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How South Africa’s Christo Wiese Sued His Way Back Into The Billionaire Ranks

An Enron-like accounting scandal at South Africa-based furniture group Steinhoff International wiped out billions of retail tycoon Wiese’s fortune. After a four-year battle, he’s back as one of Africa’s richest, and at peace with the world.

hristoffel “Christo” Wiese exudes an air of calm that betrays no hint of the chaos that turned his world turned upside down for more than four years. In December 2017, the then-76-year-old South African billionaire was informed about serious accounting fraud at retailer Steinhoff International, where he was both chairman and the largest shareholder. Those irregularities turned out to total $7.4 billion in falsified transactions over a span of nine years from 2009 to 2017, a PwC investigation found–making the Steinhoff affair the South African equivalent of the 2001 Enron debacle.

Steinhoff International had acquired Wiese’s discount clothing retailer, Pepkor, in 2015 for $5.7 billion in stock and cash; and he became its chairman a year later in May 2016. Wiese stepped down as chairman in mid-December 2017, soon after the accounting fraud was made public. While it was eventually proven that Weise had no role in the fraud, the 90% drop in the share price of Steinhoff–by far Wiese’s most valuable asset–pummelled his fortune, from an estimated $5.6 billion in March 2017 to $1.1 billion on the 2018 Forbes list of Africa’s billionaires and then off the ranks altogether by the time Forbes’ World Billionaires list came out a few months later that year.

Now, following a multi-year legal battle that ended in a $500 million settlement consisting of cash and stock, Wiese is back on Forbes’ newly released 2023 list of Africa’s billionaires, tied at No. 18 with an estimated net worth of $1.1 billion.

Asked about his ordeal last week, Wiese described his initial reaction–and what he’s grateful for. “It came as a huge shock to discover that this [Steinhoff] fraud was in the core of the business,” Wiese recalled in a Teams video call from his office in Cape Town, South Africa. The other shock? “That the people who were committing the fraud managed to get through all the gatekeepers,” he added, ticking them off: internal auditors, external auditor Deloitte, the South African Reserve Bank, international banks that were lending Steinhoff billions of rand, the South African and Frankfurt, Germany stock exchanges (where the company’s shares trade) and the ratings agencies.

Read More: The Full List Of Africa’s Richest People

What did Wiese know? Nothing, he insists. “People said, ‘But Christo, you were the chairman.’ And I said I chaired four board meetings in the entire time,” Wiese explained. “I am supposed to know what all the other gatekeepers missed?”

Despite his comments, Wiese–and the investment community–had been alerted to concerns about Steinhoff as early as a decade before the furniture seller admitted its problems. In 2007, Sean Holmes, a South Africa-based analyst for JP Morgan, published a critical 56-page report that questioned Steinhoff’s earnings and pointed to poor financial disclosure and a lack of transparency, according to the 2018 book Steinheist: Markus Jooste, Steinhoff & SA’s Biggest Corporate Fraud. The book also recounts a 2009 meeting Wiese had with an analyst at a different firm who shared 40 slides that delved into concerns such as Steinhoff’s inflated assets and its “suspiciously low tax rate.” (That was years before he sold his company to Steinhoff). Then in 2015, right before Steinhoff shifted its primary stock listing to Frankfurt, a German tax authority raised concerns about the company’s accounting. Wiese said a forensic accounting firm the board hired shortly afterward failed to find any issues.

In fact, Wiese had demonstrated supreme confidence in Steinhoff as a business (or took a huge risk, depending on your perspective). In September 2016, he borrowed $1.8 billion from banks to finance the purchase of more shares in Steinhoff, lifting his ownership stake from nearly 20% to 25%. To guarantee the loans, Wiese pledged the vast majority of his Steinhoff shares as collateral. When Steinhoff stock tanked at the end of 2017, the banks took control of his shares. The loan transaction was ring fenced around the Steinhoff shares, so that in case of default, the banks could not go after Wiese’s other assets, a spokesperson for Wiese said.

Markus Jooste, a South African and the former CEO of Steinhoff International–who ran the company during the years of the accounting fraud, will be tried in Germany in April, South African media reported on Friday. In the spring of 2021, German prosecutors were reported to have charged Jooste and three colleagues with balance sheet fraud. Jooste, who has denied the allegations in the past, could not be reached for comment.

