Former Steinhoff CEO Markus Jooste made his first public appearance in Parliament since auditors flagged irregularities in the retailer’s accounts. Photographer: Armand Hough / African News Agency (ANA)

CAPE TOWN - Former Steinhoff chief executive Markus Jooste has begun his testimony in Parliament. 

This is the first time the former chief executive has spoken since he resigned in early December last year, following allegations of accounting irregularities at Steinhoff.

WATCH: 

Yunus Carrim first told members that due to the legal framework and according to Parliament's legal advisor Frank Jenkins witnesses are protected from self-incrimination.

This is in terms of section 16 of the Powers and Privileges Act. 

What this means is that Jooste must answer factually in relations to matters on Steinhoff and the inquiry. 

This evidence is given under oath and very importantly may not be used against him in any court outside Parliament. 


Scopa chairperson Themba Godi told Jooste that he does not need to be afraid and he should take his time and relax.

Government wants to hear what he is about to say as this is a matter of national significance. Godi explained that the Steinhoff fallout had a major impact on pension fund holders.

Parliament, therefore, needs to get clarity. 

Jooste began his testimony by outlining the auditors of all entities falling under Steinhoff, with Deloitte auditors dominating the accounting of its entities. 

Jooste said it was important to share this information to help the committee understand what led to the events of 2017.

According to Jooste, Steinhoff's major downfall began with a 2007 joint-venture

The former chief executive said that a partnership with a European retailer dating back to 2007 was definitely not the best decision, looking back. 

The venture was terminated in 2015 and consequently led to litigation. This led to allegations that Steinhoff was planning tax misconduct with relation to its European subsidiary.

Jooste said that investigations by German prosecutors and two firms commissioned by Steinhoff found that there was no misconduct or nothing untoward and these investigations were concluded two years ago. 

This probe had a 'devastating effect' on Steinhoff as evidence will show, Jooste said.

Jooste told MPs that Deloitte's proposal for further investigations into accounting irregularities led to a crisis in investor confidence, credit lines and the drop in Steinhoff share price. 

It should be noted that Jooste was vehemently against the probe as Steinhoff had already conducted its own investigations. 

These findings took two years and found no irregularities. 

"I was not aware of any accounting irregularity in the books of Steinhoff," Jooste said when referring to the Deloitte report.  

Deloitte's proposal for a new investigation would delay the release of the financial results on December 6, 2017. 

Jooste then said that he proposed another auditor and further suggested that the company release the unaudited financial results instead. 

The board did not agree with Jooste and therefore the share price nosedived, according to the former chief executive. 

The F-bomb 

DA MP David Maynier has caused some heads to turn in Parliament when he dropped the F word. Maynier asked Jooste to explain why one of his own associates would call him a F****ing psychopath.

Maynier also asked Jooste about the "big mistakes" he referred to in his resignation letter in 2017. Maynier said that it was also surprising, that there was no apology from Jooste for those who suffered major financial loss, including pensioners.

Jooste then acknowledged his WhatsApp message where he alluded to the "big mistakes" he made. 

The former chief said that he was referring to the mistake Steinhoff made by entering into a venture with a European retailer back in 2007. 

This venture lead to drama and fights that lasted three years and ended in its termination finally in 2015, according to Jooste. 

Jooste said: It led to the perception of accounting irregularities and as a result, we were not able to complete financial statements on time. The financial loss devastated to a lot of people.

The former chief also said that he did not know of any member within Steinhoff who "deliberately or knowingly" contradicted the code of conduct within the company.

Stayed away from Steinhoff

Former Steinhoff CEO Markus Jooste made his first public appearance in Parliament since auditors flagged irregularities in the retailer’s accounts. Photographer: Armand Hough / African News Agency (ANA)
Former Steinhoff CEO Markus Jooste made his first public appearance in Parliament since auditors flagged irregularities in the retailer’s accounts. Photographer: Armand Hough / African News Agency (ANA)


Jooste has stayed away from Steinhoff since he resigned in 2017. 

The former chief told members of parliament that he decided to stay away from Steinhoff and has not contacted any of the staff members. 

In terms of the pension funds and the major loses, Jooste said that he could not comment on that and furthermore this was not the main reason he was at parliament. 

Jooste also made it very clear that he has not sold any of his Steinhoff shares while he was employed by the company. 

R3 Billion 

According to Jooste when the Steinhoff's share price nosedived his family trust owned about R3 billion worth of shares. This translated to 68 million Steinhoff shares.

Hesitation

EFF MP Floyd Shivambu asked Jooste why Parliament had to subpoena him to appear here if he did nothing wrong.   

Joost responded to Shivambu by stating that after the events of December 4 he had to obtain a legal team to assist him in this process. 

His lawyers advised that he should not stand before Parliament back in January.  

Auditing was correct

According to Jooste, he was wholeheartedly satisfied with the auditing process and in his opinion it was professional. 

Jooste did note that he could not specifically blame anyone for the downfall of Steinhoff.

"I did not come here to blame anybody I personally believe all the colleagues I worked with worked in the best interests of the company. They gave their lives, it was part of the daily DNA of the business.

"I do not blame anyone for what happened at Steinhoff."

When it came to the PwC investigation, Jooste said that he could not comment until the report is finally released.

Biggest corporate failure of SA

Former Steinhoff CEO Markus Jooste made his first public appearance in Parliament since auditors flagged irregularities in the retailer’s accounts. Photographer: Armand Hough / African News Agency (ANA)
Former Steinhoff CEO Markus Jooste made his first public appearance in Parliament since auditors flagged irregularities in the retailer’s accounts. Photographer: Armand Hough / African News Agency (ANA)


Yunus Carrim put it to Jooste that Steinhoff was the biggest corporate scandal to hit South Africa, but the former chief of Steinhoff argued that the fallout showed that the company was the biggest corporate failure in SA. 

Carrim challenged Jooste on his lack of humility and sarcastically stated that the former chief was painting himself as the "Mother Theresa" of Steinhoff.

Jooste then added that he was saddened by the fact that a large number of people lost money but he was glad that Steinhoff was able to mitigate job losses.   

Jooste ultimately argued that the main reason for the fall in the share price was the decision to delay the release of the company's financial statements.

This created uncertainty and the, therefore, the markets reacted to that negatively.   

Jooste said that there are a number of reasons the company experienced such a fallout. He argued that it was due to the multilateral structure of Steinhoff and the decision to go into business with Andreas Seifert in a joint venture back in 2007. 

This is a developing story.

BUSINESS REPORT ONLINE