Billionaire Today
“I mourn the loss of people not money” The joy of building billions and the pain of losing them
He is one of the gentleman entrepreneurs of Africa who turns 80 in September – he grew up barefoot in a small farming town, made his own money and argued in court. Along the way, he built a multi-billion-dollar shopping empire - yet nothing could prepare him for a catastrophe that wiped out 50 years of hard work.
It is a good day to interview an African legend in Cape Town. The sky is perfect blue, save for a few tufts of white cloud perched on the peaks of Table Mountain. The sparkling sea winks back its approval. Everywhere people are walking, cycling or driving down Beach Road towards the warm welcome of Clifton – the billionaire suburb of Cape Town.
This sandy shore of crashing surf is where millionaire shopping tycoon Christo Wiese has lived for more than half century, in the city where his ancestor first set foot more than 300 years ago. In 1713, Dutch East India Company soldier Benjamin Wiese quit his travelling life of the sword and stepped off a rickety, wooden ship, to try his hand in business in Cape Town as a shopkeeper. Clearly, retail was in the blood. Who would have thought that his great-great-great grandson would write the book in how make millions from retail across the continent?
Shopping brought the fortune that bought Wiese a prime piece of Clifton – the suburb with the most expensive real estate in Africa. In half a century he has built a shopping behemoth, that is also the biggest clothing manufacturer in Africa, employing more than 200,000 people.
You have to own, more than earn, to buy a slice of Clifton. In the 1970s, Wiese bought his prime spot, a house on a small peninsula known as The Ridge that juts out into the Atlantic. Down the years, he has transformed lovingly a beach house into a luxury home.
Clifton was not always a rich spot. As I arrive on this blazing hot afternoon, Wiese greets me with a smile and a story from a century before. The man himself – like me – is something of an amateur historian. He paints a long-lost picture of ex-soldiers living in rough tents and shacks on the steep hillside where steel and glass mansions now stand.
“When the soldiers came back from the First World War many didn’t have anywhere to live so the council said they could camp out on the hill at Clifton. In later years, it became the home of musicians and writers,” says Wiese with a warm smile.
Fast forward more than 100 years and Clifton has the most expensive real estate in Africa and home to billionaires, financiers and rich tourists who spend up to $20,000-a-night on luxury villas.
If the walls of Wiese’s luxury beach house could talk, they would hold a fascinating tale of more than half a century of the life of an entrepreneur in Africa. In September, Wiese will be 80.
“I’m one of those unfortunate people that believe they will live forever, for me it sounds unreal when you mention the number 80, because I don’t feel like I always thought 80-year-old people should feel. So yes, I’m trying to slow down, get younger people around me and to get my children to start taking over. My problem is what will I do if I’m not involved and not busy? But I am trying to cut back a bit and spend time with the grandchildren and do things that gives joy in other ways,” says Wiese.
It has been a tough year for Wiese and the shop owners of Africa. COVID-19 has shaken sales to their foundations; even before, the South African economy that is Wiese’s heartland was struggling against sluggish growth.
Even before all of that, Wiese – once one of the richest men in Africa – suffered what could be called a business tragedy.
It all began so well. Wiese, keen to diversify his wealth around the globe, had been introduced to the head of Steinhoff by Markus Jooste an acquaintance and a big name in South African business.
“He wasn’t really a friend; I knew him when he was a young articled clerk. He worked for a firm of accountants that did my mining company’s’ books in Cape Town. So, I met him and he’s 20 years younger than I am so I was about 40 and he was 20, I took note of him, but no friendship. He then left and went up north, did his thing there and started to build a business. The first time I really made contact with him again was in 2007 or 2008 when they invited me to a Steinhoff presentation of their results, I met Bruno Steinhoff, delightful man. Thereafter they invited me to a shooting trip or two to Europe so I got to know them,” recalls Wiese.
For a piece of the Steinhoff action, Wiese had to sacrifice Pepkor – the clothing company he had helped build almost scratch from Upington the small, dusty, farming town of his birth. Becoming Steinhoff’s biggest shareholder all made sense according to journalist and biographer TJ Strydom.
“By late 2014 and 2015, Pepkor was sold to Steinhoff and it obviously looked to make sense, the retail footprint is so much bigger and now it’s into clothing too. There were some complementary businesses in Eastern Europe and that whole narrative of having this thrifty retailer, low cost, with vertical integration all run by a CEO who at the time had about 15 years, almost two decades of experience in the field…It was all part of this bigger narrative of having something listed in Europe where you can borrow on European markets much cheaper than you would in South Africa. You could see the story sort of held and it was also a way for Weise to diversify his wealth globally,” says Strydom.