Altogether, Wiese claimed he was defrauded out of $5 billion (59 billion Rand) and sued Steinhoff for that amount in 2018. It took until late January 2022 for Steinhoff to get South African and Dutch courts (Steinhoff is headquartered in Amsterdam) to sign off on its settlement for shareholders–Wiese and thousands of others–and creditors.

Wiese’s roughly $500 million (8 billion Rand) settlement came in the form of cash plus a 5% stake in listed retailer Pepkor Holdings (which is now 51% owned by Steinhoff International). Wiese says he accepted far less than he initially sought, partly to put a halt to the negotiations, which kept dragging on. Steinhoff funded the settlement with Pepkor shares and cash raised from selling off assets–though it still owns 50% of U.S. company MattressFirm and a few other holdings.

Wiese was never in danger of losing his fortune entirely. Besides his Steinhoff stake, he owns more than 10% of listed supermarket chain Shoprite Holdings, Africa’s largest retailer–a kind of South African Walmart, with a hard focus on low prices. It had $10.7 billion revenues in the most recent fiscal year, 145,000 employees and nearly 3,000 stores across southern Africa. In the wake of the Steinhoff accounting nightmare, Wiese sold off hundreds of millions of dollars worth of his Shoprite shares, lowering his stake from 18% in 2017.

Other Wiese holdings include industrial investing firm Invicta Holdings, listed on the Johannesburg Stock Exchange, which has investments in China, Singapore, the U.K. and a small business in the U.S. Via another firm, Tradehold Ltd., he owns industrial businesses in South Africa and commercial property in the U.K. And through Luxembourg-listed firm Brait PLC, Wiese owns stakes in Virgin Active health clubs and two South African firms: a fashion label and a consumer goods business.

“Christo has been a massive risk taker his whole life,” Syd Vianello, a retail analyst in Johannesburg, told Forbes for a March 2016 profile of Wiese. “Africa is not a place for sissies.” Wiese, who calls himself an incurable optimist, agrees. “I’ve been in business for 55 years,” he says. “I just accept that the world is always difficult.”

Wiese’s journey to become Africa’s biggest retail tycoon took a meandering path. After attending Stellenbosch University, he started working for his cousin’s husband’s discount firm PEP in 1970. Four years later he decided he wasn’t good at working for someone else, and wanted a job that required less hours so he could start a family. Following a detour that included buying, running and then selling a diamond mine, Wiese went back to his cousin, who’d grown PEP and added Shoprite, a grocery chain, and offered to buy him out. The cousin accepted.

He focused on maintaining low prices and serving poor customers of all races–at a time of apartheid. In 1986, Wiese spun off Shoprite and PEP (now called Pepkor) into separate public companies, maintaining control of both. By 2014, Wiese says he controlled the two largest retail businesses in South Africa, and there was really no way to grow more domestically due to antitrust concerns.

That is when he turned to Steinhoff, which did business in Europe and South Africa. “I came to the conclusion that here was a business with a very strong balance sheet, strong cash flows, experienced management and international operations,” he recalled. It didn’t turn out that way.

Now 81, Wiese said he has no plans to retire. “I nearly died in 2021 with Covid, so I’ve come to realize that I’m not necessarily destined to live forever. But my problem is I don’t play golf or do stuff like that. For me, my business is my pleasure.”

Plus he certainly has no desire for Steinhoff to be his final chapter.

“I was not going to let this almost unbelievable disaster spoil my life,” Weise reflected on the Steinhoff matter. “I have a lot to be grateful for. I love my country, I’ve got a wonderful family, wonderful friends. I just decided to carry on with my life.”

