We’ve become used to our state-owned enterprises haemorrhaging money these days – like Eskom’s R19 billion in ‘irregular expenditure’ – but the Steinhoff scandal took many by surprise.
One man who knows more about the company than most is James-Brent Styan, author of a new book on the Steinhoff saga called Steinhoff en die Stellenbosse Boys.
During a Q and A session at the Press Club last night, Styan delved deep into their unravelling, but he also had some worrying words for those who think this was an isolated incident.
[He] suggested the company’s collapse might be part of a systemic problem, meaning even major issues can be easily obscured.
Styan said there had been “obvious red flags” ahead of Steinhoff’s collapse, but that “hardly anyone stood up and said ‘There is a problem here'”.
However, he added, even eight months later it was not entirely clear what had gone wrong at Steinhoff, and the facts were likely to still take some time to emerge.
This, he said, was an indicator that it was necessary to question the level of “trust we have in the financial system as a whole”.
This was a global problem, he said, with “real repercussions”.
One of the major warning signs he uncovered during his research for the book, which traces Steinhoff’s history and includes interviews with insiders, is the taxes (or lack thereof) that they paid:
Corporate Income Tax in South Africa is payable at a rate of 28%, but according to Styan, for several years, Steinhoff was paying an effective tax rate of 8% to 12% and “nobody asked any questions”.
Maybe that will be shown to be legal when all the cards are laid on the table, but he remains sceptical.
Back in January, we reported on a conspiracy theory of sorts, involving Steinhoff and Mattress Firm, and perhaps there’s actually more to that one than some tinfoil hat false flag:
Steinhoff purchased Mattress Firm at $64 a share in 2016, when it had been trading at $29 a share.
This prompted Fraser Perring, a former British social worker who founded Viceroy Research, to begin conducting research into Steinhoff’s financials, which was made public in 2017.
According to Perring, “Either the market was undervaluing it by 100%, or Steinhoff was overpaying by 100. And if it’s too good to be true, something is up.”
I’m sure the team at Viceroy aren’t done trying to uncover the dirt on South African businesses, despite their methods coming under fire, so we’ll keep a close eye on that.
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