Home for born-again African billionaire Christo Wiese is surely one of the most beautiful spots on earth. It sits on a tiny piece of land – jutting through the crash of surf on the rocks into the blue of the South Atlantic – in Clifton, Cape Town, on the southernmost tip of Africa. Here, he reflects on life, business, economic turmoil and his painful return to billionaire status – $1.1bn according to Forbes – just six years after he almost lost it all in an Enron-style accounting scandal that crept up on the wily entrepreneur like a thief in the night.
Wiese, in a high-backed chair dressed in a formal jacket, with a cravat, is thinking onwards and upwards, as usual.
The 81-year-old former lawyer and failed election candidate never got to inhabit the corridors of power in Parliament, but for decades he has been a sage and influential voice among those in charge. The night before we spoke on this clear, blue sky, Cape Town morning, he had sat down to dinner with President Cyril Ramaphosa, where politics and business were on the menu.
These are tough and depressing times for a once-prosperous South African economy beset by damaging power cuts, rising unemployment and falling foreign investment. The country is less than a year away from elections, in which it is likely that the ruling African National Congress (ANC) will lose its majority and the total power it has enjoyed for nearly all of the country’s three decades of democracy.
“It is very likely. If you look at the polls. I think the ANC are preparing themselves for that very distinct possibility that they will not get 50%. Indeed, there are people who say they will be lucky to get 40%!” says Wiese.
This could strike fear into the hearts of many who have invested in the country. The likely coalition partner for the ANC, if it wants to cling to power, is the red-beret-wearing Economic Freedom Fighters (EFF) – a radical and militant far-left party.
“Well, I think it is generally accepted that there are some coalitions that will be disasters, in the extreme, but that will only hasten the demise of those coalitions. If the mighty ANC can be brought to its knees by load-shedding and the state of the economy generally, then you must accept that coalitions, that are equally bad or, God forbid, even worse, will also, in time, end up on the dust heap,” says Wiese who does not mention the EFF by name. He doesn’t need to.
Whichever political party – or parties – end up running South Africa next year they will face the same grave issues: how to keep the lights on, stop the economy from crumbling and win back the faith of investors.
It is hard to believe it is a mere 18 years – it seems like a century – since 2005 when South African papers were calling the year “two thousand and thrive!” Power cuts were unheard of; the mines were flourishing in the commodity boom and growth was at a healthy 5% – the level that economists believed was just enough to absorb the hundreds of thousands of young workers coming onto the job market every year.
This year, growth may have recovered to around 2%, following lean years of financial crisis and Covid-19 lockdowns, but millions of South Africans are fretting, by candlelight, how to keep their businesses open in a land where power is off more than it is on.
Crippling cost of cuts
These dark days have already hit Wiese hard in the pocket. He says the bedrock of his retail fortune, Shoprite, is spending R125m a month (about $6.46m) on buying diesel for generators at its 3,000 stores. That’s more than $1.6m a week.
Wiese says Shoprite is fortunate to have earnings before interest, taxes, depreciation and amortisation (EBITDA) of R20bn (about $6.4bn) – so it can carry these crippling costs. “You can imagine what it does to businesses that don’t have that flexibility – that is part of the tragic story of load-shedding. Small businesses, and even medium businesses and large businesses, like mine, are suffering terribly! I mean, the impact on our economy is really horrific,” he says.
How easy is this going to be, I ask, with national power generator Eskom – still the biggest electricity producer in Africa – beset by corruption, leadership turmoil and a grid that’s close to collapse? How long could it take to fix, if that can be done?
“Decades it won’t take. It will take two or three years to have it completely solved, but decades it won’t take. But, you know, I am confident, as we were confident that apartheid was unworkable and sooner or later it would be dead.
“It is the same with this. South Africa has a very vibrant private sector and these challenges also offer opportunities. I mean that I am aware of several big projects in renewable energy and there are, in fact, with technological advances, solutions. These require the political will and the correct policies from government. But government is very aware of it.
Dinner with the president
“I had dinner with the president last night and he spoke about it. We all know politicians – he also conceded that they tell people what they want to hear. But they have finally grasped the seriousness of the situation and they are hurting where politicians hurt most – at the polls – so, you know, we are very confident things will change.”
