Steinhoff the Rails- Steinhoff

This week we talk the largest financial scandal to come out of South Africa: Steinhoff International. What started out as a multinational home furniture retailer who was always playing second fiddle to Ikea, turned into a huge empire with representation in over 30 countries. But behind the scenes Steinhoff CEO Markus Jooste was secretly cooking the books, and things were speeding to an unhappy end.

Episode Transcript

(00:02):
Wall Street veteran Bernard Madoff has been arrested and
charged with running a $50 billion Ponzi scheme.
Congress wants to know what caused the Enron meltdown, and
while the collective rage currently is focused on low
comp. Tyco CEO Dennis Koslowski was
convicted of looting hundreds ofmillions of dollars.
This is one of the biggest fraudcases ever.

(00:23):
Their president's a crook. Well, I'm not a crook.
Find out more on this week's episode of White Collars, Red
Hands. We've got to talk about the
largest financial scandals to come out of various countries
here in White Collar's Red Hands.
We've discussed Enron in America, Christopher's case in
Australia, and Carrie and Group in Hong Kong, among others.

(00:47):
But with 195 recognized countries in the world, well,
we're not even close to scrape at the bottom of the barrel.
We still have quite a few more to go.
And today we check another off the list as we discuss Steinhoff
International, a holding group originating out of Germany but
eventually migrating to South Africa, where it became one of
the largest companies listed on the Johannesburg Stock Exchange,

(01:11):
the largest of its kind in the country.
Of course, this meant that the fall of the retail giant after
an accounting scandal was first uncovered in 2017, became the
largest corporate downfall in South African history.
So let's find out the history behind Steinhoff International,
how it rose to power and dominance, and how this
oversized liability machine crumbled under its own weight,

(01:34):
leaving behind ruined lives and at least one body in its wake.
Nelson Mandela would not approve.
You're gonna, you're going to lay down Nelson Mandela.
Nelson Mandela's the best thing to ever happen to South Africa.
You're, I don't know, you're probably right.
He's on all the money. That's true.
He's on every single bill. The best thing to happen to any

(01:56):
country, that's what's on all oftheir money.
That's why white dudes are on all of America's, huh?
Yeah. Yeah, except for the Sacagawea
coin. Did you say Sacagawea?
Yeah, how do you say it? Sacagawea.
OK. We're gonna have to call the
judge on that one. In Ohio, we call our Sacagawea.

(02:17):
Yeah, you say a bunch of shit inOhio.
All right, Welcome back, everybody, to another episode of
White Collar's Red Hands. I'm Kashawn.
And I'm Nina. And as the intro told you, we're
talking about Steinhoff International, which is not, you
know, it's not a fun name there.I don't know if you can tell

(02:39):
there's not a lot of whimsy in today's episode.
I wish it was whimsical. I keep trying to find a way to
make the accounting scandals whimsical.
Yeah. To have some whimsy.
Whimsy. Have some fun.
You know, sometimes things don'thave whimsy, and that's OK,
Kashan. Not everything has to have
whimsy. Sometimes things are just bad.

(02:59):
I I mean, you can wear you can wear fun socks to a funeral.
That's true. Right, that's all I'm going to
say. You can throw a little whimsy
into almost everything. That's true.
So, as the name seems to suggest, Steinhoff was
originally a product of Germany.Steinhoff.
It's a It's a pretty German. Yes, that.
That is the most German name I've ever heard, actually.
Oh. Not the most German name, it's.
Pretty fucking German it was. Hans has to be in there if it's

(03:22):
the most Oh yeah. It was founded in 1964 by a now
German billionaire, Bruno Steinhoff, who had the
completely original idea of naming his company after
himself. Lots of people do it.
People name their children afterthemselves.
It's very common. You're correct.
Steinhoff aimed at providing a budget furniture business to

(03:45):
Western Europe and did so through a sort of arbitrage, by
purchasing furniture cheaply from what were the communist
countries at the time in EasternEurope and then selling it at
what is a discount price in the more capitalist Western Europe.
So when he was getting the furniture from Eastern Europe,
was it like they were making thefurniture there, like furniture

(04:10):
companies were making it there and he was selling it at a
discount? Yeah, OK.
Or. Can you tell me what the
alternative to that would be? I don't know why I was thinking
they were taking people's right.Yeah, no, they're and.
Selling it like they were stealing couches and then
selling them at discounted ratesto Western Europe, hey.
You call me bastards, give me your give me your four piece
dining set. I want your sofa right now.

