Statement on the crash of Steinhoff shares on the JSE

11 December 2017

This week’s crash of Steinhoff shares on the Johannesburg Stock Exchange (JSE), representing a loss of anything between R135bn and R180bn, is no accident. It is the inevitable outcome of the cowboy capitalism of Christo Wiese, Markus Jooste, and their cohorts.

For years Christo Wiese has been the darling of South Africa’s financial media and of their dial-a-quote commentators. Until a week ago they were still lauding his Midas touch, his ability to acquire battling companies and miraculously turn them around. Now the truth is beginning to emerge about just how this business-model’s wizardry has been achieved. Essentially it’s a sophisticated pyramid scheme conning banks and asset investment managers by inflating the real value of his acquisitions and concealing actual debt in off- balance accounts. There has also been tax dodging and massive, cleverly engineered capital outflows from South Africa.

When stories broke a few months ago that the German authorities were investigating Steinhoff, our local media gave Wiese oodles of air-time and column inches to airily dismiss these as rumours. (Much as Koos Bekker was afforded a full front page of Sunday’s Business Times to scoff at evidence that he has been paying the Guptas to block government’s attempts to end MultiChoice’s crushing monopoly of pay-TV).

Despite the local adulation, the likes of Bekker and Wiese have long been involved in dodgy dealings. As the SACP reminded the South African public earlier this year, it was Wiese who was caught at London City Airport in 2009 with £674 520 in used bank notes in his luggage on the way to the tax haven of Luxemburg.

 But in capitalist countries capitalists tend to enjoy not just a free press, but also a free pass. UK Justice Underhill found Wiese not guilty on the wonderfully class-biased grounds that “It is unlikely that a businessman of previous good character, already enormously rich from legitimate business, would become involved in money laundering.” Really?

 This businessman of “good character” who has grown “enormously rich” from so-called “legitimate business” has now destroyed some R7-10bn of the Government Employees Pension Fund and threatened thousands of local jobs.

This time there must be real consequences. We are calling for a full investigation by the criminal justice system.

Issued by Mhlekwa Nxumalo, Acting National Spokesperson, SACP, 11 December 2017