Once the richest man in South Africa, retail tycoon Christo Wiese has lost his dollar billionaire status, Forbes’ realtime rankings show.
As of Friday, 8 December, Wiese’s fortune has shrunk to $742 million (R10.2 billion), in the wake of a massive scandal that has seen the Steinhoff share price crumble over the past week.
Wiese, who owns 23% of Steinhoff and is its biggest shareholder, was forced to take the reigns at the company as executive chairman after former CEO, Markus Jooste stepped down amid an accounting scandal that emerged in Germany.
Steinhoff said it wasn’t able to release audited full-year financial results on Wednesday due to matters related to a criminal and tax investigation in Germany.
It had previously rejected allegations made in a Manager-Magazin report that Jooste is among employees being investigated by German prosecutors in a 2015 case linked to possible accounting fraud.
The company has been accused of inflating earnings and covering up losses.
Following the initial reports of Jooste stepping down, Steinhoff’s shares fell 61% on the JSE. wiping off over $2 billion of Wiese’s net worth.
On Thursday evening, ratings firm Moody’s downgraded Steinhoff’s credit rating from baa3 to B1 – “highly speculative” or junk. This led to a further crash in the stock price on Friday, where the company dropped a further 40%.
In total, over $3 billion of Wiese’s wealth has been destroyed by the scandal, pushing him off the billionaire’s list. He was ranked as the third richest man in South Africa in March, with a net worth of $5.7 billion (R78 billion).
He has since lost 87% of that. Wiese was listed as the richest man in South Africa in 2015, with a net worth over $6.8 billion.
The pain does not stop at Wiese, however. Anyone with a pension or investments in South Africa has also been affected by the crash, with the Public Investment Corporation’s (PIC) exposure to Steinhoff costing the public billions.
The PIC’s exposure to Steinhoff prompted a response from National Treasury, where finance minister Malusi Gigaba expressed concern over the scandal.
In a statement on Thursday Gigaba welcomed the Financial Services Board’s independent investigation into the matter. The FSB said it would take action if any violations were found.
By 10h00 on Friday, Steinhoff’s shares declined 41% in intra-day trade, to R5.90 – down an incredible 88% from the R50.25 at the start of the week.