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It is fair to say that Markus Jooste didn’t much like me. Back in October 2011, I’d written about a court case in which the South African Revenue Service (SARS) had dragged him to court, demanding R207m in back taxes from him. What was interesting about that case was not the fact he was fighting with the tax authority – he’d been pushing the limit for many years. Rather, it exposed a side of Markus Jooste that nobody had ever seen: how he appeared to be making millions personally through side deals involving Steinhoff; deals that, notably, hadn’t been disclosed as “related party” ones. In that case, the tax authority claimed he’d made hundreds of millions when his company bought the Thesen forests in Knysna for R11.9m in 2001, and then had flipped it onto Steinhoff for R159.7m a few years later – a handsome profit indeed. It was the sort of self-dealing that gives capitalism a bad name – an economic system already facing some­thing of a credibility crisis in a country where 37% of the adult population don’t have a job.

The forestry deal was intriguing because it suggested that the CEO of this rapidly expanding retail company, who’d been described as charming and one of the hardest-working guys around, wasn’t just in business for the shareholders. It seemed there might be another dimension to the Steinhoff story.

That newspaper article rankled with him. Often, he’d mention it to his colleagues, who’d tell me about it. Then in September 2017, he gave an interview to the Financial Mail in which he complained about the article, as it had come out “when I visited my mother for lunch”. “I refused under that pressure and under SARS’ threats . . . When [SARS] lost, six-nil in court with costs, do you think anybody wrote anything? Nothing – and that’s the problem,” he said.

In Markus Jooste’s world, he’s always been the victim of unfair publicity, an unfair vendetta by a former business partner in Austria, Andreas Seifert, and unfair criticism by analysts who just didn’t truly understand what he was trying to do. In that same interview, Jooste railed against the German criminal investigation into him and Steinhoff, which made head­lines in 2015, days before the company’s listing on the Frankfurt Stock Exchange. Journalists “twist it to make it sensational”, he said. “At the end of the day, the authorities worldwide are looking for more tax . . . you must remember: it’s a game for money.” It was a revealing choice of words, even as he insisted that Steinhoff was a business built for the long term. “Our game is for long-term investors who want to invest in a business that will be there when all of us are gone. We plant a tree for every tree we cut. Why should I do that? The trees they’re going to harvest being planted now, I’ll be dead for 15 years before we cut them. It’s about sustainability, it’s about the long term,” he said.

It turns out that it wasn’t just trees that were being cut. Corners were being cut all over the place, but most especially in Europe, where a series of opaque companies were set up under the pretence that they were independent from Steinhoff, but whose real goal seems to have been to help burnish its accounts.

When late at night on Tuesday, 5 December 2017, Steinhoff announced that it had found “accounting irregularities” and that Jooste “has tendered his resignation with immediate effect”, it wasn’t just the fifty thousand individual investors in South Africa and overseas who felt the aftershock. South Africa’s investment reputation took just as much of a hammering. As Shane Watkins, the founder of investment company All Weather Capital, put it, foreign investors from places like the US, Europe and Asia had invested in South Africa, despite the fact that its growth rate was relatively low, because it was seen as having some of the best-managed companies in the world. “Then we had Steinhoff, and other examples since, that reflect badly on us. I’m concerned that those who came here in the search for quality businesses will re-examine this rationale.” Nicky Newton-King, who heads the continent’s largest stock exchange, the JSE, agrees. “South Africa had pretty much an unblemished reputation among emerging markets for having the strongest management and ethical corporate stan­dards. Now, after Steinhoff, it creates the impression that we’re no longer first among equals – we’re no different from other emerging mar­kets where there are issues.”

What has happened has challenged the view that the governance in South African companies is strong enough to stop these sorts of ethical breaches. More than that, there was a bracing realisation that the moral decay that had assumed grotesque forms under former President Jacob Zuma from 2009 until 2018 may not have been confined to venal politicians.

Craig Butters, a portfolio manager at Prudential Investment Managers, is someone who’d been sceptical about Markus Jooste and Steinhoff for more than a decade. Famously, he’d met Christo Wiese in 2009 to warn him off Steinhoff. “It has broader resonance. Everyone has been pointing fingers at government officials for their poor ethics. But we’ve shown them that we’re not any better in the private sector.” This may sound dramatic, but then Steinhoff is South Africa’s Enron – one of the largest companies on the stock exchange that had, entirely unnoticed, been apparently corrupted for years.

Of the 1,651 pension funds registered in South Africa, 948 had exposure to Steinhoff – more than half of all retirement funds in the country. Consider that from its peak at R96.94 in April 2016, the stock had ebbed to R45.65 before Jooste’s resignation. But, within two days it had lost 86% of its value. In the end, it reached a low of just R1.12 in June 2018 – a loss of 98% in just more than two years. This meant that, at last count, civil servants whose pensions were invested with Steinhoff had lost more than R21bn.

As Heather Sonn, who took over as Steinhoff’s chair after Jooste’s resignation in December 2017, puts it: “At Steinhoff, I believe there was purposeful deceit where certain people went to great lengths to mis­represent the financial statements, in collusion with others.” In this way, she says, what happened is comparable to Enron. At least in the case of Enron – the Houston-based energy company that went bankrupt in 2001, after massive corruption was discovered, including off-balance sheet vehicles designed to hide losses – people went to jail. By contrast, as damning as the Steinhoff evidence appears to be, nobody is holding their breath that South Africa’s Hawks – a supposed elite crime-fighting authority thoroughly gutted by the rotten years of Zuma – will be able to secure any convictions. They’re more like buzzards with crooked wings than any sort of real bird of prey.

What we do know, and what you’ll read in this book, is how Steinhoff bamboozled the country’s wealthiest, most accomplished and most powerful business leaders.

In many places in the book, such as the first chapter, which recounts what happened behind the scenes in the week before Steinhoff’s collapse, the narrative has been reconstructed and verified with a number of sources from within those meetings and boardrooms. (In the first chapter I did not use quotation marks to denote when the various characters are talking. This is deliberate and is meant to highlight the fact that it is a recon­struc­tion – and that I was not there in person.)

You’ll also read the story behind the Steinhoff leaks, written by the Financial Mail’s tenacious reporter Warren Thompson. Those emails, published here, are damning evidence in themselves.

To be able to tell the story of Steinhoff, I am deeply indebted to numerous people who were instrumental in this book being written. This includes Craig Butters, who first began talking to me about the “imminent collapse” of Steinhoff more than eight years ago; my colleague Warren Thompson and the brains trust at the Financial Mail who acted as the cliché police while I was writing; publisher Gill Moodie; and all the journalists who have done a fantastic job in telling this story for months – most particularly among them, my wife Janice. And, finally, the dozens of people I spoke to, both from within Steinhoff and from outside, who filled in the rough outlines of the story with luminous and arresting colour, giving life to the story of what I believe is South Africa’s most epic fraud.

ROB ROSE

September 2018