Deafening silence: Is the SA Reserve Bank captured by Steinhoff?

The details can be mind-numbing. Sometimes it is hard to follow the investigative news reports, the legal issues and other technicalities that seem to require degrees in finance before one can make sense of it all. 

However, detail can hide breathtakingly simple questions.

I want to raise questions about the comfort of Steinhoff in still not making amends for their illegal and unethical behaviour, and the Reserve Bank’s silence about how it features in this saga. The Bank has some basic questions to answer and their silence on this is potentially culpable (if they are propping up Markus Jooste and Steinhoff) or, at the very least, their silence is unhelpful in helping claimants to receive a just and equitable outcome.

Steinhoff took about €19-billion worth of assets offshore to Europe from 2014 onwards after getting permission from the Reserve Bank to do so in terms of exchange control laws and regulations. The mandate of the Reserve Bank is to make sure the flows of money out of the country do not harm the economic interests of the country. 

You do not want to restrict the economic freedom of either individuals or corporates. But that freedom should be balanced with the goal of keeping an eye on the likely effect on the local economy that allowing assets or monies to be taken abroad would have. 

When an entity like Steinhoff wants to list in Germany and have its headquarters in the Netherlands, with consequences for its assets here in South Africa, the Reserve Bank must determine, factually, how going abroad will affect the economic activities and value of the company in South Africa, and thereby also the impact on local stakeholders. It is a balancing act on the Reserve Bank’s part that requires access to true facts.

Here comes the nub of the issue. The only way the Reserve Bank can do its job lawfully is based on accurate information put before it. Steinhoff lied. And that is the understatement of the century. They inflated their financials in gross material respects. Steinhoff fraudulently misrepresented itself to the Reserve Bank. They did so to many companies which they induced into doing business with them. 

In fact, one theoretical possibility is that the Reserve Bank is a victim of Steinhoff’s. We would only know if that were indeed so if the Bank told us the truth instead of being so coy. 

But what is the logical consequence of Steinhoff pulling the wool over the Reserve Bank’s eyes? It is simple: the Bank took decisions based on fraudulent misrepresentation. That is not consistent with the proper application of the law and regulatory prescripts guiding exchange controls. How could the Reserve Bank ever have taken an accurate and honest decision about whether to allow money and assets to be taken out of the country if they were lied to by Steinhoff in the financials placed before the institution? It means that the initial Reserve Bank decision was itself not based on a proper consideration of the true facts. It was therefore devoid of legality. 

There are two questions the Reserve Bank must be asked by journalists immediately, and repeatedly until they answer them as a matter of urgent public interest: 

1. Do you accept that Steinhoff fraudulently misrepresented itself to you in 2014? and 


2. If the answer is “yes” – as we know it is by Steinhoff’s own proven admission – do you accept that the logical and irresistible consequence of such material fraudulent misrepresentation is that the Reserve Bank must either rescind or (/and) review that original decision to grant Steinhoff permission to move to Europe?