SAFTU alarmed at Steinhoff revelations

The South African Federation of Trade Unions has noted with alarm the crash of Steinhoff International. It is estimated to have lost the country R194 billion, more than the estimated losses from all the Gupta-related scandals.

It has threatened the livelihoods of millions of workers whose pension and provident funds have been invested in this company. The Public Investment Corporation alone used to have a stake of R20 billion; today it is worth just R3.6 billion. Numerous other workers’ funds contain big holdings of Steinhoff shares, whose value plumetted in value by R134 billion in just two days.

Some funds, like GEPF pay defined-benefits, which means that the workers’ pensions are guaranteed. Other workers with defined-contribution benefits risk losing huge chunks of their expected retirement income.

Even those funds which pay defined benefits could find they no longer have the funds to pay out these pensions and will require a bail-out. The GEPF will try to claw this back from the Treasury, which means from the tax-payers, leading to and even more cuts in expenditure on vital services. Other funds may simply be bankrupted.

The crisis also threatens the jobs of over 130 000 workers in 32 countries around the world, mostly in the retail sector.

There could not be more emphatic evidence that SAFTU’s analysis has always been right – that the Gupta scandals, outrageous though they are, are not abnormal, but just one of the worst symptoms of a structurally corrupt capitalist system. Naspers, and now Steinhoff, have lifted then lid further to reveal a  swamp of corruption, fraud and money-laundering

In the Gupta cases, the main feature was the buying of leading politicians, public servants and officials of state-owned enterprises in order to channel funds into the family coffers. In Naspers case it allegedly involved trying to buy support for the government to change its policies on digital migration and encryption.

Steinhoff, if the allegations in the media are true, used earnings manipulations, uncontrolled acquisitions, tax frauds, and an even older but equally abhorrent trick, now known as a Ponzi scheme, defined in Wikipedia as “a fraudulent investment operation where the operator generates returns for older investors through revenue paid by new investors, rather than from legitimate business activities or profit of financial trading.”

Is it a coincidence that Steinhoff’s now-resigned CEO, Markus Jooste, grew up in the world of horse-racing and gambling and his main hobby is owning and racing horses?

The shareholders, including all those provident funds are the “new investors” who have been duped into buying shares which were inevitably going to crash one the bubble bursts. There is speculation that the BitCoin, which has made millions for its initial investors, is the next in line to explode.

In such cases, the truth is hidden behind a web of complex and fraudulent book-keeping exercises, setting up bogus companies, which transfer money to and from each other, and spinning of excuses like Steinhoff’s talk of “accounting irregularities”.

It is not only the companies now exposed as directly involved in these crimes that must now be investigated and prosecuted, but also all the regulatory bodies, stock exchanges, auditing companies and investment portfolio managers, especially those who advised the funds who were managing workers’ money to invest in Steinhoff to explain themselves.

They all failed to detect and warn about activities which they must have known were at the very least suspicious. In some cases, like KPMG, they used their reports to cover up obviously dubious activities.

No stone must now be left unturned to prosecute and punish those who have broken the law in all these companies. These are not victimless crimes. As well as those whose pensions have been jeopardized, every South African will have to pay the price of living in a corrupt kleptocracy, with an economy now relegated to junk status, with all the consequences in sluggish growth, grinding poverty for millions, unemployment six times the world average and living on the earth’s most unequal society.

It is not just individual CEOs and companies who must be put in the dog, but the whole monopoly capitalist system which is now being exposed as being run purely to amass the biggest profits in the shortest time to enrich a powerful ruling class at the expense of the majority.

Its is a system whose watchwords like “me-first” and “to-hell-with-everyone-else’ have spread from the private corporate world into the public service and throughout society.

To counter this we have to return to the values of the Freedom Charter, and bring power to the people, and not the corrupt and greedy capitalists we see being exposed very day in our media.

Please follow and like us:

Be the first to comment

Leave a Reply

Your email address will not be published.