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How Markus Jooste took Christo Wiese for over R200 million

Things are getting ugly in Stellenbosch.

Moneyweb sent a copy of this article to Christo Wiese and Stefan Potgieter (a director of Mayfair Speculators and Markus Jooste’s son-in-law). Christo Wiese declined to comment. Stefan Potgieter did not respond. We also made attempts to reach representatives of Mayfair through its lawyers of record. Our phone calls and messages went unanswered – WT.

In an almost unbelievable turn of events, it seems Markus Jooste has betrayed the man he once looked up to as a young articled clerk, the man who was his mentor and who ultimately became his business partner.

The papers filed before the Western Cape High Court last month by Absa bank to have Markus Jooste’s Mayfair Speculators liquidated reveal how he removed nearly all the assets from the company before leaving his good friend Christo Wiese on the hook for over R200 million.

The story began almost exactly a year before, in December 2016, when Mayfair, represented by Jooste’s son-in-law Stefan Potgieter, and Absa concluded a financing arrangement, which saw the bank providing Mayfair with an overdraft facility amounting to R335.6 million and bank guarantees of a further R14.4 million (in total R350 million). To secure this, from Jooste, Absa received a suretyship of R100 million and cession of a share portfolio consisting of Steinhoff shares.

In addition though, the court papers reveal that Absa required “an unconditional, irrevocable on demand limited guarantee by Upington Investment Holdings” for an amount of R350 million “pursuant to which Upington would guarantee the due and proper performance by the Respondent of all its obligations under the Facility Agreement….” – bank-speak for Upington standing behind any and all obligations of Mayfair up to the limit of R350 million.

Upington Investment Holdings is a registered company in the Netherlands and South Africa and is the primary investment vehicle for Christo Wiese’s shares in Steinhoff, as can be seen from the shareholder register of Steinhoff as at November 24 2017.

No

Shareholders as at 24 November 2017

Number of shares held

Percentage of total shares

Value based on share price of R55.89 (R’m)

Value based on share price of R8.70 on 8 January (R’m)

Change (R’m)

1

CLEARSTREAM BANKING S.A LUXEMBOURG (Upington)

1 153 178 766

26.8%

R64 451

10 032.66

-R54 419

2

GOVERNMENT EMPLOYEES PENSION FUND PUBLIC INVESTMENT CORPORATION

320 729 253

7.4%

R17 926

2 790.34

-R15 135

3

CITICLIENT NOMINEES NO 8 HK GW

122 934 974

2.9%

R6 871

1 069.53

-R5 801

4

JPMC-OPPENHEIMER LENDING ACCOUNT

115 822 130

2.7%

R6 473

1 007.65

-R5 466

5

UBS SWITZERLAND AG- UBS WM UK CLIENT HOLDINGS

100 881 227

2.3%

R5 638

877.67

-R4 761

6

UPINGTON INVESTMENT HOLDINGS B.V.