(04:31):
Give me that fucking coffee table.
Oh, we're taking that. We're taking the outdoor stuff,
too. I love those.
I love those patio chairs. Nothing you could do about it.
They're like, Oh no. No, they were just they it was
cheaper to produce there becausethe.
The. Economies were worse there, so
they were cheaper to buy there and then sell the.
Economies were terrible there, Europe.
So then after doing this successfully for a while, they

(04:53):
started manufacturing their own.They bought a bunch of like
upholstery factories and they started making their own
upholstery furniture instead of just providing this resale
starting in 1989. And they were slowly growing a
decent size market in the European furniture game, which
is dominated by to this day. I don't know if it works fine,

(05:16):
but IKEA. Yeah, I was thinking when you
were talking about this, I was like, had he not heard of IKEA?
No, they. So basically.
When was IKEA founded? 1943?
So they had IKEA, Yeah. You will be, I mean, I, I
mentioned it somewhere in here, but like pretty much this whole
time, they're like the second largest in Europe behind IKEA,

(05:38):
like at all points. Steinhoff's discount Furniture,
Yeah. Meanwhile in South Africa, a man
named Marcus Jewst was born in the winter of 1961 into a middle
class family. His dad worked for the Postal
Service and was known for his love of betting on horse races.
Jewst also grew up with a love of horses.

(06:00):
He would go on to like be very involved in like horse breeding
later in life, but decided instead to issue equine biology
and went to school for accounting.
And he got a bachelor's in accounting from Stellenbosch
University in Stellenbosch, South Africa.
And eventually got an honors degree, which from what I can

(06:22):
understand is basically it's like a postgraduate degree, I
think like a master's, not like a PhD, so kind of like an MBA,
but in accounting. So he could earn a chartered
accountant degree, which in short, is just kind of like the
highest South African recognition for an accountant.
It's basically like you're ACPA but it felt higher because you
had to have a postgraduate degree to become a certified

(06:44):
like Chartered accountant. Makes sense?
Whatever, it's how they do things.
He spent some time as a financial director for a public
company before becoming the financial director of a South
African furniture company by thename of Goma Goma.
And here he met a German businessman named Klaus Don.

(07:05):
The that's. That's pretty fucking German.
Klaus. Klaus yes.
But it's not, it's not Klaus. It's Claas Klaus Don.
I don't know who showed in in. Kloss showed him the ropes and
eventually provided the connection to Bruno Steinhoff.
Because they had known each other, the two got together and

(07:27):
decided it would be mutually beneficial for them to merge
their furniture holdings in Europe and South Africa into one
big company. So they did.
But they kept Bruno's name and their furniture.
Baby would be known as SteinhoffInternational.
Although I remember it was already, technically it was in

(07:48):
Europe, it was international already.
It was way outside of Germany. But they were like, sure.
We'll call it that now. Oh.
It's Steinhoff International, I think original, so like that
that is like yadda yadda ING it a little bit like 'cause at
first it was like Steinhoff Europe and Steinhoff Africa and

(08:09):
then they were like, let's just.Yeah, let's put it together.
Let's just consolidate. But the that final merger was
done in 1998. Don and Jewst originally were
non executive directors, but Jewst was selected to head up
the company as the CEO starting in 2000.
And he immediately began building a giant and he got in

