In one of South Africa’s most consequential corporate collapses, the Steinhoff saga has reshaped how businesses, legal professionals, and the public think about transparency, privilege, and accountability. The Supreme Court of Appeal’s ruling in Ibex RSA Holdco Ltd v Tiso Blackstar Group (Pty) Ltd is a wake-up call for navigating corporate governance.
The scandal
Steinhoff International, once a global retail powerhouse, was rocked by revelations of massive accounting irregularities in late 2017. Its auditors, Deloitte, refused to sign off on the company’s financial statements, triggering a corporate meltdown that wiped out around R200 billion in shareholder value, much of it borne by South African pension funds.
In response, Steinhoff commissioned a forensic report from auditors PricewaterhouseCoopers (PwC) to investigate the irregularities. While a brief 11-page summary of the 4000-page report was released in 2019, the full report remained confidential — until media organisations, citing the Promotion of Access to Information Act (PAIA), challenged its secrecy.
The legal battle
Media houses, including the Financial Mail and amaBhungane, sought access to the full report. Steinhoff (and its post-restructuring successors, Ibex RSA and Topco) resisted, claiming the report was subject to legal professional privilege.
The Supreme Court of Appeal rejected these arguments on multiple grounds:
- Dominant purpose test: The court found that the PwC report’s primary purpose was to help Steinhoff finalise its financial statements, not to prepare for litigation or obtain legal advice. This meant it did not qualify for legal privilege under PAIA.
- Waiver of privilege: By publishing an 11-page summary detailing key findings — including descriptions of fictitious transactions, identified wrongdoers, and financial impact — Steinhoff had waived any claim to privilege. The court held that once you share part of the story, you cannot legally withhold the rest.
- Public interest override: The court applied Section 70 of PAIA, which allows for disclosure in the public interest, especially where there is evidence of legal contraventions. Given the scale of the fraud, its impact on public funds, and the fact that millions of South Africans were indirectly affected, the SCA found the public interest in disclosure outweighed any harm Steinhoff claimed would result from publishing the report.
What this means for business
The case sets important precedents and highlights several takeaways for the corporate and legal sectors:
- Transparency matters — especially where public funds are at risk: The court reaffirmed that businesses cannot hide behind legal privilege to suppress evidence of wrongdoing when public interest is at stake.
- Legal privilege is not absolute: The dominant purpose of a document must clearly relate to legal advice or litigation. Broad or vague claims will not stand in court.
- Partial disclosure can trigger full disclosure: Releasing summaries or selected findings can amount to a waiver of privilege, especially if those disclosures contain the “gist” of a confidential report.
- Careful drafting of forensic mandates is critical: Legal teams must ensure engagement letters and investigation scopes are clearly aligned to their intended legal purpose if privilege is to be protected.
- Reputation is built on credibility, not secrecy: In a post-Steinhoff world, stakeholders, from regulators to investors, expect full transparency in how companies deal with crises.
Good corporate governance is not optional
The Steinhoff scandal is a sobering reminder that corporate governance isn’t just about compliance — it’s about integrity. Courts will not tolerate strategic secrecy in the face of public harm. Businesses that embrace openness and accountability, particularly in times of crisis, are more likely to emerge with their reputations intact and their stakeholders’ trust preserved.
When wrongdoing occurs, the public has a right to know. And when companies attempt to shield the truth, the law may compel disclosure. Whether you’re drafting engagement letters, advising clients, or managing risk, the Steinhoff case is a precedent that demands attention.
This article was prepared by Dudu Kelokilwe and Wildu du Plessis.