White monopolies shoot their own feet

Christo Wiese, billionaire and former chairman of Steinhoff Holdings. Image BizNews

Steinhoff and Naspers. Two listed companies which are well known to the investment community, which have been active in corporate wheeling and dealing, which have ventured outside the confines of South Africa. And which are now both in the dog box.

I have met and interviewed the CEOs of both companies. Impressive businessmen, who have done well to grow their businesses. But have they both crossed the line between good business and improper behaviour?

Naspers has been under fire for putting undue pressure on the government on behalf of its pay-TV interests, by paying millions to the reviled, but influential, Guptas (The Messenger editor adds: which owned the controversial Zupta mouthpiece, ANN7).

Initially, chairman Koos Bekker and his CEO Bob van Dijk appeared to try to wish-away the problem. From the heads of a communications company, this performance was spectacularly naïve and inept.

They haven’t been helped by having their version of events ridiculed by former Communications Minister Yunis Carrim. Unfortunately for Bekker, Carrim is one of the few recent holders of that government post who commanded respect, and was considered a good ‘un – which is probably why he is no longer in the job.

Might there have been early signs of arrogance at Naspers? It may seem trivial to an outsider, but this company chooses to discuss its financial results with the investment community through a conference call – unlike most other listed companies, which host presentations for analysts and journalists.

This reluctance to engage, eyeball to eyeball, may reflect a shyness, a vulnerability, a social awkwardness. Or might it project an air of arrogance?

Well, Naspers’ bubble of arrogance has been well and truly pricked.

The spotlight is now shining upon it, and there are reports that a US law firm Pomerantz is assembling a class action against the company over the pay-TV issue. This may get nowhere, but it is an embarrassment and a reputational blow.

And what about Steinhoff? Well, the share plunged by a colossal, nose-diving, 61.5% on Wednesday when trading began on the JSE.

This followed the abrupt resignation of longstanding CEO Markus Jooste, after reports of accounting irregularities.

My initial reaction to the price tumble was that this represented an incredible buying-opportunity, as the intrinsic value of the company and its assets could not have shrunk so spectacularly overnight, and there was, indeed, some recovery in the share price.

Steinhoff has been active in Europe, where standards of corporate governance and transparency may be more vigorous. This may have been its downfall.

Certainly, the noise and unsavoury odours around both Naspers and Steinhoff have given regrettable ammunition to those who moan about white monopoly capital, and advocate the nationalisation of the banks, the mines, and whatever else they can get their grasping hands on.

These Captains of Industry have let down their teams.

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