February 2023, CICO writer  Staff Reporter Kerry A. Dolan

TikTok and its Ethics

Legislators in Washington reacted with outrage to admissions by TikTok and its Chinese parent company, ByteDance, that they improperly used the video-sharing app to spy on reporters covering the company. Forbes first reported the existence of the surveillance scheme, which targeted three Forbes reporters, in October. At the time, TikTok did not deny the report, but tweetedthat the app had “never been used to ‘target’ any members of the U.S. government, activists, public figures or journalists.” TikTok and ByteDance now admit that this was false. After the October report, Republican members of Congress James Comer and Cathy McMorris Rodgers requested documentation from TikTok and ByteDance regarding the targets and purpose of the surveillance. On Thursday, McMorris Rodgers tweeted, “TikTok has placed the safety and privacy of Americans in jeopardy. They have gone on record numerous times claiming that they do not share Americans’ data with China. We know that is a lie, and we now know the list has grown to include U.S. journalists. Accountability is coming.” In a statement to Forbes, Senator Ron Wyden (D-WA) endorsed those concerns: “Using customer data to spy on journalists and employees is a scandal that casts doubt on every promise TikTok has made about protecting personal information. Sadly, it’s not the first time a tech company has abused the massive store of information it holds about its customers. As long as corporations have access to detailed data about their users’ movements, personal contacts and interests, companies and governments will be tempted to misuse it.”

This scandal could not have come at a worse time for TikTok, which is currently negotiating a national security contract with the multi-agency Committee on Foreign Investment in the United States (CFIUS) to address national security concerns raised by the app. Although TikTok was reportedly close to a deal with CFIUS this past summer, national security agencies and the DOJ have expressed increasing concern about a deal that would allow ByteDance to continue to own TikTok. Meanwhile, legislators have begun moving forward with their own sanctions of TikTok, including a unanimously passed Senate bill to ban the app on government devices, and a bipartisan, bicameral proposal that would ban the app for all users in the United States. (Disclosure: In a previous life, I held policy positions at Facebook and Spotify.)

Many of the concerns raised by lawmakers and government leaders about TikTok have focused specifically on its potential use as a surveillance tool. FBI Director Christopher Wray spoke earlier this month about how the PRC government interrogated the parents of a Chinese student in the U.S. who posted a TikTok critical of the Chinese government, and Representative Raja Krishnamoorthi (D-IL) told Forbes that our October report on surveillance contributed to his decision to co-sponsor a bill to ban the app.

In response to TikTok’s and ByteDance’s admissions yesterday, Krishnamoorthi said, “It’s deeply disturbing to learn that ByteDance weaponized TikTok to track journalists who were investigating the company, confirming some of our fears of how the app could be misused.”

Mike Gallagher (R-WI), Krishnamoorthi’s co-sponsor on the ban bill, issued a statement calling the conduct egregious, saying: “TikTok has repeatedly told Congress and the American public that it does not share U.S. user data with its Chinese owner ByteDance and specifically claimed it has never targeted individual Americans. But reports out just today reveal that this was a lie and that ByteDance employees accessed the location data of U.S. journalists who wrote critical stories about TikTok.”

Both Congressmen called on their colleagues to join across the aisle in an effort to ban the app —calls that were echoed by bipartisan leadership in the senate. Senator Mark Warner (D-VA) said, “This new development reinforces serious concerns” about the TikTok. “The DoJ has also been promising for over a year that they are looking into ways to protect U.S. user data from Bytedance and the CCP — it’s time to come forward with that solution or Congress could soon be forced to step in,” he continued.

Senator Marsha Blackburn (R-Tenn), who was the lead author of a letter to TikTok in June about concerns over the company’s relationship with China, told Forbes TikTok “cannot be trusted.” “It’s clear they are desperate to get their hands on any U.S. user data they can and deposit it directly into the hands of the Chinese Communist Party,” she said in a statement. “The Biden administration has the authority to crack down on this violation of privacy and national security threat – and they must take action immediately.”

Marco Rubio (R-FL), who co-chairs the Senate Intelligence Committee with Warner and is a Senate sponsor of the Gallagher-Krishnamoorthi bill, also spoke up about the spying incident. “No one should be surprised or fooled by ByteDance’s public apology,” he said. “Every day it becomes more clear that we need to ban TikTok.”

