Auditors have to assume that every director is a crook until proven otherwise.
"If you go in with that attitude you won't make mistakes. But they don't."
This is partly because their firms are providing consulting services to the companies they audit. The two functions are supposed to be ring-fenced, but, in practice, they're not, he says.
And because the auditors are being paid by the people they're auditing.
This makes a collusive relationship between auditors and directors almost unavoidable.
In addition, he says: "You'll never get rid of the old boys' club. I'm an old EY (or PwC or Deloitte) guy, I'm sitting on a board of directors, I'm going to appoint EY. There is this incestuous relationship. It's still there. Sleeping with the enemy."
Steinhoff's auditors Deloitte were some of the best around.
"They didn't go out deliberately to make mistakes. But nonetheless these huge mistakes were made. How could people like Deloitte miss them? Easy. They're getting paid by the people they spy on. When it comes to looking at those accounting transactions without bias, they can't. They will look for ways to agree."
How else, he argues, could such a huge audit firm make such huge mistakes?
"You can't tell me that auditors will miss these transactions. They were huge, and going on for many years."
Technically, they may have looked okay. But it seems they never asked more than: is it technically correct?
"That's where they're in breach of the auditing standards. Because they should have gone in with professional scepticism, where it's not right until it's proven right."
Had they done so they couldn't have missed that these transactions were, according to the PwC report, related party deals.
"Hang on," they should have said, "you've sold this to your auntie, to your uncle.
"Surely they could have seen that? And surely that should tell you something's wrong, and that you should be investigating further, and keep investigating until you've got the answer?"
Any transaction involving related parties should be a major red flag for the auditor, he says.
What about Steinhoff's supposedly independent directors?
"They had no guts. They didn't report, they didn't see. They were an ultimate failure."
How could he know that?
"Because there was a failure under their watch. So who's to blame? Under their watch it happened."
The PwC report says how "complex" these transactions were.
No excuse, Firer says.
"They didn't question enough what they should have. You can't come and tell me that they didn't know about it. That there were no clues anywhere. I cannot believe that."
He believes the minutes of their meetings will show they didn't ask the right questions. "If they did, what answers did they get? They turned a blind eye."
How is it possible that some of the most experienced and qualified directors in the country who were on the Steinhoff board missed it? he asks.
What if they really didn't know?
"It's not that they must have known, it's that they should have known. That's what this is going to be all about."
He says it is time for directors to be held criminally liable.
In the Companies Act, if directors produce misleading financial statements, "which happened", they can get up to 10 years in jail.
Arguing that they didn't know what was going on is no excuse, he says.
"It simply confirms that they were delinquent. They should have known."
He blames the failure to put them behind bars on a lack of political will.
"The directors of many state-owned companies would have to be put behind bars then, too."
The lack of consequences has led to directors behaving "with impunity, arrogance and contempt for the law"...