Markus Jooste
[5] Following a dispute with business partner Andreas Seifert, European regulators, journalists and law enforcement were alerted to the conglomerate's inflated profit and asset values, besides off-balance-sheet deals with third parties,[6] causing Deloitte LLP to demand an internal investigation before the 2017 financials would be signed off.
[7] Jooste's sudden resignation was followed by an involved and protracted controversy concerning Steinhoff's accounting practices in its Central European business dating back to 2014.
The ensuing 3,000 or 7,000 page PwC investigation[10] directly linked Jooste and his CFO Ben la Grange to widespread fictitious transactions and accounting irregularities[11] resulting in the Stellenbosch-headquartered company claiming R870 million from Jooste and R272 million from Ben la Grange in a summons lodged at the high court in Cape Town, which aimed to recoup salaries as well as bonuses.
[10] Aided by the Panama Papers, some journalists contend that insider trading had occurred since Steinhoff's listing in 1998, and that the company's top brass had acted on both sides of several deals.
Leveraged Steinhoff shares served as currency to remunerate third parties, while shareholder value was diluted to acquisitions in which Jooste and a circle of associates had allegedly acquired prior stakes.
[12] As South Africa's Hawks investigative unit admitted to making no progress at all, while the NPA lacked the in-house skills to address crimes of this nature,[13] criminal charges were not forthcoming.
The ruinous impact on pension funds caused some South African lawmakers to express dismay at the lack of prosecution, and some demanded arrests of the culpable parties without delay.
[31] Despite being partially funded with Steinhoff shares, the very large premium paid for Mattress Firm prompted scrutiny by independent analysts.
[35] In October 2015 Jooste treated some Stellenbosch colleagues, friends and associates to a lavish excursion to the semi-final of the Rugby World Cup at Twickenham Stadium, which is estimated to have cost Steinhoff shareholders some R84 million.
[36] On 4 December 2015, Steinhoff announced that Oldenburg authorities had carried out a 26 November raid on its European headquarters in Westerstede, Germany,[37] in order to review its balance sheet treatment of transfers to subsidiaries or third parties.
Three days later, on 7 December, Steinhoff International Holdings transferred its primary listing from Johannesburg to Frankfurt, as, in Jooste's words, the majority of the firm's stores, customers and revenues were in Europe.
[38] Though describing it as "an important day in the history of Steinhoff", Jooste chose not to leave Cape Town to attend the event, citing "neck pain" which precluded travelling.
In 2017, while its stock was held by some 340 investment funds in South Africa, in part due to its low volatility,[24] its financial position began to worsen as its operating profit margin fell and net debt increased.
[43] Financial Mail journalists, aided by the Panama Papers, alleged that Jooste had secret stakes in these daughter companies before they formally entered the Steinhoff fold, and that they were acquired at premiums to their value.
[12][44] On 4 December 2017, Steinhoff Holdings disclosed that it would release unaudited annual statements, and the next day Jooste resigned his position as CEO amid allegations of fraud and corruption.
[47] Jooste also submitted his resignation as chartered accountant, but SAICA rejected it, preferring instead to suspend him pending the outcome of disciplinary proceedings.
[48] According to Jooste, who was drawing a salary of R2,5 million ($190,000) a month at the time, the Steinhoff board had disagreed with his plan to find new auditors to sign off on the financials.
[51] Jooste's December 2017 resignation as CEO of Steinhoff came as the company admitted to "accounting irregularities" within the group,[52] and announced that it had approached PwC to conduct an investigation into these.
[56] Viceroy Research immediately tweeted a link to its 37-page report which detailed how Steinhoff had allegedly used off-balance-sheet entities to obfuscate losses and inflate earnings.
[70] By late December, Steinhoff shares were on the brink of collapse, as management could not ascertain the magnitude of accounting irregularities, or provide assurances concerning individual companies' cash flows.
[15] The FSCA reacted to this admission of false and misleading statements by imposing a R1.5 billion fine on the company, which was later reduced to R53 million and paid without contest.
[79][47] Absa, who was owed R350 million, expressed suspicion about R1.5 billion of assets that were transferred as a dividend in specie to Mayfair's holding company in August 2017.
[79] The Western Cape High Court postponed the banks' application,[47] and the lenders subsequently agreed to grant Mayfair extension until the end of 2018 to facilitate a favourable disposal of its real estate and racehorses.
[13] In June 2018, a Dutch shareholders association, VEB, filed for damages against Deloitte in Rotterdam, for their failure in vetting the accounts of retailer Steinhoff Int.
[84] When Jooste appeared before South African members of parliament in September 2018, he denied knowledge of any accounting irregularities on Steinhoff's part.
He stated that Deloitte's independence became compromised in Steinhoff's dealings with Andreas Seifert, causing him (Jooste) to recommend appointment of new auditors, and the delay of the release date of audited results to the end of January 2018.
In 2004, Jooste became a partner in Klawervlei Stud, together with Johan du Plessis, Danie van der Merwe and John Koster, and they chose the four-leaf clover as their emblem.
