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Absa applies for Jooste-linked company’s liquidation

Bank asks for investigation into R1.5 billion asset transfer.

Absa Bank has applied for the liquidation of former Steinhoff CEO Markus Jooste’s Mayfair Speculators, the company that, until this week owned South Africa’s best racehorse, Legal Eagle, as well as hundreds of other racehorses, a property portfolio and a chunk of Steinhoff shares. 

Absa has also demanded an investigation into a suspicious transaction that saw Mayfair move R1.5 billion of assets to its holding company in August this year. This was just months before significant financial irregularities hit the headlines, causing one of the largest ever corporate implosions in South Africa.

Read: The funds most exposed to Steinhoff

The bank says it is “highly probable” that Jooste was aware of the imminent uncovering of the financial irregularities, which he later took responsibility for. This could have prompted the transaction.

The German magazine Manager-Magazin reported on 25 August that Jooste and other senior Steinhoff employees were being investigated by German authorities for possible accounting fraud. Steinhoff strongly denied these allegations. 

Steinhoff’s share price continued its decline on Thursday. At 11:38 the price was R3.99 a share,  down 14% from Wednesday’s close.

Steinhoff

Read: ‘I have made some big mistakes’

The liquidation hearing is due to be held on Friday, and Mayfair has not yet filed responding papers. Moneyweb was unable to get hold of Jooste and Mayfair’s legal team did not answer its office number.

Mayfair Speculators

Mayfair Speculators is a wholly-owned subsidiary of Mayfair Holdings. The only active director is Stefan Potgieter, Jooste’s son-in-law. Jooste resigned as a director on December 7 this year.

Potgieter did not want to speak to Moneyweb on Wednesday, saying he was very busy before terminating the call.

Mayfair Speculators houses many of Jooste’s assets, including Steinhoff shares (held via SBG Securities), many properties, racehorses and a 49% share in Klawervlei Stud, a horse-breeding farm. Racing is Jooste’s passion and he was a regular feature at racing sales. In September, Mayfield (in various partnerships) acquired nine yearlings at the annual yearling sale in county Kildare, Ireland for a collective €2.3 million. 

Until recently Jooste was a director of Cape Thoroughbred Sales (CTS), a position he has recently vacated. Mayfair Speculators is in the process of exiting its shareholding in CTS. 

In an affidavit, Absa manager Hester van Niekerk (unrelated to the author), states that Absa provided a R350 million overdraft facility and bank guarantees to Mayfair Speculators in December 2016.

This was secured with 11.2 million Steinhoff shares held by SBG. At the time Steinhoff’s share price was R71 and the shares were worth R800 million. Van Niekerk also states that an additional 3.2 million Steinhoff shares were transferred to SBG on August 18 this year to increase the total holding to just under 15 million shares, valued at around R936 million at the time.

Share price implosion

Van Niekerk stated that Steinhoff’s spectacular share price implosion early in December slashed the value of the shares to only R145 million, which resulted in a breach of the share cover covenants.

Van Niekerk states that an Absa representative informed Potgieter on December 6 that Mayfair was in breach and requested the company to put up additional collateral. Potgieter allegedly stated that Mayfair did not have additional collateral to remedy the covenant breaches.

A few days later, Absa demanded the repayment of R226 million.

During a subsequent meeting, Potgieter acknowledged to Absa that Mayfair was technically and commercially insolvent as it had liabilities of around R1 billion and assets of about R350 million.

At this meeting, Van Niekerk alleges, Potgieter also stated that in August this year, Mayfair transferred assets to the value of R1.5 billion to its parent company, Mayfair Holdings, as a dividend in specie. This dividend included several properties, development properties, Lodestone Brands and a company that manufactures pipes.

He also confirmed that Mayfair and other subsidiaries are selling racehorses.

Investigation

In the affidavit, Van Niekerk says Mayfair disposed of R1.5 billion of assets while Jooste was a director of the company. “It seems highly probable that Jooste was aware that the financial irregularities and fraudulent transactions (at Steinhoff) would be uncovered in the near future, which explains the declaration of a dividend in specie in the sum of approximately R1.5 billion.

