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Steinhoff...........

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JOHANNESBURG (Reuters) - Shares in Steinhoff plunged more than 18 percent in Johannesburg trade on Thursday, extending heavy losses suffered the previous session after the South African retailer revealed "accounting irregularities" and its chief executive quit. By 0707 GMT, the stock had slid 18.17 percent to 14.41 rand, adding to a more than 60 percent plunge in the previous session.

Marius Jooste - A racehorse owner from the W/Cape.................. grasshole thief of note!!

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The Steinhoff bigwigs had a thing about racehorses. Remember Chris Dirks?

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136 million shares traded today.........and counting

The Stellenbosch sweet wine just turned very sour!!

you haven't lost if you haven't sold.....................gulp!!

 

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From his buddy Alec Hogg..............

I have known and respected Steinhoff’s now departed CEO Markus Jooste for decades. During this time he built a global giant by executing on Steinhoff’s vertically integrated business model and applying strict financial disciplines both internally and when considering acquisitions.

In dozens of interviews, during spats in the RA and Phumelela boardrooms, and over many private cups of tea, our interaction has always been direct and honest. It’s like having woken up in a parallel universe seeing him mercilessly pilloried on social media and widely labelled a crook.

Those who know him are not the only ones in shock. Jooste himself has gone so far underground that every line of communication seems broken.

All we have from his side is a text message apparently sent to a few members of his team at Steinhoff. I say apparently, because he hasn’t yet confirmed to anyone whether he actually sent it. But it does sound very much like the man I know – apologising to his team, accepting responsibility for his mistakes and encouraging those he has left behind to keep living their dream.

My engagement with those closer to the fire and other research is throwing up all kinds of interesting but sometimes conflicting information.

But here’s what we do know for sure.

At board level, Jooste has been under pressure for the way he has handled a tax investigation by the German authorities and allegations of accounting impropriety made by the group’s previous partner in its POCO subsidiary. This I can “get” – PR has never been a Jooste strength. His binary brain is simply not wired for such nuances.

But he seemed to be riding that storm well enough as most believed his strong responses that there was nothing to the allegations. What has proved Jooste’s undoing, though, was when Deloitte refused to sign off on annual financial results to end September that were due for release earlier this week.

Jooste, himself a chartered accountant, disagreed with their interpretation and wanted the board to release the results as unaudited. An already irritated Steinhoff board took the side of the auditors against its CEO. A standoff occurred and Jooste resigned with immediate effect.

Chairman Christo Wiese, Steinhoff’s biggest single shareholder, has taken charge. Big Four auditing firm PWC was immediately assigned to double check Deloitte. And the group’s highly rated former CFO Ben la Grange has been moved back to his old post running the global finances to apply the required attention to getting to the truth. He thus relinquished his position as CEO at the recently listed Steinhoff Africa, a move that wasn’t immediately appreciated.

Those are the facts as we have been aware of them thus far. Something else we know is there is nothing more powerful than the truth. And Steinhoff has one of the strongest and most independently minded boards of any South African company. Each director’s personal credibility depends on the truth being aired.

While the social media mobs are screaming, spurred on “research reports” being circulated by short-selling hedge funds enjoying a massive payday, it is all too easy to get caught up in the drama. But investment rewards discipline and rationality. Not emotional or knee-jerk reactions.

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I know things that went down.  Had family that worked for Steinhoff - some funny stuff been going on for a long time.  But proof is difficult so we just nod and wave..

Quote

 

https://www.dailymaverick.co.za/article/2013-04-23-daily-maverick-interview-christo-wiese/#.Willx0rXZhE

Wiese has had his fair share of controversy over the years, including a much-publicised spat with SARS over billions of rands in unpaid taxes and having a briefcase containing £700,000 confiscated at Heathrow Airport. Wiese believes he has dealt with both issues.

“Let’s deal with the briefcase situation first. It took me three years, but I got every penny back with interest because they were wrong. So that matter played out very well for me in the end.

“I didn’t make a big brouhaha about it, but while this was a big story at the time, when I got my money back, only one newspaper carried a small story. Even my own daughter, a year later, asked me if I got my money back.

“On the SARS thing, I made my statement. If SARS thinks I owe them money, they know where I am. I don’t fight my legal battles in the media. There are forums where we can address them and I never ran away from something. I have a simple saying: ‘If I stole from you, arrest me’ and ‘If I owe you money, sue me’. Everybody knows where I am.”

