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1) Was there a problem with compliance?
Steinhoff famously kept the same auditors working for the over the course of a decade while the maximum allowed term should only have been years. This clearly shows Steinhoffs agenda towards retaining employees and directing their loyalties  the company and profit as opposed to the ethics of their profession. By conducting operations this was, they managed to bring large stakeholders into their accounting fraud racket. So long as all their boxes were ticked and the company appeared sound, they would theoretically be able to do business as usual. This fell apart under close scrutiny from German auditors who were sent to investigate their firm on 2015 before they listed on the Frankfurt stock exchange. This was the beginning of their demise as the books overcooked and eventually, in 2017, this culminated in the collapse of their stock on the JSE.

2.Their directors in terms of independence

The board had not maintained balance of power in any respect, while the majority of any board should be made of non-executive directors, Steinhoff had many sections of its board made up of people who had been with the firm for decades. Steinhoff did not comply at all to these standard following 2002, with some members holding 5heir positions since as early as 1999.
Even more critically, Christo Wiese being the standing chairman for so long should be questioned. The lack of independence in the majority of their board allowed for ethical corruption to take root as all of them were heavily invested in the conspiracy.

3. Was there a problem with structure of the board?

Yes as they changed from unitary board structure to dual/two tier. Dual is more stakeholder based, executive directors have more freedom to engage in unethical activities which are hidden from the supervisory board. Unitary is better as executives are asked questions while the whole board is present. Dual structure is critised for encouraging info asymmetry since boards meet seperately and  management has more knowledge about company operations.

6. Can the company's operational integrity and reputation be salvaged.

Steinhoff is in the process of salvaging their company's integrity and reputation through acknowledging that accounting irregularities did occur. Steinhoff did make changes to their board by adding 5 new board members, however the crisis at Steinhoff had caused investors to be untrustworthy of the company, therefore the possibility of Steinhoff making a comeback is an unrealistic even with a new constructed board.

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With the collapse of apartheid and the lift on sanctions they recognized an opportunity to expand into Africa. This is around the time Daun and Markus Jooste became involved with Steinhoff.

Their expansion consisted of 4 pillars
- Low Cost manufacturing
- Enter the UK and Australia
- inroads to Logistics
- Sourcing in Asia

They had begun a period of consolidation, which included a large scale acquisition drive.

2013 they had full control over their supply chain, sourcing, distribution, Logistics and retail.

Steinhoff owns PEP, Ackermans, Incredible connection, Timbercity and Hi-fi. Amongst many others. Selling household goods and general merchandise

Their share price was R50.25 in 2017 with a Market Capitalization of R240.5 Billion.

On December 5th 2017 Steinhoff CEO, Markus Jooste, stepped down. The board noted accounting irregularities. This took the form of misrepresentation of earnings and irregularities on the balance sheet.

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- Psychological

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Steinhoff began in 1963 when Bruno Steinhoff began souring and selling household goods. He recognized an opportunity (Possible exploitation) in East Germany, this was the low cost materials and labor due to its communistic nature during the Cold War.

His first office was at home, and soon a warehouse. He connected with low cost products, that competitors wouldn’t or couldn’t connect with.

When there was strong economic growth Steinhoff flourished due to its low cost furniture. And when the global recession of the 1980s struck, they were again ahead of competitors due to their low costs.

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Thanks

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Group 1: Describe Steinhoff to the class. summarise the Steinhoff story before 2018.

Group 2: Summarise Steinhoof and it governanace structures and systems. What went wrong?

Group 3:Steinhoff and business leadership.

Group 4: What are the lessons we can draw from Steinhoff