NEWS
31/01/2018 13:17 SAST | Updated 31/01/2018 13:17 SAST

Wiese: 'Cleverer People Than Steinhoff Board Have Been Duped'

Former chair blames Steinhoff's failure to detect fraud and accounting irregularities on structure of company and auditors who check their books.

Mike Hutchings / Reuters
South African magnate Christo Wiese.

Former Steinhoff chairperson Christo Wiese has blamed the company's board's failure to detect fraud and accounting irregularities on the complex structure of the company and the auditors who check their books.

Wiese was responding to questions from members of Parliament on Wednesday during a joint committee inquiry into accounting irregularities at the global consortium.

"Steinhoff is a hugely complicated group, in terms of inter alia operating in 33 countries with a multitude of companies and subsidiary companies... The only way it can be run is in a decentralised fashion. In addition, Steinhoff has a very sophisticated internal audit process," he said.

"The way it works in these various companies is that there are component audit firms who do the audits. It goes through all the processes, and then it goes to the top company, which is Steinhoff... There is a very sophisticated process. I can only say that cleverer people than this board had been duped before by people committing fraud."

READ: Markus Jooste Declines Invitation To Appear Before Parliament.

He said the main issue is that there are allegations or concerns expressed by statutory auditors that are under investigation.

"The criminal complaint laid against [Markus Jooste] concerns matters other than these alleged irregularities by the statutory auditor. I can only refer to many instances around the world where companies of a similar or bigger size... to detect fraud in a company is an extremely difficult if not impossible task," he said.

"It becomes more difficult where in this case the CEO is directly involved. The auditors who raised the queries towards the end of last year were the same auditors auditing these accounts for ten years or more... They themselves, by doing that, are saying that they have missed things. They are there paid very handsomely to make sure things do not fall through the cracks."

READ: Jooste To Be Investigated By Hawks.

Jooste resigned as Steinhoff's CEO in December last year, after news broke that the company allegedly did not declare $1-billion [~R11.5-billion] in transactions with a related company, in contravention of laws requiring it to do so. Steinhoff has also been under investigation by regulators in Germany for accounting irregularities.

According to the company's acting chairperson, Heather Sonn, Jooste has now been reported to the Hawks.

Wiese also resigned as chairman of the supervisory board of the group in December, but remains the single largest shareholder of the company.