Then the whispers of financial irregularities became headlines, turning Wiese’s net worth and investments upside down.
“The company reported accounting irregularities which started an investigation which took almost two years to complete. A long forensic report from one of the four big auditing firms and the result was that Steinhoff’s share price was knocked by more than 90%,” says Strydom.
It was almost like the disaster crept up on Wiese – he didn’t see anything was wrong until it was almost too late.
“I never realised it until, I have often told this story, it was towards the reporting period deadline in 2017, the accounts needed to be signed off on a Monday, if I remember correctly the 5th of December,” says Wiese.
“On the Wednesday prior, to the Monday, 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. 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 etc. 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. It was the Wednesday before the Monday that 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 9 years prior to 2009!”
It all hit the unwitting millionaire hard and low below the belt. As late as 2016, Wiese was worth $7.2 billion; by the end of 2017 his net worth had plummeted to a mere $300 million all thanks to Steinhoff.
The dive was so dramatic at the beginning of 2018 that the Forbes wealth unit – the group 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,” wealth unit head Kerry Dolan said after the computer technicians had checked and found no error.
It could have been even worse for Wiese. He said 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 R40 billion Shoprite stake – one of the main pillars of his wealth – into Steinhoff in a what would have been a futile bid to prop up the company. When reality dawned Wiese, took a deep breath and harked back to his roots.
“Well, I realised that the unthinkable had happened to me and that I would have to plan how I was going to get through this financially, emotionally and I had a day or two to myself and I decided that I had to follow going back to the Upington days. I had to find a proper basis of which to deal with this. The first decision I made was that I’m not going to mourn the loss of money, I never started with that kind of money I made it and I earned it. This guy came and stole it, so I don’t mourn the loss of it, I mourn the loss of people not money,” says Wiese.
“The second thing is that I count my blessings because it could have been worse because I was planning on putting some of my other interest into that company as well to make it bigger, more powerful and stronger to grow and expand. The third one, which I have the greatest difficulty, is to not become a bitter human being, to go around to everybody and complain. It’s tough and I will never pretend that it was that easy to just shrug it off, if somebody tells you that then they’re a liar,” says Wiese as he looks far out into the blue sea beyond his balcony and backyard.
Even further away from this gaze lies the farming town of Upington – population 72,000 – in South Africa’s Northern Cape, where Wiese was born of the banks of the Orange River on the fringes of the Kalahari, the son of a farmer, who spent most of his childhood barefoot. It was a small town that shaped him and taught him the value of hard work and discipline among a people he respects.
“The first lesson I think I learned was that everything comes through a magic formula and it is spelt in four letters, W-O-R-K. If you work, you will make it,” says Wiese.
That simple, hometown, back ground never left Wiese. He always rejected pomp and security guards. He answers his own phone and does his own driving with a small pill box at hand where he keeps small coins to pay for parking.
Many years into his billionaire prime. Wiese was to meet Princess Diana at a lavish hotel in London. He had bought new shoes for the occasion – only to find to his horror that they squeaked. On the night he tip-toed around the princess – avoiding all contact – because he didn’t want to be remembered by her as that guy from Upington with the squeaky shoes – even though, his wealth could have bought out the Princess of Wales several times over. Upington through and through.
“Those people were poor 60 years, 70 years ago. Today you can go there and there are fewer farmers, because the farms had expanded, but when I was a child there were only five well to do farms along that stretch, today you will not find five poor farmers there; in one generation! I know how those people worked and built up their farming enterprises, they sent their children to school, university and it’s a remarkable story and it all happened because of hard work.”
“Well, he has always said that it is a hard place to grow up in. Which it is, it is an extreme place it’s got the some of the highest temperatures, it’s very dry but the you have the largest river in the country flowing through that so there is a lot of agriculture. By the time that he was born, in the 1940s, Upington had been around for 60-odd years so it was very much a frontier town. There were a lot of investments as it became the gateway into South West Africa, later Namibia, and the agriculture there, and the mining which Christo later got involved in, it was definitely a town going somewhere, but it was an extreme place. I think it is bizarre to think that this is the place where a retail empire gets born. That to me is the interesting part because you think, agriculture, mining or something like that, but not a thrifty clothing shop is what he started with,” says biographer Strydom.