71 150 542

1.7%

R3 977

619.01

-R3 358

7

STATE STREET BANK AND TRUST CO-OMN IBUS ACCOUNT-WEST CLIENT

58 108 723

1.3%

R3 248

505.55

-R2 742

8

LANCASTER 101 PTY LTD CITI

51 526 717

1.2%

R2 880

448.28

-R2 432

9

VANGUARD EMERGING MARKETS STOCK INDEX FUND

44 533 078

1.0%

R2 489

387.44

-R2 102

10

FIHAG FINANZ UND HANDELS AG

43 731 538

1.0%

R2 444

380.46

-R2 064

11

BUS VEN INVEST NO 1499 (PTY) LTD (P

43 229 864

1.0%

R2 416

376.10

-R2 040

12

STEINHOFF INTERNATIONAL HOLDINGS NV

40 377 900

0.9%

R2 257

351.29

-R1 905

13

UPINGTON INVESTMENT HOLDINGS BV N1

38 265 935

0.9%

R2 139

332.91

-R1 806

14

GOVERNMENT EMPLOYEES PENSION FUND PICIND CAM

37 156 600

0.9%

R2 077

323.26

-R1 753

15

SSBTC CLIENT OMNI NON LUX OM01

36 389 917

0.8%

R2 034

316.59

-R1 717

16

CITICLIENT NOMINEES NO 8 NY GW

35 624 988

0.8%

R1 991

309.94

-R1 681

17

STANDARD CHARTERED BANK AS TRUSTEE FOR CORO BALANCED PLUS FUND   -COBP

35 259 510

0.8%

R1 971

306.76

-R1 664

18

STEINHOFF AFRICA HOLDINGS PTY LTD

33 995 232

0.8%

R1 900

295.76

-R1 604

19

SSBTC CLIENT OMNI LENDING NON LUX OM79

33 567 872

0.8%

R1 876

292.04

-R1 584

20

BBH(LUX) FIDELITY FUNDS-EMERGING MARKETS

32 239 499

0.7%

R1 802

280.48

-R1 521

21

UPINGTON INVESTMENT HOLDINGS BV N2

31 000 000

0.7%

R1 733

269.70

-R1 463

22

UPINGTON INVESTMENT HOLDING BV(NO1)

29 481 543

0.7%

R1 648

256.49

-R1 391

Source: Timbukone, author’s calculations

The bank also took cession of Steinhoff shares from Upington as security, and this explains why we came across shareholders of Steinhoff in the company’s share register that were named “Upington Mayfair Absa Pledge”, as seen below:

No

Shareholder

Number of shares as at 24 November 2017

39

UPINGTON MAYFAIR ABSA PLEDGE

                                   14 490 000

40

UPINGTON MAYFAIR

                                   14 021 454

Source: Timbukone

The Upington Mayfair Absa pledge account held 14.49 million Steinhoff shares at the end of November worth approximately R810 million. In the end though, this was still not enough. Following the upheaval on December 6, when Markus Jooste resigned as CEO, the Steinhoff share price collapsed from R55 to R17, which meant that Mayfair was in breach of its covenants as the outstanding balance of the loan – which stood at R220 million at that point – was barely covered by the value of the shares (R255 million). The difference (or buffer) was nowhere near what had been stipulated in the loan agreement. Absa pointed this out to Mayfair and informed it via a letter the following day that a default event had occurred.

At a meeting held on December 8, Absa was given unpleasant news: Jooste had resigned as a director, and the company was technically and commercially insolvent because it had liabilities of R1 billion and assets of approximately R350 million. This situation, the representatives of Mayfair (which did not include Jooste) told Absa, was largely the result of Mayfair Speculators declaring a dividend in specie of R1.5 billion in August to its parent company, Mayfair Holdings. Also, rather tellingly, by the time Absa had gone to court on December 15, this had not been forthcoming.

The dividend in specie was effectively a transfer of ownership of assets that included houses, development properties, Lodestone Brands and a company that manufactured pipes. Jooste had deliberately moved the assets out of the reach of creditors. And he would have known that his friend, Christo Wiese, had guaranteed obligations to the tune of R350 million.

By December 13, the Steinhoff share price had sunk further to R9.80 a share, meaning the value of the security (R142 million) was now well short of the outstanding amount of R226.3 million. Also, no response had been forthcoming from Mayfair on how it planned to correct the situation. Absa had no choice but to begin selling the shares, initially 6.7 million of them, which raised proceeds of R70 million. It has since instructed the broker to sell the remaining shares.

Assuming an average selling price of R10 a share, the proceeds raised should amount to approximately R150 million. This means that Absa is short about R80 million and counting, which Christo Wiese must now stump up for, in addition to the 14.49 million shares in Steinhoff he ceded and has now already lost. This might be small change next to the over R60 billion that has been erased from Christo Wiese’s balance sheet as a result of the shenanigans and possible fraud Jooste has wrought on Steinhoff, but it will be painful nonetheless since it was inflicted by a man he once regarded as his friend.

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Interesting article, does anyone know where Markus Jooste is? Seems his son-in-law is complicit? Should man up and face the music.

Last seen at the ANC NEC Conference in East London.

Are you sure it wasn’t Dubai?

Mr. Wiese knows where he is, that’s a given, the big question is, what’s he going to do to him??