(08:34):
pretty quick. Like he he was a financial
director for a public company atthe age of 27.
Oh, wow. So he he rose through the rink.
He was pretty quickly the CEO. Yeah, and he wasted no time with
Steinhoff International either. At this point, you know, they
have this whole target of like, vertical integration for their
furniture, where they make all their furniture and they control

(08:57):
everything up to it being sold in stores.
But what Juice wanted to do was expand and quickly, and they did
this through acquisitions, one of the quickest ways to grow a
company from nothing to a big player and just simply buying up

(09:22):
a bunch of smaller or medium sized fishes just of
incrementing sizes as you go along.
And this has been the story of many businesses that we've
discussed, especially ones that got too big too fast and usually
had to resort to creative accounting to get around how
much debt this kind of growth requires.
Because you don't have this money, so you have to leverage

(09:43):
it to buy out all these companies.
And if you do it too fast and you're not careful about it, it
will ultimately. Yeah, it'll become an issue.
Yeah, it's you're, you're going to have to do some what?
It's so funny. People in this were really upset
because they always use the termlike creative accounting,
because they this is also the time you got to think in South

(10:06):
Africa, like right around when Steinhoff International comes
in, apartheid was ended. And there's definitely this
divide because most of these companies are like were and are
still headed by primarily white men because of apartheid.
Even though it was ended, you know, it's, it's still in the

(10:30):
society. This is stuff we feel here,
right, You know? Yeah, unfortunately, like even
though that ended, I mean, it's the same thing with here when
slavery ended and, you know, it took another 100 years for the
civil rights movement to happen and.
We still feel. And we still feel its effects.
So yeah, that doesn't shock me that apartheid ended and then
all these white men were in charge of everything.
But so you, you see a lot of people being like, you know, we

(10:53):
don't like the, we don't like the term creative accounting
because it makes it seem like they're not committing crimes
when they are. And I was like, I was like, I
agree with you a lot. And they did get criticisms
because the only people on their, in their C-Suite on their
board were all pretty much whitemen.
So, but they were taking over and getting bigger and Steinhoff

(11:19):
wanted to expand to other markets and he started by
purchasing $86 million stake in the UK based furniture company
known as Homestyle Group in 2005.
That was their first big addition.
Then in 2011, they acquired one of the largest European home
retail chains, Conforma, which is still the second largest

(11:39):
chain of its kind with 200 stores across Europe, once again
second only two. IKEA.
This acquisition cost Steinhoff €1.2 million, which pretty big
acquisition, but brought in a huge amount of revenue and more

(12:00):
than that showed growth. The year that Goma Goma and
Steinhoff merged, they went public on the the Johannesburg
Stock Exchange, the JSC. And as we've discussed before,
the the biggest goal for publicly listed companies is to
is constant growth. They want to show growth year
over year. So it's not really about money

(12:21):
targets, about just being. Better than like growth targets,
yeah, and. In order to keep stock prices
high, there must be a year over year increase in revenue
generated by the company. And this can be done by actually
doing good business, making smart deals, cutting costs, you
know, making lean manufacturing procedures, or you can pull the
Stein off and just like keep acquiring more companies.

(12:44):
It's kind of, I mean, this is a stretch, but it's a little like
a Ponzi scheme, right? It's like you just keep
acquiring more things. In the hopes of like.
And you bring on debt to do it, but your revenues keep ticking
up every year just 'cause you have more stuff.
Yeah, it's impossible for it notto tick up.
But at some point, you can't buyanything else.
No, you're going to cap out. And you're kind of boned at that

(13:07):
point. That's what happened to a lot of
companies in the 80s. And it it's what happens in a
lot of markets where it's like it's new and open.
So it was ripe to happen here inSouth Africa too.
So every every company you add means you increase your
company's revenue with relatively little work compared
to developing and implementing good business plans.

(13:30):
And there were plenty more minnows to munch on as they
bought Austrian home furniture chain Kik Aligner in 2013.
And then they made their biggestpurchase in 2015 when Steinhoff
acquired Pepcor for $5.7 billion.
So 1.2 million was the biggest before this and then they
dropped 5.7. Billion.