Wiese believes that the negative publicity around wrongly-labelled meat products will not impact on his business.

 

That's quite a bit of "pocket-money" to be carrying in a briefcase.  Can you be rich and stupid?  He won the case and got the money back after it was confiscated.

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This lady has balls!!!

By Magda Wierzycka

The failure of Steinhoff has shocked even the most seasoned asset managers. It is the biggest corporate failure on the JSE.  Allegations of earnings manipulations, uncontrolled acquisition sprees and tax fraud are just the tip of the iceberg.

Off-balance sheet companies were set up to hide losses, executives collaborated with each other to defraud investors, and debt was taken on at a massive pace. The warning signs were all there.

The most obvious of those was the cynical move by shareholders in PSG to, in a sleight of hand, swap their shareholding in PSG shares in South Africa for a suddenly-Frankfurt-listed Steinhoff, thereby externalising their wealth without the need for foreign exchange controls approvals.

This alone should have been a strong indicator that one is not dealing with pillars of society. Many names are implicated. Many more will follow.

The serious question to ask is how so many active asset managers in South Africa missed this.

Priding themselves on meticulous research, scrutiny of balance sheets and income statements, backed by interviews with management, they should have seen what was obvious from the beginning that this was as close to a corporate-structured Ponzi scheme as one can get.

When I looked at the financials of Steinhoff (not my day-job, by the way) I had another Net1 moment – it took me exactly half an hour to figure out that the structure was obfuscated, that financial items made no sense, that the acquisition spree was not underpinned by any logic and too frenzied to be well thought out, and that debt levels were out of control.

I am a vocal critic of many things. This time I am going to push the envelope by testing the liability clause that most asset managers include in their management agreements, that of “gross negligence”.

Most managers think of the clause as dealing with their operational risks and administrative failures. Unlucky for them, gross negligence also covers negligence as far as management of portfolios is concerned.

Management includes research. I firmly believe that the blind faith in the Midas touch of Christo Wiese made many oblivious to the obvious.

The right questions were not asked, the corporate structures were not analysed in any great detail, earnings versus debt calculations were not done, management was taken at its word – all this against a backdrop of marketing exactly the opposite and charging savers and investors for the privilege. 

Hence, one can assume that marketing was at best a misrepresentation backed by incompetence, at worst a falsehood.

Critics will immediately accuse me of using this as an opportunity to punt passive asset management or index tracking.  So, let me declare my vested interest, backed by my core beliefs, backed by 24 years of observing the asset management industry, and shared by Warren Buffett – I do not believe that active asset management adds value commensurate with what is being charged to investors.

Net1, ABIL, Steinhoff – the landscape is littered with asset managers missing the obvious.

If there are any ethical asset managers out there who believe in their own skills, right now is the time to prove it – please use some of the performance fees you have levied in the past before destroying value for investors to compensate them for the recent destruction.

I challenge you. However, asking an active asset manager to put his hand in his pocket is like squeezing blood from a stone – I have seen that personally in the recent past when trying to raise money for another very worthy cause (time will come to name and shame, by the way).

The greed is unprecedented. As far as I am concerned the time has come to pay the piper.

Magda Wierzycka is CEO of Sygnia. She has written this in a personal capacity.

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16 minutes ago, J1M1 said:

This lady has balls!!

 

!

She is the original dealer of puss-klappe all-round.  The thing that irks most of the offenders (like Jimmy Manje) is that she is correct! 

DQgLxNvVwAAtBEd.jpg

 

The sad part of this fuckup by Steinhoff is that it gives the MSM an opportunity to lambaste the whole private sector and get some heat off the whole government corruption.

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4 minutes ago, Hawk_Eye said:

She is the original dealer of puss-klappe all-round.  The thing that irks most of the offenders (like Jimmy Manje) is that she is correct! 

DQgLxNvVwAAtBEd.jpg

 

The sad part of this fuckup by Steinhoff is that it gives the MSM an opportunity to lambaste the whole private sector and get some heat off the whole government corruption.

It makes the Guptas look like amateurs...........

  • Haha 1

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52 minutes ago, J1M1 said:

This lady has balls!!!

By Magda Wierzycka

The failure of Steinhoff has shocked even the most seasoned asset managers. It is the biggest corporate failure on the JSE.  Allegations of earnings manipulations, uncontrolled acquisition sprees and tax fraud are just the tip of the iceberg.

Off-balance sheet companies were set up to hide losses, executives collaborated with each other to defraud investors, and debt was taken on at a massive pace. The warning signs were all there.

