You’d want to believe that nothing like Steinhoff could happen again.But if you can’t spot where you went wrong, you could end up there againTrade unionist turned businessman Jayendra Naidoo says something terrifying about his company’s ill-fated investment in Steinhoff.“You do reflect and try to think of the lessons you can take from this, what signs you might have missed so that it doesn’t happen again.“The problem is, we didn’t see any signs at an earlier stage that made us doubt anything.“There were no warning signs.”It’s scary because it suggests that given the same set of circumstances, Steinhoff could happen again.Naidoo’s company, Lancaster 101, and so many others, could end up here again.What happened is that back in 2016, Lancaster borrowed R9.3bn from the Public Investment Corporation to buy 2.75% of Steinhoff.Luckily, a few months later in mid-July 2017, the deal was restructured and Lancaster’s stake in Steinhoff dropped to 1.2%, while it took 8.8% of Steinhoff Africa Retail (Star).(As it turns out, the Public Investment Corporation badly messed up its exposure to Steinhoff, leading it to write off R5bn of the loan to Lancaster.) Then the bomb dropped. On December 5 2017, Steinhoff announced that CEO Markus Jooste had resigned “with immediate effect” after “accounting irregularities” had emerged.Over the next month, Steinhoff’s share price shed 90% of its value.Naidoo says it was a fraught time.“You go through a whole range of emotions – from shock, to being upset, to anger.“Right now, we’re very calm and focused: we’re trying to follow the path of recovering what value we can.“It’s not a short game,” he says.That path led to Lancaster serving a summons on Steinhoff last week for the small matter of R12bn.Amazingly, this isn’t even the largest single claim against Steinhoff.It is only about one-fifth the size of the R59bn claim lodged by its former chairperson, Christo Wiese.Technically, the claim is based on “misrepresentation”.The argument is that Steinhoff held itself out to be a bluechip company with impressive financial foundations, when actually those foundations might as well have been made of marshmallow, in some cases. It’s hard to disagree.The PwC forensic report has confirmed there was an epic fraud at Steinhoff going back years, which had the effect of “substantially inflating the profit and asset values of Steinhoff”.And the value of “fictitious and/or irregular transactions” in Steinhoff’s books: €6.5bn or R106bn.“The scale is absolutely astounding,” Naidoo says.“It’s something that no-one could have imagined.“Back in 2016, we didn’t know any of this.“We put in place a wellstructured, risk-mitigated transaction, but unfortunately there was a deep and dark hidden secret unknown to anyone.”(Well, not everyone. Jooste himself, tagged as the mastermind of the audacious fraud, evidently knew.)It’s not that Naidoo hasn’t encountered his fair share of deceptive people.He was, after all, on the selection panel to choose the members of the Truth and Reconciliation Commission in 1995.But then, he probably never met anyone quite like Markus Jooste.Naidoo even served as chairperson of Star (which has subsequently been renamed Pepkor) for a few weeks alongside Jooste, who was a non-executive director.In that time, Naidoo says he saw nothing that tickled his antennae about Jooste’s behaviour.You could argue, however, that if you had looked hard enough, there were plenty of signs.Months before Lancaster invested in Steinhoff, in December 2015, police raided the company’s European headquarters in Westerstede, Germany, using such phrases as “suspected accounting fraud”.Back then, the Handelsblatt newspaper reported: “Prosecutors said they are investigating cases of suspected accounting improprieties worth several hundred million euros at two Steinhoff subsidiaries.“Police suspect the fraud could have distorted the value of Steinhoff’s global furniture business.”After Steinhoff, you imagine that some investors will have taken the “lesson” to be that you ignore these instances of bad news at your peril.And that a touch more scepticism when the CEO brushes off instances of “regulatory overreach” might not be a bad idea.The Steinhoff saga is already unprecedented as SA’s most audacious fraud.But the drama is now entering a new phase that will break the mould in other ways.Most times, companies don’t survive a fraud like this.The legal claims, such as Naidoo’s and Wiese’s, typically hobble it.That’s why there’s no modern-day Enron, Lehman Brothers, Leisurenet or Regal Bank.Last week, Steinhoff indicated it wants to be different.It called on claimants to come forward, saying that “in principle, the company would always consider whether there may be any alternative approaches to concluding claims, such as negotiated settlements”.If Steinhoff chairperson Heather Sonn can get all those claimants into a room and thrash out a settlement that saves the retailer, it’ll be something akin to a global first for a company that size.Don’t underestimate the importance of this moment.The drama is now entering a new phase that will break the mould in other ways.● This article first appeared on BDLIVE.