(13:52):
That's a huge jump. This also did show a change of
direction for Steinhoff though, as Pepcore was a South African
investment holding company that held assets outside of the realm
of home furnishing retailers andthis was their first big move
outside of just like home furnishing.
They did have Pepcorp had some holdings like Pep, which is a

(14:15):
general retail store that targets like lower to middle
class buyers, which it's founder, billionaire Krista
Weiss compared to being the Walmart of Africa.
They sold clothing, shoes, household products, electronics
and even cellular phones. Yeah, that does sound almost
exactly like Walmart. It was, and I don't think

(14:35):
Walmart had a presence here. So this was just kind of like
their market at the time? Yeah, 'cause I mean, we did that
Walmart episode and then mainly when it's outside of the
country, they were in the US, they were like, obviously
Walmart is mainly in the US, butthen they have Canada and then
some Mexico and that was really it.
Well. Yeah, likely also at this time
was because of the sanctions puton because of apartheid in South

(14:59):
Africa is like like most countries said, you can't do
business in South Africa becausethey have this institutionalized
like racist government, right. So they were already here for
that. Most of the other large holdings
for Pepcor besides PEP were alsolike in the clothing and shoe

(15:20):
space, such as Ackerman's, whichwas like a clothing, like a
discount clothing store, Shoe City and Techie Town.
Techie TEKKIE is a South Africanterm for a tennis shoe.
So like how we would say sneakers or like, yeah,
trainers. They have Trekkies.

(15:40):
Trekkies. So that's kind of cute.
I kind of like it. Yeah.
Shortly after this big investment into the South
African branch of their business, Steinhoff made the
interesting decision to public publicly announce that they were
actually focusing more on their European arm though.
And they shifted their main listing from the JSE to the
Frankfurt Stock Exchange in Germany.

(16:02):
And they joined the the MDAXM DAX, which is the German
equivalent of the S&P 500, although 10% of the size, it's
the top 50 like listings on the exchange in Germany.
So they moved in the market, they were automatically a big
player and then they made a large European acquisition in
Poundland. Oh, I'm.

(16:25):
Sure you've heard of? Poundland many a times.
Yeah, it's right next to Pound Town.
It is actually. It's just a hop, skip and a jump
away. Just a a jump across the pond.
They were this close to having aa store named # town in Britain.
That's so funny, but it's a it'sa British discount variety
store. Yes, which makes sounds like

(16:45):
Poundland is basically like the Dollar Tree.
Right, Yeah, 'cause I mean, yeah, their money's called the
pound, so it makes sense. It's just.
Yes. And they, they bought this
variety store for a £610 millionin 2016.
And sorry, there were a lot of because they're international,
they bought a lot of things in alot of different currencies.

(17:06):
Later when we get to the accounting scandal, I like
converted all of them, but I didn't do it for this one
because I was like, there's too many things.
That's fair. That's super fair.
You you know, £610 million is a lot of money.
That's a lot of money. They also made their second
largest acquisition to date thatyear, while also expanding into
the United States when they acquired Mattress Firm, the

(17:30):
subsidiary of Temper Temper Sealy, and they acquired them
for $3.8 billion. Wow.
In 2016 at their peak Sign Off International did business in
30. I've actually seen multiple
reports, either 30 or 32 different countries and operated

(17:52):
6500 brick and mortar stores under at least 40 different
brands that it owns. And in 2018, they employed
130,000 people and reported a revenue of €12.9 billion.
Of course the keyword there is reported because under the
surface, Marcus Juiced had juiced the books and all his

(18:15):
dirty laundry was about to be aired out.
All that juice was about to be squeezed.
Yeah, all that juice from Pound Town.
All the pound town juice was about to be squeezed out every
last drop. I'm immediately sorry we did
this bit. Every stroke I have so.
Much. I have so much regret, which is

(18:37):
usually what happens to me afterPound Town, Poundland fuck, you
get the idea. I cry after I cry after sex.
Are you OK? Yeah, I didn't just have sex.
I'm not crying. OK.
In 2015, In 2015, a former business partner with Steinhoff

(19:01):
named Andrea Seifert was in a battle over the valuation and
ownership of It's POCO. I'm assuming it's Poco.
It's a German furniture chain. Basically this guy said, I
actually own 50% of Poco. And Steinhoff said no, we bought
you out. You don't own any of it.

