Steinhoff collapse: a failure of corporate governance

Abstract

South Africans are still in shock after the near-total financial collapse of one of its best-known companies, Steinhoff (Steinhoff International Holdings N.V.). Although incorporated in The Netherlands, the company’s head office is in South Africa. Before its collapse, Steinhoff was among the top-10 companies on the Johannesburg Stock Exchange. Full details of the collapse of Steinhoff are still emerging, but the collapse commenced after the resignation of its Chief Executive, Mr Markus Jooste, when it became clear that the company’s external auditors were not prepared to sign off its 2017 financial statements.A number of lessons can be drawn from the collapse of Steinhoff. Steinhoff is a classic case of corporate governance failure, while the collapse also shows the danger of an all-powerful chief executive, and the limitations of a two-tier board structure. In addition, serious questions have to be asked about the external auditors who signed off on financial statements in earlier years.

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