January 2023, CICO writer  Staff Reporter Emily Baker-White

The Untold Story Behind Emax, The Cryptocurrency Kim Kardashian Got Busted For Hyping

In June 2021, at the height of the cryptocurrency craze, Kim Kardashian posted an Instagram story promoting Ethereum Max, a brand-new token. The reality TV star wasn’t giving “financial advice,” but she was eager to share with her 225 million followers “what [her] friends just told her about the Ethereum Max token” – namely that they were reducing supply to give “back to the entire E-Max community.”

Turns out some of those “friends” had paid the professional celebrity $250,000 to promote Ethereum Max, and even though Kardashian had labeled her Instagram post as an “ad” it wasn’t enough to satisfy regulators. Last month the Feds fined her $1.3 million for hyping the cryptocurrency. SEC Chair Gary Gensler described the charges as “a reminder to celebrities” that they must disclose such payments. Kardashian declined to comment.

Kardashian was not the only famous personality to endorse the obscure token, which sported a market cap of nearly $250 million in May 2021 but is currently virtually worthless. Other paid Emax boosters included boxing legend Floyd Mayweather, NBA Hall of Famer Paul Pierce, and NFL wide receiver Antonio Brown. But the token’s famous promoters were merely the outward manifestation of more widespread disease. An exclusive Forbes investigation has uncovered that behind Emax’s rapid rise–and even faster fall–are two guys from the small coastal city of Milford, Connecticut: Russ Davis, a crypto promoter and marketer, and Justin Maher, one of Emax’s cofounders and Davis’ brother-in-law. Over the last 18 months, Davis and Maher have shilled dozens of dubious tokens.

Many of those tokens are so small and obscure that there is little available data, but Forbes was able to find historical prices for 18 of the cryptocurrencies endorsed by Davis and Maher. On average, each token is down more than 90% from its all-time high. That compares to the broader cryptocurrency market which is down 70% since peaking last November, according to CoinMarketCap. At least eight coins promoted by Davis and Maher (with names like Rocket Bunny and Boom Baby) have plunged over 99% from their peaks. Davis and Maher’s role behind Emax has not previously been reported. In an apparent web3 twist on the classic “pump n dump,” Davis and Maher pitched Emax as a long-term investment to Davis’ thousands of Twitter, Instagram and Facebook followers during the token’s launch last May, while simultaneously cashing out their own holdings through secret wallets. According to allegations in a class action lawsuit and individuals who spoke with Forbes, the duo pocketed millions of dollars in profits.

Davis, 41, runs InRussWeTrust, a paid newsletter and private Facebook group of 24,000 crypto enthusiasts. Maher, 37, is a crypto promoter and was a financial advisor at NorthwesternNWE -1.4% Mutual from 2013 until October 2021 when he resigned “while under internal review for allegations that [he] was involved in a cryptocurrency shilling scam,” according to an SEC disclosure. A spokesperson for Northwestern Mutual confirmed that Maher no longer works there “due to not following firm policies and procedures.” Maher has not been charged with a crime.

For his part, Davis denies the lawsuit’s allegations and said he’s never participated in any pump and dump schemes. Davis alleges that Giovanni Perone, one of Emax’s cofounders and a defendant in the class action lawsuit, was the one doing the pumping and dumping: “Gio was the kingpin of the whole Emax scandal, 100%.”

In a series of text messages with Forbes Maher also blamed “Perone and his crew.” Maher insists that most of the lawsuit’s claims are “based on hearsay or conjecture, or just straight up conspiracy theories.”

Perone, 38, was an executive at private equity shop Cerberus Capital Management before cofounding Emax. Perone, like Davis and Maher, offloaded Emax tokens “onto unsuspecting investors” for “substantial profits” during the token’s fist six weeks, according to allegations in the lawsuit. Perone and his lawyers did not respond torepeated requests for comment.

Not everyone is mad at Davis and Maher. Some Emax investors sold early and scored profits. Others made peace with their losses, chalking it up to the realities of the crypto market where fortunes can vanish as quickly as they’re made.

To the less forgiving though, InRussWeTrust sabotaged its own followers.

“A lot of people followed Russ,” says Tony Russo, 34, a Florida-based crypto investor and former InRussWeTrust member. “He gained trust and then started screwing his own people over.”

