DW: Could Steinhoff have engaged in accounting fraud, and as a consequence, risk closing its doors?

Wolfgang Drechsler: That there has been fraud seems to be now rather obvious. But the extent of the fraud came as a surprise. That the company was a bit on the dubious side was well-known. Before this happened, people questioned the accounting practices of Steinhoff. Their habit of moving assets between countries, of parking losses or certain activities outside their official balance sheets, of having these wonderful tax rates.

There were many things that made people question that there was something wrong. But to my surprise, when I got an interview with CEO Markus Jooste at the end of October and had to prepare for it, it struck me immediately how many unresolved questions there were. I got in touch with an analyst who told me about their concerns. I was just flabbergasted that nobody blew the whistle about these things.

So for me it wasn't a surprise entirely. When Steinhoff went to publish their results on December 6, the auditors didn't certify them. That's a disaster for a company. Then every investor knows there is something fishy. That's when their share price plunged by 80 percent in three days. Normally, people then come in and pick up the pieces, opportunists and so on. Steinhoff, however, plunged and almost remained exactly where it fell at the beginning of December.

Since then, we've been waiting for new auditors to come in, to find out about the extent of the fraud. What was it? How deep does it go? It's probably two or three years back that have to be restated. So it could be enormous. There is still some inherent value in the company, but no one knows how much that is. And nobody knows how big the debts of the company are. And that's why it could be that Steinhoff closes down, but it's unlikely.

That's because it has got serious assets amongst the companies it bought in the last 25 years. So the shares could double or triple from their current stake. That is still 80-85 percent less than where Steinhoff started at the beginning of December, so it will be only a very partial recovery, if there is any at all.

Pension funds, not only in South Africa but also elsewhere in Africa, tend to invest in companies that have a long-term view, hoping that these companies are going to be sustainable. What happens to the people who have invested a lot of their money in Steinhoff, and, of course, the poor pensioners whose money has been invested there?

This has always been a problem. You invest in pension funds because you trust that the people running them have an idea of what they're doing. When I looked at Steinhoff and talked to some of these pension fund managers, there were so many people completely unaware of what was brewing.

Normally, it goes well; people can make a lot of money with companies like Steinhoff. But now and then, there is a company committing fraud, and a share can basically melt and disappear. And then there is not much you can do.

Of course, there is still some value in Steinhoff. They can split the company, sell the pieces, and then repay some of the damage. But first in line for that will be those owed debts, like the bank. And then the pension funds will be only partially recovered. They might get back 20 percent, 40 percent, if they are very lucky more than half. It is highly unlikely Steinhoff will ever come close to the value it had last year. That is a risk you take when you invest in shares. It's not a savings account.

The company employs more than 130,000 people worldwide. From the look of things, the potential loss of jobs is enormous isn't it?

It could be. If Steinhoff closes its doors, then clearly tens of thousands of people might lose their jobs. It is rather unlikely that such a catastrophic event will occur, because as I said, there is still value in the company. Only recently they acquired Poundland, a large group in Great Britain. They acquired a large mattress producer in the US. This kind of thing made them the big company that they are.

They are the second-biggest company in the furniture sector after IKEA. It's not a company that's got nothing, like Enron, which burnt to a crisp. It won't be like that with Steinhoff. But the damage will still be immense.

Wolfgang Drechsler is a German journalist based in South Africa.

This interview was conducted by Isaac Mugabi. It has been edited for clarity.