(19:22):
No POCO. No Poco for you.
This meant that more people fromthe outside and their auditor,
Deloitte was taking a closer look at their books than they
had done before 'cause he had, you know, he had made legal
claims, he was going through court.
They all had to look at this. A combined effort of journalists
and regulatory bodies convinced the German police to raid the

(19:43):
Steinhoff European Office to inspect their balance sheets.
Which this is I was going to saythey found papers signed by
Andrea Seyfert that had his nameon it saying that he that he had
like sold his shares and he was like, those are forged.
And, you know, not just that, but some other stuff was up when

(20:05):
they they looked at their balance sheets.
And the next month, the German tax authority announced that
they had started an investigation into the
accounting of the business. However, after two years, there
wasn't much released in this point.
It's 2017 after that initial raid, and it started to seem as
if there was nothing to discover.

(20:27):
In August of 2017, a report cameout that listed Marcus Giust as
being one of the primary people under suspicion during that
German investigation. And Giust, of course, publicly
denied this. But then in December, Steinhoff
announced that there would be a delay in the release of their

(20:48):
yearly financial statements due to some issues with the audit
process, which set off, you know, quite a few alarms usually
doesn't bolster confidence. And what really sent everyone
into a tizzy was that the next day after that, Marcus Giust
announced his resignation from the company and that Deloitte

(21:09):
had uncovered accounting irregularities that required a
more thorough investigation. And Steinhoff announced that
they had hired a a separate auditor completely priced
Waterhouse, Cooper or PwC to conduct this investigation.
The German authorities then publicly announced that the

(21:30):
criminal investigation started years before was still ongoing.
And all of this meant, did the shit really hit the fan for the
stock price of Steinhoff? Probably.
Plummeted it. That's my guess.
Well, within the first day, the stock price, which at its
highest reached almost 100 Rand per share, which?

(21:50):
Is that South African? Brand is the South African
currency it dipped about 50% fifty 7% on both the Frankfurt
Stock Exchange and the Johannesburg Stock Exchange and
within a couple of weeks had been reduced by almost 90% and
this is one of the biggest companies like imagine if Amazon

(22:12):
just like lost 90% of its its market cap that.
'D be crazy. Two weeks.
That'd be crazy. In effect, the Johannesburg
Stock Exchange lost a total value of 295 billion Rand, which
is $24 billion, in two weeks, which was around 8% of the
entire GDP of South OH. My God.

(22:35):
So because of this scandal, 8% of the worth of South Africa
was. Gone.
Oh my God. So it wasn't great.
This is just another example of how you should not ever let a
company get this big. At least not without any sort
like obviously there was some lapse in oversight.
Absolutely. The PwC report took a year to

(22:59):
conduct and in the end they produced a 3000 page report that
has never been released publicly.
Interesting. People in South Africa also had
some stuff to say about. That yeah, I'm sure they were.
That it that it had not been released.
What they did do however, in early of 2019, so like a few

(23:20):
months later, they released an 11 page summary of the report
and this is where most of the information about how the fraud
was conducted actually comes from.
So although he is not they namedexplicitly in the report, it is
believed that Marcus Jews, referred to likely in the report
as a top executive, directed a small circle of other executives

(23:44):
to add fictitious profits to thebalance sheet.
So we've seen this before. We've seen this before and it
seems simple, but is usually actually really complicated in
practice. But basically they would create
fake transactions, whether it besales or income of any other