Changes are needed from government, he says, in the shape of more public private partnerships, less red tape, including that tied up with one of the cornerstones of democratic South Africa – the Black Economic Empowerment policy. True, the policy has created a rising new class of wealthy black South Africans, but it has been criticised for encouraging rent-seeking, rather than creating entrepreneurs.
This year, BEE cost Wiese a fortune and almost scuppered one of his prized deals: the purchase, by Shoprite, of selected parts of the South African wholesale and retail giant Massmart. “It took 18 months to get through all the regulatory things – now, that’s just crazy! That’s the sort of stuff that we’ve got to get rid of, if we want the economy to grow,” says Wiese.
“The costs were horrendous. I don’t know how much, but it was one court hearing after the other, one tribunal hearing after the other. It was just unworkable… Several times we threatened to walk away because, I mean, it was just not worth it, but if we had walked away 7,500 more people would have been unemployed.
“There were conditions around empowerment, which held it all up, you know, you must give this shop to that group, or whatever. I mean it was just an absolute bloody mess!”
Wiese believes, along with many in business in South Africa of all creeds and colours, that the policy is ripe for review.
“It certainly needs to be relooked at. Most sensible people accept that we have to do something in regard to our unfortunate past to bring the bulk of our people into the economic mainstream. Now, BEE was certainly a method; it was done, in my opinion, not as well as it could have been. In any event, it was done and achieved certain objectives.
“But I think it is the kind of social engineering that should have a finite life. Because we find particularly foreign investors hear they’ve got to give such a percentage to previously disadvantaged people, etc, they are put off by it – and our foreign direct investment figures show that.”
Growing up barefoot
The conversation is punctuated by the crash of a wave outside Wiese’s window. Certainly water, or the lack of it, has played a big part in his family history.
His great-great-great grandfather landed on sand not too far from the Clifton mansion. In 1713, Dutch East India Company soldier Benjamin Wiese arrived on a wooden ship to try his hand in Cape Town as a shopkeeper.
More than 300 years later, the Wiese family, destined to make its fortune from shops, had made its way to the tiny Northern Cape farming town of Upington on the fringes of the Kalahari desert. The town is so dry that its main statue celebrates not a war hero, nor a politician, but a more practical hero of the community, that saved many a farm – a donkey hitched to a water pump.
Wiese grew up barefoot in this tight-knit town, near where his father battled to farm the dry fields and ran a petrol station to supplement his meagre farming earnings. “They didn’t come from money,” says journalist TJ Strydom, author of a biography of Wiese. “If you go and look at South Africans that did in their own lifetime make it big, I think he is the best example of someone who took his opportunities – and he was educated well – and then went into business… after being in business for a decade or two he was one of the big players in South Africa. But I think a lot of people were barefoot in the 1940s.”
Wiese’s big chance came when one day he crossed the road from the petrol station to talk to his cousin-in-law, who was opening what was to become a tiny thrift clothing shop. He was intrigued by the business and his family invested in what became PEP Stores – and he went on to make his first fortune. The simple idea was that everyone wanted fashion, but at the right price.
“They didn’t sell cheap clothing. They sold quality clothing, cheap. I think that created brand loyalty which was difficult to replicate for anyone else. Some of the big chains tried that, so they started Jet to take PEP on in the early 1970s; they couldn’t do it. Weise must have had a lot to do with the whole idea of understanding the people that shop there,” says Strydom.
Wiese never forgot this humble beginning that was to launch him on to a career that would reap more than $7bn in net worth. He always joked that the boardroom of his current supermarket empire was bigger than his first shop in Upington. Homespun and avuncular – that’s Wiese.
On this day, he tells me of his advice to former President Jacob Zuma about government spending: “I told Zuma, my mother taught me you never buy things that you want, simply because you want them, you don’t even buy things that you need because you need them. You only buy things that you cannot do without. The question in South Africa is a very simple one, it is not what do the people want, it’s not even what do the people need: it is what can people not do without.
“The answer is simple: nobody can do without a job. So the government simply has to test every move they make against this question: will this create employment or destroy it? If you do this we could change this country overnight!”
The Steinhoff scandal
Yet all of this down-home wisdom was as naught in December 2017 when the Steinhoff accounting fraud hit the fan. Wiese had liked Steinhoff, a South-African-based furniture manufacturer that was expanding in Europe; he had spent time with the founder and pumped in millions of dollars.
