When the HIV epidemic reached its peak in the early 2000s, Steinhoff International made it possible for charity organisation Abraham Kriel to help hundreds of orphans.

Steinhoff, with Marcus Jooste at the helm, has since collapsed in a spectacular fashion, having orchestrated the worst accounting scam in South African history.

Now charities like Abraham Kriel are bracing for the day that the financial support provided by Steinhoff is cut off, reports Business Day.

Abraham Kriel is under so much pressure, in fact, that they’ve even considered selling their 116-year-old Johannesburg headquarters.

“It’s been very stressful,” said Miemie Retsuri, who manages community services for Abraham Kriel in Soweto, where Steinhoff donations feed and clothe 400 children, many of whom have lost one or both parents to Aids.

Creditors are circling, and angry shareholders are suing Steinhoff for the billions that they lost when investors found out about the scandal in December of last year.

Funding to non-profit organisations is typically one of the first things to go when a corporate sponsor plunges into financial difficulties. The demise of Lehman Brothers and Bernard Madoff’s Ponzi scheme in 2008 left charities like the Harlem Children’s Zone in New York nursing substantial funding cuts.

“The unfortunate reality is that in difficult times resulting from reported corporate malfeasance, there’s less to give away,” said Amanda Bloch, founder and director of GastrowBloch Philanthropies in Cape Town. “When one funder dominates the funding base and the nonprofit doesn’t diversify, they stand the chance of damage and loss and human devastation.”

In Steinhoff’s case, the two charities set to lose the most are Abraham Kriel and the Knysna Initiative for Learning and Teaching (KILT), which runs programmes to improve the quality of education for 12 000 children.

Whether Steinhoff can continue to support these charities depends on the outcome of the anticipated PricewaterhouseCoopers auditing investigation.

In Soweto, hit hard by the HIV outbreak that peaked in 2006, there is a lot at stake for orphans. Steinhoff foots the bill for as many as 400 daily meals, some delivered directly to the kids’ homes where they share it with relatives who cannot afford basic necessities. On an October afternoon, the menu was a small serving of pap, spinach, carrots and beef stew along with four slices of bread and a banana.

“For each of the beneficiaries of the Steinhoff scheme, another three or four people are supported,” Retsuri said at the charity’s Emdeni centre in Soweto, where about 80 children gather for lunch each day. “The impact is huge.”

Programs run by KILT at 15 schools rely heavily on Steinhoff for the funding that they need to train and support teachers and principals, tutor students and pay for school infrastructure.

In its latest annual report, KILT’s auditors cited “material uncertainty” on whether Steinhoff can honour the five-year, R75m commitment it made in May 2017. It has already reduced this year’s funding, according to its website.

Abraham Kriel’s corporate donors, also including Siemens and Anglo American, were by far the biggest contributors to its income in the fiscal year through March, but with the Steinhoff debacle there are cuts anticipated in staffing and children’s support next year.

Far from the world of corporate crime and big business, the Steinhoff scandal is now putting orphans’ lives at risk.

When are we going to see Markus and his crooked cronies behind bars?

[source:businessday]