November 2022, CICO writer  Staff Reporter John Hyatt

Inflation in the eurozone just hit a fresh record high of 9.1%—and economists say ‘the worst is yet to come’

Inflation isn’t just an issue in the U.S.—it’s wreaking havoc on consumers worldwide. And while there are signs domestic price increases may have peaked in June, an ongoing energy crisis is creating a nightmare situation for Europeans.

Inflation in the eurozone surged 9.1% from a year ago last month, the EU’s statistics agency, Eurostat, revealed on Wednesday. The rise marked the ninth straight month of record consumer price increases for the 19-nation currency bloc. And “the worst is yet to come,” Anna Titareva, a UBS economist, warned in a Wednesday research note. A 38.3% year-over-year jump in energy prices was the main driver of European inflation in August. Energy prices have soared in Europe this year as the Ukraine war and subsequent sanctions by the West have lifted natural gas prices four times as high as they were a year ago.

A 10.6% annual jump in food, alcohol, and tobacco prices also helped exacerbate inflation in the eurozone last month. But even core inflation, which excludes more volatile food and energy prices, hit an all-time high of 4.3% in August, more than double EU officials’ 2% target rate. Titareva noted that this was a “stronger than expected” rise in core prices. Three EU nations also saw inflation rates of over 20% last month, while nine saw double-digit price increases, according to Eurostat data. Italian government officials said on Thursday they are planning a new multibillion euro package to help families cope with surging energy and food prices. The move came after Carlo Bonomi, president of Italian employers’ association Confindustria, said the country is facing an “economic earthquake” as a result of inflation in a radio interview this week, Reuters first reported.

European nations have spent billions on energy subsidies and even direct payments to residents in order to help with surging consumer prices since the war in Ukraine began in late February. Even Germany, which typically has much lower inflation rates than the rest of Europe, is dealing with record levels of inflation amid surging energy costs. Consumer prices in the country rose at a 7.9% annual rate last month, according to the country’s national statistics office. And Jörg Krämer, chief economist at Germany’s Commerzbank, told Reuters he expects the situation to get worse from here as government fuel rebates and public transportation subsidies expire.

“The gas levy and the end of the fuel rebate and the €9 ticket are likely to push inflation to 10% by the end of the year,” he said. Krämer isn’t the only economist arguing inflation in Europe will increase through the end of the year either.

Where will eurozone inflation go from here?

Investment banks are worried that consumer prices will continue to rise across the EU over the coming months, forcing the European Central Bank (ECB) to raise interest rates more aggressively, thereby increasing the odds of a recession. The ECB only recently abandoned its negative interest rate policy, raising rates for the first time in 11 years in July. Some ECB officials have argued for an outsize 75 basis-point rate increase this month to combat inflation as well, but so far Europe’s central bank has been far more dovish than the Federal Reserve as the eurozone’s economy continues to struggle. A UBS team, led by economist Arend Kapteyn, said in a Thursday research note that eurozone inflation will continue to rise until it hits 9.6% in September, noting that it could “stay uncomfortably high for another few quarters” after that as well.

“We now forecast a recession in Europe,” Kapteyn added. “Central banks appear to have collectively decided a mild recession is acceptable to anchor inflation expectations.”

Goldman Sachs economists are even more pessimistic on the inflation front. In an Aug. 25 research note, a Goldman team, led by senior global economist Daan Struyven, said eurozone inflation won’t peak until the end of the year, when it hits a year-over-year growth rate of “above 10%.” Struyven warned that there is also “upside risk” to this forecast, and that he expects Europe could experience a “prolonged recession.”

September 2022, CICO writer  Staff Reporter Will Daniel

5 ways your website can create an emotional bond with your customer

Numerous studies have shown that emotions and instinct, rather than rational thought, are more often the driving forces behind consumer behavior and purchasing decisions. When customers feel a deep emotional bond with a brand, it is known as ‘brand intimacy’.

Brand Intimacy agency MBLM’s annual study of US consumers’ emotional connections with the brands that they use confirms that the brands that create the most brand intimacy are also the fastest growing brands. This means that all companies and brands can benefit from marketing that creates emotional bonds with their customers, in turn, ideally, to create a sense of brand intimacy. Here are five strategies companies can draw on to achieve this.