The most obvious of those was the cynical move by shareholders in PSG to, in a sleight of hand, swap their shareholding in PSG shares in South Africa for a suddenly-Frankfurt-listed Steinhoff, thereby externalising their wealth without the need for foreign exchange controls approvals.

This alone should have been a strong indicator that one is not dealing with pillars of society. Many names are implicated. Many more will follow.

The serious question to ask is how so many active asset managers in South Africa missed this.

Priding themselves on meticulous research, scrutiny of balance sheets and income statements, backed by interviews with management, they should have seen what was obvious from the beginning that this was as close to a corporate-structured Ponzi scheme as one can get.

When I looked at the financials of Steinhoff (not my day-job, by the way) I had another Net1 moment – it took me exactly half an hour to figure out that the structure was obfuscated, that financial items made no sense, that the acquisition spree was not underpinned by any logic and too frenzied to be well thought out, and that debt levels were out of control.

I am a vocal critic of many things. This time I am going to push the envelope by testing the liability clause that most asset managers include in their management agreements, that of “gross negligence”.

Most managers think of the clause as dealing with their operational risks and administrative failures. Unlucky for them, gross negligence also covers negligence as far as management of portfolios is concerned.

Management includes research. I firmly believe that the blind faith in the Midas touch of Christo Wiese made many oblivious to the obvious.

The right questions were not asked, the corporate structures were not analysed in any great detail, earnings versus debt calculations were not done, management was taken at its word – all this against a backdrop of marketing exactly the opposite and charging savers and investors for the privilege. 

Hence, one can assume that marketing was at best a misrepresentation backed by incompetence, at worst a falsehood.

Critics will immediately accuse me of using this as an opportunity to punt passive asset management or index tracking.  So, let me declare my vested interest, backed by my core beliefs, backed by 24 years of observing the asset management industry, and shared by Warren Buffett – I do not believe that active asset management adds value commensurate with what is being charged to investors.

Net1, ABIL, Steinhoff – the landscape is littered with asset managers missing the obvious.

If there are any ethical asset managers out there who believe in their own skills, right now is the time to prove it – please use some of the performance fees you have levied in the past before destroying value for investors to compensate them for the recent destruction.

I challenge you. However, asking an active asset manager to put his hand in his pocket is like squeezing blood from a stone – I have seen that personally in the recent past when trying to raise money for another very worthy cause (time will come to name and shame, by the way).

The greed is unprecedented. As far as I am concerned the time has come to pay the piper.

Magda Wierzycka is CEO of Sygnia. She has written this in a personal capacity.

The auditors must have been asleep at the wheel. Their insurers will be getting twitchy 

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12 minutes ago, Docker said:

The auditors must have been asleep at the wheel. Their insurers will be getting twitchy 

There's a LOT of twitchy people here right now.........SA horse racing was "owned" by him - has/had horses in Australia, France, England &Ireland as well -  a lot of people may go without pay this Christmas!!

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Jooste's next big move will be to "find God"..........if the manne don't find him first.....:15_8_217:

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This gives us the opening to start questioning active managers and the research they do for the fees they charge.

— Magda Wierzycka, Sygnia Group

It took me exactly half an hour… to figure out that things are very seriously wrong with this company… please explain to me how active managers did not pick up this massive fraud…

— Magda Wierzycka, Sygnia Group

Certainly there has been tax avoidance… and accounting fraud…

— Magda Wierzycka, Sygnia Group

The fact that German authorities are investigating fraud – and they’re calling it fraud – suggests this goes further than ‘creative accounting’…

— Magda Wierzycka, Sygnia Group

I don’t believe for a second that Markus Jooste acted in isolation.

— Magda Wierzycka, Sygnia Group

Most of the large asset management companies - Allan Gray, Coronation, Investec, Prudential, Foord - all of them have exposure to Steinhoff… How did they not perform this oversight function on behalf of investors? How did they get caught in this trap?

— Magda Wierzycka, Sygnia Group

There’s nowhere to hide from this one!

— Magda Wierzycka, Sygnia Group

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46 minutes ago, taipan said:

Yep, I have money with both Allen Grey and Coronation.

Both highly respected, trusted companies!!

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Maybe some economist can help us understand this:-

SA holds +/- 100 tons of gold - the USA around 800 tons.

if SA's in so much debt, why not sell off a few tons - @ US$ 1,250/ounce we'd be in the black quite quickly..................

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