Rumour has it he is on his yacht in the Mediterranean, outside of most legal jurisdictions….

Are there sharks?

On the yacht? yes there is a big shark on that yacht!

Where oh where is Mike Schutte? If he was still around I think he would be snooping around Stellies. Jooste and co be afraid very afraid?

A well researched article. Very tellingly.
It gives an insight into the psychic of this man, formally referred to as the “golden boy”. It seems that he will hang out anyone to dry so as to protect himself. And he clearly does this premeditated. I will not be surprised if the wife and son in law will be next in line to suffer the psychological consequences of the fraudster.
It has become clear that he was never a good businessman that were able to make money from straight forward business. What he did, was to buy more businesses with share paper and then geared the hell out of the assets to fund operational shortfalls and to massage loan capital into business revenue. A round-tripping pyramid scheme of sorts. At best Jooste and his co-directors was but only reversed loan sharks. Pitiful.

Yes but you must know that it’s the trappings (flashy cars, jets, mansions) that makes people believe someone is a “good businessman” Few bother to look at details of how the deals are struck.

Very true, Louise.

There is no honour among thieves

the nature of mankind.

Excuse me, not quite! Speak for yourself.

Ultimately the article assumes that Wiese was not aware of Jooste moving the assets; and this I strongly doubt that is the case.
If Wiese was the one who effectively guaranteed (via Upington Investment Holdings) this financing from ABSA (and it appears Jooste had “nothing to lose”) then how is it possible that Wiese would not have known about the movement of those assets?
For that matter, why did/would Wiese agree to pledge Upington Investment Holdings for what appears to be for the benefit of Jooste?

Yes, Jooste has done some unsavory/illegal things, but the old man is just as in the thick of it as well.

Wiese is left with several dilemmas if he knew what was going on ( and I’m sure he was aware) and thus choices …….he took the easy choice…..to keep quiet.

Where does a man hide when the whole world is looking for you and when powerful men are coming for you? It can’t be fun.

Yip, same place as Mr Kebble ended up hiding in!! Same MO!!

Rumors among some traders are that the Jo’burg Lebanese crowd are taking cession of equity script and other debts linked to Jooste and SNH for the purpose to collect losses incurred from the kingpins directly (supposedly at a 35% collection margin). Can’t confirm how much water this carries.

The Companies Act (Sec 22 & 77) that all parties can be held personally liable if it was their intention to defraud other creditors of the company.

Very interesting article. Only question remains; did Wiese know? In other words, is he a victim or is he fully co-opted by Jooste in order to defraud their financiers/the banks?
Mr Wiese probably knows exactly where Jooste is…

I think Wiese is a victim, I do’nt think a person who stands to loose millions and face jail time at such an age will defraud financiers/banks, methinks he trusted Jooste “big time” and now he is stuck with the problems.

Just how much money do these “people” need to accumulate at the expense of others?

A good question. Apparently “enough” is just never enough.

Why is Markus Jooste’s personal assets not being frozen, where ever they may be across the globe?

Because there is not as yet solid and enough proof from forensic auditors, etc of criminal activities that will stand up in a court of law. Once the proof is there, the action will commence. In the mean time the asset freezers are running and getting very cold, ready for action.

So what happened to “honour amongst thieves” ?????
I’m not surprised Marcus Jooste won’t show his face – he can’t hide the smile!

“This situation, the representatives of Mayfair (which did not include Jooste) told Absa, was largely the result of Mayfair Speculators declaring a dividend in specie of R1.5 billion in August to its parent company, Mayfair Holdings. Also, rather tellingly, by the time Absa had gone to court on December 15, this had not been forthcoming.”

This was straight up stealing.This boy knew wassup ahead of them.

Just like other people commenting I find it hard to believe Mr Wiese did not know what was happening with the assets. Just as difficult to believe that people such as Steinhoff COO and CFO knew nothing at all. If they missed it they are at the very least guilty of sheer incompetence. Investors demand better than this from a CFO who was paid R 50 million per year. It is high time directors of companies who act outside the law are prosecuted.

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