Former Steinhoff CEO Markus Jooste benefitted from undisclosed property and share deals with the company he headed over a period of 18 to 20 years, according to two investigative journalists who published explosive allegations last week.
This means the corporate fraud could have stretched back all the way to Steinhoff’s 1998 listing on the JSE.
They further allege that the Steinhoff family has similarly been benefiting all along through a trust set up by Bruno Steinhoff around 1997.
The report by Financial Mail journalist Warren Thompson and Craig McKune, who works for investigative journalism unit amaBhungane, comes almost a year after the share price of Steinhoff collapsed spectacularly upon Jooste’s resignation on December 5 last year. This followed the refusal of Steinhoff’s auditors to sign off the group’s financial statements and the group admitting to accounting irregularities of unknown magnitude.
Steinhoff’s share price has since lost 96% of its value, costing investors – many of whom are pensioners – more than R200 billion.
There is still little clarity about the nature and extent of the corporate fraud, with PwC, appointed by the current Steinhoff board to investigate the matter, due to submit a report in December.
The two journalists however believe that they have been able to prove their hypothesis that a British property developer, Malcolm King, and George Alan Evans, a Geneva-based former banker, acted as fronts for Jooste and others at Steinhoff.
They told a media briefing hosted by the National Press Club on Friday that they ploughed through hundreds of documents, including some of the Panama Papers, and followed clues left by anonymous analysts and fund managers on Twitter, including those of @JSE_Dog, which has since been closed.
They also made contact with sources close to the action by throwing breadcrumbs out on Twitter inviting people with knowledge to contact them, and built on previous piecemeal investigations by various journalists and media houses in South Africa and Australia as well as hobby investigators.
According to Thompson and McKune, King, 74, sometimes fronted for Jooste in furniture company trades, while Evans handled Jooste’s and the Steinhoff family’s offshore companies, using ‘placeholders’ to hide the identity of the real owners.
By 1990 Evans had set himself up as a professional trust provider, through his company Warren Trustees Group. By 1997, a year before Steinhoff’s listing on the JSE, Evans was handling both Jooste’s and the Steinhoff family’s offshore dealings, the report states.
He allegedly set up Danesfort Investments in Jersey for Jooste (integrating it in the structure of Jooste’s existing Nordic Settlement trust) and The Marksman Trust for Bruno Steinhoff for the benefit of his daughters. The real ownership of the entities was however disguised behind Warren Trustees, they state.
These entities, Thompson and McKune allege, were the main vehicles for the secret deals.
One example involved Steinhoff’s lease of a property in Ashchurch, Tewkesbury, Gloucestershire, United Kingdom in 1999. This lease allegedly enabled entities secretly owned by Jooste and the Steinhoffs to obtain funding to buy the property through a shelf company with no business history.
Through his associates, Jooste and the Steinhoffs seemingly also built up big positions in companies ahead of Steinhoff getting involved with the same entities, often at a premium. One example of this was Steinhoff’s involvement with the Australian listed Freedom Group that started in 1999.
Jooste served on the board of Freedom while King and Evans allegedly obtained 27% of the shares in the group, Thompson and McKune allege. They further state that the Steinhoffs also built up a substantial position.
They say that despite market scepticism, “it proved a great investment because, in 2003, Steinhoff part-funded the Freedom Group’s managers when they announced they would buy out Freedom’s shareholders for AU$221 million (R1 billion) at a premium”.
Thompson at Friday’s briefing questioned the fact that a beneficiary of the Steinhoff family’s trust, Angela Krüger-Steinhoff, is still serving on the current board that is tasked with cleaning up the mess and saving the company, while she is seemingly a beneficiary of some of the transactions he and McKune are questioning.
He said Krüger-Steinhoff did not respond to their enquiries, nor did either of the other implicated persons, except King. When they confronted King with evidence contradicting the responses he gave them, he also stopped communicating with them, Thompson and McKune stated.
Thompson questions the apparent lack of haste in the South African authorities’ criminal investigations into the matter.
He said it does not make sense for the authorities to wait for the PwC report, which was commissioned by the very same company where the fraud was institutionalised for such a long time.