Steinhoff shock will affect us all

Markus Jooste former Steinhoff CEO.
Markus Jooste former Steinhoff CEO.
Image: Raymond Preston

We have been hit by the biggest corporate scandal of our time.

The resignation of billionaire Markus Jooste on Tuesday caused Steinhoff International to lose about R194-billion, and its value continues to be steadily wiped out.

The giant household goods and clothing retailer experienced these losses in only two days against looming prosecutions that may stem from investigations by German investigators probing alleged accounting fraud.

The company was given a four-point downgrade by Moody's as its share price continues to plummet.

While many of us only heard of Steinhoff when the scandal exploded this week, South Africans have every reason to be concerned about the shady transactions that may have led to Steinhoff's demise.

The group owns the local brands JD Furniture Group that houses popular brands such as Russell's, Hi-Fi Corporation and Rochester, as well as their clothing retail arm of Pep, Ackermans and Dunns. Collectively, Steinhoff employs hundreds of thousands of ordinary South Africans and it is only a matter of time before downsizing and retrenchments follow.

These employees' retirement savings that have been entrusted with the company have drastically diminished since the exposure of unethical and illegal business practices that may have occurred.

Secondly, the Public Investment Corporation (PIC), which holds an 8.5% stake in Steinhoff, is one of the most affected partners in this saga and is said to have already lost up to R4-billion. The PIC administers the pension funds of government employees.

The Steinhoff corruption comes after allegations that Naspers and MultiChoice acted improperly to influence government policy in the roll-out of set-top boxes so that the pay-TV pioneer could retain its market dominance over new players.

While Naspers has shifted the buck to MultiChoice, worrying allegations of how former communications minister Yunus Carrim was threatened and the multimillion-rand payments to both the SABC and ANN7 are being probed by an international law firm.

It is clear that ordinary South Africans suffer the most when state organs and corporations engage in corrupt practices to indulge their greed.

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