(24:06):
kinds from other companies and then support these fake
transactions with falsified documents.
So like we made these sales to Xcompany or X company owed US
money and they, they, they paid us some money.
And at first, these entities that they were involved in these

(24:26):
transactions, they seemed legit at first because they were all
presented as completely independent from Steinhoff.
There was no there, there was nooverlap between them.
But in 2016, a little something called the Panama Papers were.
Released. I've heard of those.
Yeah, the, the the Panama Paperswere a huge leak of of

(24:48):
confidential documents that primarily covered information on
dealings and offshore assets in the Caribbean.
And it exposed a lot of shitty things that a lot of rich people
were and are still doing. I remember when that got leaked.
I remember that that was a really big deal.
This was, I think this is probably close to the time of

(25:10):
like WikiLeaks too, right? Like, it was just like, like,
like confidential document leakswere just like big, you know?
And these papers showed that these supposedly independent
companies were actually controlled by executives of
Steinhoff or their close associates.
So they were dealing on both sides.

(25:30):
And before those papers came out, it was kind of obfuscated.
So Steinhoff said that they weregetting revenue in from these
fake sales. But since no money ever changed
hands, the the TWC report referred to these as non
recoverable loans. So basically, like you say, you

(25:51):
got money from someone, but you didn't actually get it.
So they called it a non recoverable loan because there's
no, there's never a plan to everactually pay that money into the
company. So Steinhoff would take that and
then would disguise them as assets instead of liabilities.
Like obviously they weren't going to put like loans on on
their balance sheet, so they instead would write these

(26:14):
transactions on their balance sheet as just cash, which would
make it seem like they, you know, had better liquidity, just
cash in a bank account somewhere.
They would also disguise them asproperty investments or like
over like inflate the worth of their property and they'd hide
some of the money that way or they they would paint them as

(26:36):
investments into intellectual property.
So basically like they turned what was debt that they were
never going to get back into something that looked like they
could get money back at any time.
They turned it into assets. Then if they did put them on the
books as actual debts, which they did do sometimes they would

(26:56):
just, they owned so many companies, they would just like
move them around the company. So they would put the debt on
one companies and then another company, they would make a
payment to that debt. But what they really do is just
take the debt and move it to another one of their companies
and just keep doing that and just kind of hop it around,

(27:17):
which obviously you can't do goes against good accounting
practices. So just for example, like let's
say that Ackerman had a debt on it.
They would say Ackerman paid offthe debt, but really they would
just say, well, Techie Town tookon a new loan for the exact same
amount, you know, so they just move it around.
Yeah, they're just moving aroundeverything.

(27:39):
As a result of this investigation in 2018, sign up
announced that they needed to write down $12 billion from
their books from their previous earnings reports as a result of
the generation of about $7.36 billion in in these false
transactions. And this was prime, like it

(27:59):
occurred from 2009 to 2017, but it primarily took place between
2014 and 2017. So like three years is when the
bulk of this was happening. They also referred Marcus Juice
to the South African authoritiesand started a civil claim
against him for the fraud. The South African Financial

(28:20):
Sector Conduct Authority, or theFSCA, announced it had started
an investigation into the company and they were bolstered
by a call to action by the SouthAfrican Parliament, who actually
called some of the like how our Congress will call people in
front of them when this stuff happens.
They called Juice and some otherpeople in front, of course, they

(28:40):
just denied. The Yeah, Well, yeah, of course
they are. But they were like, you should
go after these guys. The Directorate for Priority
Crime Investigation Unit, which deals with economic and
corruption crimes in South Africa and is known by many S
Africans. Just as the Hawks struggled with

(29:00):
the investigation, saying that they were making slow progress,
so slow that there actually still has been no charges filed
in any South African court to this day, over seven years
later. That being said, we'll, we'll
get into a little bit of what happened.
But that being said, there was some wins on the civil side of

(29:21):
things. Or the Johannesburg Stock
Exchange, which has the ability to enforce penalties of its own,
found Juiced guilty of violatinglisting requirements and fined
him the maximum allowable penalty of 15,000,000 Rand, or
$810,000. Doesn't really seem like enough
money. No, he was making, he was making
like $190,000 a month A. Month.