But in 2017, Steinhoff shocked corporate South Africa when it revealed an enormous hole in its accounts. Two years later, an independent report by accountants PwC found that the firm recorded fictitious or irregular transactions totalling $7.4bn over the financial years 2009 to 2017. The report found that a small group of former Steinhoff executives and individuals from outside the company, led by a “senior management executive,” were responsible.
Weise tells me that at the time, when he was chairman of the company, the board reports showed no trace of trouble. “I never realised it until toward the reporting period deadline in 2017. The accounts needed to be signed off on a Monday in December… On the Wednesday before that was the first time I became aware that the auditors were desperately unhappy, that they couldn’t complete the audit. Until that time none of us knew anything.
“The chairman of the audit committee had been dealing with the auditors, but there was no panic. They wanted this and they wanted that in terms of documentation like bank statements or whatever it is that they required. But there was no inkling of any panic. [Chief executive Markus] Jooste kept up the narrative that they don’t understand his tax planning because Steinhoff was a multinational company with lots of transfer pricing issues that needed to be addressed, it was highly complex.
“I was aware that there were discussions going on but those discussions went on every year.” On that Wednesday “I for the first time had been confronted by the auditors with horrific accusations that the management team had been defrauding the company for years. As the subsequent investigation showed, the auditors only went back to 2009 but there is enough evidence that the fraud started nineyears prior to 2009.”
On 19 April this year Jooste was due to face trial in Germany on charges of accounting fraud. But the hearing was halted on day one because he was unable to leave South Africa, where he faces charges that his attorney says are much bigger and so does not have his passport.
Loss of fortune
When the accounting hole was first revealed, the impact sent the Steinhoff share price plummeting along with the value of Wiese’s large stake. In 2015, Wiese was worth $7.2bn; by the end of 2017 his net worth had plummeted to a mere $300m.
The dive was so dramatic that at the beginning of 2018 the Forbes team that tracks the net worth of the world’s billionaires thought at first it was a computer error. “This is the biggest and fastest drop we have ever seen in the real time net worth of any individual on the Forbes rich list,” said Kerry Dolan, then head of the Forbes wealth unit in New York, after the computer technicians had checked and found no error.
It could have been even worse for Wiese. He says that if he had left it another week before salvaging his assets he would have lost everything. Worse than that, he had started to sell his R40bn Shoprite stake – one of the pillars of his wealth – into Steinhoff in what would have been a futile bid to prop up the company. Luckily, he pulled out before he lost everything.
“It’s obviously a terrible experience. I was probably among the world’s 10 largest fraud victims, if you look at the numbers. So it is a terrible experience, to see something you have been building up for 50 years just going down a dark hole.”
For four years, he fought to claw back his lost fortune with a R60bn (at the time $4bn) lawsuit. “The whole problem was that it was like herding cats – because you had all of these creditors and claimants that you had to deal with, and of course everyone wanted a bigger slice of the pie,” says Wiese.
“If I was prepared to litigate for the next 10 years, in jurisdictions around the world, I would have done much better, on our calculations. Accepting the settlement that I did accept, I decided I was not going to spend the last 10 years of my life litigating, and by taking the settlement I got 20-odd cents on the dollar. I got something, and also made it possible for other claimants, who could hold up the whole process, to get something.”
In early 2022, Wiese confirmed that he received cash and a 5% stake in investment holding company Pepkor as part of the settlement, which combined is reported to be worth R8bn ($400m).
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Ready to invest with alacrity
So instead of sitting in court ten years from now at the age of 91, Wiese has his fortune and pride restored and is ready to invest with alacrity – rather than litigate in vain.
His pride and joy right now is Premier Foods, which makes everything from chocolate to gravy browning and custard powder. “Premier is a fantastic business, very solid, great management and a very basic business that I like and understand – we have some great plans there as well.”
In March it listed on the Johannesburg Stock Exchange with a $372m valuation: Wiese’s Brait investment arm owns 47.1%. Wiese is working on plans to increase the product range and make it a much bigger company to reap economies of scale.
With even more enthusiasm, he is investing, with a partner in China, in a Singapore-based manufacturer of spare parts for bulldozers. He says the company has begun exporting to the United States and growing fast.
Even the sceptics say Wiese is back on form in African business; the rich story of the born-again billionaire of Africa is far from over.
“I believe one is only as old as one feels,” he tells me. “I enjoy what I do every day.”
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