It was an existential moment in Upington that proved the foundation of his vast shopping empire. One day, the young Wiese stepped across the road from his father’s petrol station – that Wiese snr ran to help finance the farm – to have a chat with a man who married his cousin. Renier van Rooyen ran a bargain shop selling everything from furniture to clothes. Van Rooyen was looking for investors, but the proviso was you had to work in the business too.
Stoffel, Wiese’s father, stumped up the money and became a shareholder and his son worked in the business during college holidays and full time after he had qualified as a lawyer.
The shops changed their name to Pep stores and changed the way working South Africans dressed. Everyone wanted the t-shirts and jeans to look good – few could afford to pay for them. At Pep stores you could clothe your child from head-to-foot for less than one Rand – it was an idea for its time and people clamoured for it.
“I think what the store did was give working people dignity in that they could dress well at a price they could afford,” says Strydom.
One of Wiese’s first jobs was to criss-cross the country opening new stores at the rate of one-a-week. Often, there were long queues outside on the day the stores opened and by the time Pep stories listed on the Johannesburg Stock Exchange, in 1972, it had 163 branches.
Just a year before, in the run up to Christmas in 1971, the busiest time for the business, disaster had struck and it tested Wiese’s resolve to succeed against the odds. A huge fire burned down the warehouse and the Christmas gear to a cinder. Wiese and his partner led the rescue.
“We were facing ruin because if we missed that Christmas trade we would’ve been in serious financial difficulties,” says Wiese.
“I drove through the night and day, with Renier van Rooyen and within 48 hours he had found a substitute warehouse and diverted all the goods from the station to the trucks, which had diverted it to the warehouse, and shelving was put in” recalls Wiese.
“All of us, for the six weeks to eight weeks running up to Christmas, went to work in shorts and were packing boxes. We got through with flying colours. We still made less profit that we should’ve that season and to such an extent that the insurance company sent forensic experts to check whether this was not a fire made on purpose. That is another lesson… we could’ve said ‘well that’s it’ and our business would’ve gone up in smoke, but we managed to keep it going.”
Wiese, by then married to Caro Wiese the daughter of maverick politician Japie Basson, took a break from business to practise law in Cape Town.
“I loved the drama of the court, wearing a robe, being formally dressed and engaging intellectually with opponents in a forum that is civilized with a tradition from hundreds of years. It had a great, romantic appeal,” says Wiese.
But he returned to buy out van Rooyen. in 1981, paving the way for one of the biggest retail empires on the continent with risk taking, dash and a touch of flair, according to his biographer Strydom.
“Well, he said this several times: ‘at the right price there is a buyer but, at the right price there is a seller’ it just differs with the prices. He obviously goes and looks and the underlying value of business and he wants to buy something for the low value cheaply. I think it happened several times in his career. If you look at what he paid for his stake in Pepkor initially, the value that was unlocked over the next decade, decade and a half, it was a great investment and he could use that because he knew the value of it,” says Strydom.
A deal in 1997 was the epitome of a canny Wiese. He bought the retail giant OK Bazaars – founded in South Africa in 1927 and losing a million Rand-a-day – for one Rand. In return, he turned the business round and gained a billion Rand in assets into the bargain.
One of the many remarkable moves by Wiese as he built a supermarket empire across Africa with Shoprite and Checkers. You can almost feel a tinge of sadness on this summer’s day in Cape Town as he mentions how the Steinhoff hangover has wiped out more than 50 years of hard work.
“My direct claim against Steinhoff is R60 billion. That’s what I sold my Pep stake for and I subscribed for another chunk of shares in Steinhoff. So that is my direct Steinhoff loss, as fate would have it and that again is part of life as an entrepreneur or a business person. Markets go up and down, over the same time over the past 3 years, my Shoprite stake has halved in value, my stake in Brait lost 90% in value, and so the list goes on. Those things will come back but the harsh direct loss for which I have instituted legal action for R60 billion,” he says.
Strydom, who called his book on Wiese aptly “Risk and Riches,” believes that getting this money back is a forlorn hope.
“There is no R60 billion to be had there and he is not the only one suing. There is going to be some sort of settlement around the table and when that is all concluded, we don’t know. The offer has been made by the company, there is a settlement offer on the table, but I think the clearest thing is that he is not going to walk away with R60 billion in cash. That is defiantly not what is going to happen; there will be some sort of deal,” he said.
You can be sure Wiese is drawing heavily on his robust Upington roots as he nears his 80th birthday and shows little sign of giving up on salvaging his pride and a huge slice of his hard won fortune.