(29:45):
That's insane. So he was, yeah, that's like 8
months of salary, but he made more money besides that and also
banned him from being a directorof any public company for the
next 20 years. OK, that's fair.
Sign Off also won their civil case against Joost and he was
ordered to pay them back 870 million Rand, which is $46.91

(30:08):
million. And that's, I mean, like, not as
much as he stole, but at least it's a it's pretty big.
Also, I don't know if you can tell there, there is a lot of
like still questions going on about the details of this.
To this day they don't really know who profited and how much

(30:31):
personally from this or at leastit's not public knowledge.
You know, the investigations have been kind of whatever, but
they but like I said, they did get at least that 870 million
ran back in the salary and bonuses they gave him to try and
pay back some of the people thatlost money from this.

(30:55):
They also at this time they recovered a 272 million Rand or
14.67 million from their former CFO Ben LaGrange, who was also
in on it. Meanwhile, Steinhoff kept
getting worse as they publicly revealed that they carried a
like a huge debt of 161 billion Rand, $12.8 billion just in debt

(31:18):
and they were almost on the brink of going under in 2018.
However, they were able to negotiate delays on all of the
their debt payments for like 3 years which kept them around and
they were able to stay in business and try to recoup some
of this. They sold off some of their
assets that they could so they could increase liquidity, get
some money. They kept making efforts to come

(31:40):
back, but you know, none of the tactics proved fruitful.
So with their debt still over their heads and their stock
price still in the gutter, Steinhoff International was
completely liquidated in Octoberof 2023 and just ceased to be.
No more Steinhoff. In the aftermath, much of the
value of the company wasn't justerased from the pocketbooks of

(32:02):
Steinhoff's largest investors, like Krista Weiss, the owner of
the Pep stores. He very sadly lost his
billionaire status as a result of this scandal.
That is just so bad. That's just too bad.
Innocent people like, you know, his net, innocent people like
Weiss should not have suffered from this.

(32:24):
His net worth dipped all the waydown to like $735 million.
That is horrible. I hate to hear that.
Luckily. That is so sad.
If you like a comeback story, hedid regain billionaire status in
2023. Thank God.
So dumping it out, King, absolutely.
Yeah, I am so glad he was able to regain his wealth.

(32:45):
So it didn't just hurt these people, it also hurt many
everyday people as a lot like with Enron or big collapses in
other countries. Most of the like largest pension
funds in South Africa had been investing into Steinhoff because
they were one of the they were like one of the biggest
corporations in the entire, in the entire country.

(33:06):
And many average people saw their retirement shrink
substantially because of Marcus Giust in this entire scandal.
Speaking of Giust, although the information is not public,
sources say that he was secretlycharged in Germany in 2020 on
crimes related to the 2015 office raid.

(33:28):
It was also said that he was ordered to turn himself over to
the Hawks in South Africa in March of 2024 when they had
actually looks like that investigation picked up after 7
years and they actually it's enough evidence that they
thought they could bring him in and the the FSCA had fined him
in March as well an additional 475,000,000 rands or $25.61

(33:53):
million. However, the day before he was
to turn himself in, he told his wife that he was going out for a
walk and he walked down to a local beach, pulled out a
handgun and he ended his life atthe age of 63 rather than face
his day in court all. Right, so I don't normally like
it when people call people who commit suicide cowards, but in

(34:18):
this case you are a coward. Yeah, you.
Just like you just didn't want to face the ramifications of
your actions and you're a littlebitch.
Yeah, I, I think he, he was, he was a little unhinged.
Even when he left the company, he sent out like this big e-mail
that was like, you know, usuallyI'd expect the the CEO caught up

(34:43):
in this to just be like fake. But he was like, he was like,
I'm really sorry. I've disappointed everyone here.
I've failed completely. And I was like, this is a while.
Like if I worked at this companyand it's like a Monday and I
received this e-mail, I'd be like.
Yeah. It's like we're fucked dude, no.
Literally you. You are actually.