1 – Humanize your brand

It’s much easier to feel an emotional connection with a person than with a concept, so it’s always worth humanizing your brand by showcasing the people behind the brand on your website. This is true for large businesses just as much as for startups (if not more so). The way Apple marketed Steve Jobs as the personality that encapsulated the brand ethos in the years when they first launched their revolutionary iPod, Iphone, and iPad products is a good example of this in a larger company. For smaller companies, showcasing the founder(s) on the website, and potentially the whole team (or the executive team, or those team members who interact with customers, depending on each company) is always going to be helpful in terms of cultivating an emotional bond. Equally important is the information that you provide about your team. Rather than their qualifications, it’s preferable to humanize them by including details about their lives or interests. For example, you can provide a ‘Meet the Team’ page.

2 – Build trust through authenticity

Trust is integral to all emotional relationships, including between consumers and brands. For a customer to trust a brand, it’s important that they feel that it is authentic and trustworthy. There are several ways to help achieve this. Providing real customer reviews (including videos)  is a great way to help new customers to trust a brand. It can also be helpful to provide a glimpse of ‘behind the scenes’, perhaps by creating a ‘meet the team’ video, or a video of a manufacturing process, or a tour of a workshop or company premises, including who does what and a bit about them. Engaging with customers is another way to build trust, such as by providing quick, accurate responses to customer queries. Lastly, making sure that you ‘walk the walk’, by consistently providing what you promise to, is crucial to building brand trust and so meaningful, lasting emotional bonds with your customers.

3 – Develop two-way empathy

Two-way empathy is an important aspect of every emotional relationship, and the onus is on the brand to develop it. Start by gaining a clear and detailed understanding of your customers’ characteristics, needs, and frustrations. With this understanding, you can communicate with them in a way that they can relate to, so using a language and communication style that they’re familiar and comfortable with, and by letting them feel that you understand them, and that you are like them. It can also be helpful to cultivate communities of like-minded people that your customers can join, whether in-person or online. Finally, build and nurture relationships with your customers. Keep records of their communication preferences and purchase history so you can communicate with them appropriately. Depending on your business type, this might include additional meaningful communications that address their needs and interests, or you might go the extra mile and keep records of and reference their family details when you speak to them, or send them a happy birthday message. You should personalize your customer relationships as much as possible, too. As an example, Netflix has created an algorithm that personalizes viewing recommendations rather than using demographic profiles or location.

4 – Employ emotional triggers

Utilizing emotional triggers in your website messaging can be a powerful way to develop an emotional bond and drive sales. Consumer psychologists have identified hundreds of emotional triggers that drive purchasing decisions, depending on the particular brand and product. Some of the most common, compelling emotional triggers are:

– Fear. A good example of this is when marketing insurance. Or, it might be fear of missing out on an offer or opportunity. Be careful before playing on negative emotions though when seeking to develop positive feelings about your brand.

– Guilt. Many people feel guilty about the impact our lifestyles have on the environment, or charities sometimes employ challenging images to invoke guilt to incentivize donations.

– Belonging. The feeling of wanting to belong to a particular movement or social group can be powerful. It might be Mac owners, or a particular car brand drivers, or young or healthy people, for example.

– Aspiration. This often relates to aspiring to a better or type of lifestyle, which buying a certain product or brand can allude to.

– Instant gratification. Chocolate, alcohol, and lottery tickets are among the many products and services that tempt consumer with the allure of instant gratification.

– Liberation, or well-being. These are some of the more positive emotions marketers can appeal to.

The key to employing emotional triggers is to let your understanding of your customers’ buying motivations inform which trigger you use, and then customize your messaging and images (or videos) accordingly and effectively.

5 – Storytelling

Storytelling has facilitated human bonding since time immemorial, and telling stories with an emotional aspect can allow firms or brands to draw consumers in and create an emotional bond. This might mean telling the brand story, or the founder story or team members’ stories, or customer success stories, or creating a video that tells a story that illustrates the lifestyle associated with your brand, for example. Incorporating emotional triggers into brand storytelling can create a particularly compelling purchase motivation and emotional bond.

August 2022, CICO writer  Staff Reporter Hugo Lesser