The South African Reserve Bank (SARB) is trying to seize everything it can from Markus Jooste, the former CEO of Steinhoff International. While Jooste will need to be found guilty of fraud and other criminality in a court of law before he can be thrown in jail, authorities are finding ways of getting funds from the embattled former South African business superstar.
Expect the Bank to grab a plethora of luxury properties and farms from Jooste, once a highly popular South African businessman who angered and disgusted high profile investors, including retail tycoon Christo Wiese who was the company’s largest shareholder. Jooste didn’t pay taxes on his allegedly ill-gotten gains and the Bank now has an opportunity to recoup revenue for the country. Mansions, cars , boats and anything else the ultra well-heeled own could be seized.
Jooste who is reported to be worth some $400m personally, led Steinhoff, a European multinational which began as a furniture company in the 1960s. Steinhoff collapsed under an accounting scandal five years ago with it shedding 95% of its market value, losing investors, including pensioners, billions of rand. Accounting firm PwC held an investigation where it found that Steinhoff’s former executives inflated values of the retail investment group’s assets and that it used fake transactions to inflate accounting profits. Steinhoff had looked like it was a company run by business geniuses and investors threw money at it. But PwC found that fraud worth more than R100bn was committed.
Then in October this year, Judge Andre le Grange granted a surprise order after the SA Reserve Bank’s application to attach assets related to the Steinhoff scandal, following breaches of exchange control regulations. In the order issued on October 7, Le Grange went for “the declaration of all assets and their identification with sufficient particularity”. That means Jooste is suddenly losing use of his assets.
Jooste, his wife Ingrid and son Michael are respondents in the Reserve Bank case, as well as Gary Harlow and Adriaan du Plessis who are the joint trustees of the Joostes’ Silveroak Trust are also respondents.
The Bank was granted permission to attach assets in the trust, worth more than R1.3bn. Marcus Jooste’s 7000m2 mansion in Voelklip Hermanus worth more than R81m and assets in Lanzerac wine estate were attached. His cars such as a Lexus and a Kombi were attached as well as art, jewellery and guns.
Jooste has invested hugely in Lanzerac. Steinhoff argued in court that Jooste owns a company called Pavilion Capital which is the main shareholder in Lanzerac which also includes a hotel, a spa and a restaurant.
Not only has the Bank gone after Jooste, some of his former colleagues are finally also facing its wrath. This includes Chris Grové, Steinhoff’s who worked as a manager for risk, insurance and advisory under Jooste and who owns a home in Val de Vie, the most prestigious estate in Cape Town and former chief financial officer, Ben la Grange. Grové was accused of flouting exchange controls
But things weren’t always so bleak for Steinhoff, a company that was founded in 1964 by Bruno Steinhoff in Westerstede, Germany. He initially sourced furniture from communist Europe and sold it in Western Europe. In 1997, the Steinhoff company acquired a 35% stake in SA-based Gommagomma, preparing for a merger in 1998. The company moved its headquarters to SA in 1998 where production costs were lower. Steinhoff listed on the Johannesburg Stock Exchange (JSE) in 1998.
Later in 2005, Steinhoff invested £86m in the UK’s Homestyle Group. In 2011, Steinhoff bought Conforama, Europe’s second largest retailer of home furnishings and in 2015, it bought South African retail investment and holding company Pepkor for $5.7bn making founder Christo Wiese, Steinhoff’s largest shareholder and chairman.
Steinhoff International also moved its primary listing from the JSE to the Frankfurt Stock Exchange and founded a Dutch holding company called Steinhoff International Holdings NV. Today Steinhoff International is Europe’s second largest furniture retailer, after Swedish group, Ikea.
Property Flash would expect the battled between Jooste, Steinhoff International, the Reserve Bank and other authorities to continue for years.