(35:05):
So yeah, I think you might have just been a little unhinged.
I I don't. Know, yeah, I mean, I mean,
yeah, he probably did feel guilty, but that does not excuse
all your behavior up until this point.
No, of course not. Like you knew what you were
doing was wrong. You can feel bad all day long,
but you benefited off of this for years and years and years
and years and years. This was not one simple little

(35:26):
mistake like you knew what you were doing.
Yeah, and for the seven years afterwards, he lived like fine,
like he. Yeah, you had all that fucking
money. You're fine.
He was probably under a bunch ofpressure all the time, but he.
Was probably stressed as hell, but you were not like you were
never destined to, no. The FSCA announced in September
of 2024 that they were expandingtheir investigation past markets

(35:49):
juiced. But still there have been no
formal charges pressed on anyoneinvolved in the Steinhoff
scandal, both in Germany, or at least not publicly.
Both in Germany and in South Africa.
But it is regarded as the largest of its kind in South
Africa's history. So who knew furniture could be
so scandalous? I've had some scandals on some

(36:13):
furniture. The Ottoman Humpers.
I think that Steinhoff is a perfect example of why learning
about these scandals is so important.
Right? It's a boring name.
It's a highly unglamorous sectorof business that no one gives a
fuck about. Completely unassuming
personalities. Like no one in here was like a
big personality. But in the end, if we aren't

(36:35):
looking hard into these multinational corporations, they
can get out of hand and cost thenormal person of a country
extremely deeply. And because investigating them
takes hours of pouring through boring documents and tallying
numbers to see if things match, the fuel gets burned out of the
fire long before any of the people who actually willfully

(36:58):
led the corruption or brought tojustice.
You know, it's hard to keep a passion for bringing these
people to justice when it takes a whole year to write a 3000
page investigation on what literally boils down to like,
they made, they added up a bunchof numbers and like made a bunch
of spreadsheets and stuff. You know, like, I get it.

(37:19):
It makes it easy to sweep these things under the rug.
And I never want to see someone die as a result of this.
But Marcus just continued to deny wrongdoing in the face of a
mountain of evidence. And I really do hope that the
South African government causes off its long held reputation of
being corrupt because their government still has a
reputation of being extremely corrupt and continues to hold

(37:42):
businesses that act in ignoranceor sheer defiance of the law
accountable. So I do hope they get 'cause it
wasn't just Marcus Juice. No, he was not the only one
involved with this. No, not one person can pull this
off. No, there's some other people,
and I hope that they continue the push like they say they're
going to and that someone gets arrested in this because, you

(38:04):
know, a lot of people lost jobs,a lot of people lost their
living in their retirements, andat least one person lost their
life. So got to figure that out.
And yeah, that's that. That's the story of Steinhoff
International, the largest accounting scandal in all of

(38:25):
South African history. It was very interesting, lots of
layers. Like an onion or an ogre or a
cake. Or a Redwood tree.
Yeah. Oh, that's rings.
Rings, Layers. Who's counting?
Not well, I'm not going to countall that, right?

(38:45):
Yeah, so thank you guys so much for listening to today's
episode. If you liked what you heard,
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Fucking loved Steinhardt. Hardcore accounting scandal
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(39:07):
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(39:29):
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(40:33):
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(40:54):
Believe whatever you want. Believe whatever you want.
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Oh, merch. You can buy merch.
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(41:14):
Show description. You can go there and you know
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I think you covered it all. Right.
So thank you guys so much for listening.
We'll see you next week on another episode of White Collars
Red. Hands.