“It is imperative that a provisional order of winding-up be granted as a matter of urgency so that the provisional liquidator can commence an investigation and an enquiry can be held in order to determine the lawfulness of the declaration of the dividend of about R1.5 billion and any other transactions within the Respondent and its associated companies.

“It seems probable that the Respondent (through Jooste) has disposed of other assets which require immediate investigation and resolution.”

Moneyweb has also learned that Jooste and companies related to him are selling several properties in Hermanus, Stellenbosch and Val de Vie near Paarl.

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So the chickens are coming home to roost…
Major asset- staching, seemingly
Good story, moneyweb and absa on the ball

aren’t somebody ( eg. ABSA ) then not legally obliged to also lay criminal charges against this man?

if its any comfort same things have happened in aus with the likes of alan bond and Christopher skase – BUT the losers m,ainly were the banks not innocent mum and dad investors. the saying is “A Rooster one day and a feather duster the next”!!!

http://www.smh.com.au/business/obituary-alan-bond-19382015-20150604-ghgnia.html

dishonest immoral and unethical

Sure. However, back here in Stellies it’s not just any old company/corporation; we’re talking about the bastion of modern-day Afrikanerdom. That which represents Die Volk and respectability. A more sophisticated version of Die Volk; politically correct yet maintaining ruthlessly separate existences made possible by personal incomes worth billions

Good for them…………..only way to survive in modern day racist SA where expropriation without compensation a.k.a. stealing is accepted as good by the majority of voters.

Pacaratac:

Not quite right to tag this on Afrikaners. Do I tag Enron on 300 million Americans?

Every nation has their crooks (if you even classify Afrikaners a nation)

Yes, I am an Afrikaner but no, I held no mafia shares

Wrong guy Mr Buys.

I’m with Johan Buys. Its a pity Louise puts an Afrikaner tag on this. By the same token the Guptas are crooks because they are crooks not because they are Indians. And Shaun the Sheep is an incompetent because he is incompetent not because he has brown skin. The same goes for the crowd at the parastatals. Crooks are crooks regardless of their heritage or skin colour. The tragedy of the corruption enveloping SA is it enforces the old racial stereotypes which is what we need less of, not more. Like Johan I am Afrikaans, have never dealt with the mafia and as far as I know never screwed anyone out of a cent. Jooste et al deserve their come uppance regardless of what language they speak.

Unscrupulous, gross negligent or fraudulent actions involving a known, rich business-person, almost always results great family suffering and utter humiliation.

Those nearest to such business-person will unfortunately severely suffer the unpreventable consequences of public ridicule, humiliation and ostracization from community activities and social circles. Forever and a day they will be identified in a negative sense as the son, daughter, stepson, stepdaughter, close friend, etc of so and so and wrongly be associated with the sins of the father / mother / brother / sister.

The old adage of one’s integrity and name is worth more than any amount of gold, holds true in today’s society even more than it did in past eras because of the magnitude of immediate and comprehensive information being available to everyone out there with the touch of a button (or screen).

Well…they all enjoyed it while it was there…you mean nobody bothered to question? Consequences…consequences…atleast the son-in-law probably knew a bit about his scamster father-in-law.

Zuma also didn’t know about any Nkandla upgrades… Yet, somehow I get a sense that the wife – not the mistress – was a convenience and eventually used simply to paint a “proper” picture to the world when it came to the horse racing

Paying out massive amounts of assets(which are held as security against a loan)as dividends, is just pure evil.

Tends to happen when high-school jocks get into big business.

What makes it worse is that he’s an accountant trying to run a company. :-/

WELL SAID.

Only in SA that CAs are so overdominant.

Where is the man who promised in his letter to “take the consequences of my behavior like a man”?

Durban, consulting with Gary Porritt on legal strategems.

Sneaky move.

Contravention of Insolvency Act – I would say – in moving massive funds without reason and so soon before everything imploded.

He and his mentor simply could not operate without massive bank loans.

But they will have to use their own money – how limited it may be after all of this – in future – – – – no bank will trust them again

Isn’t it known as “gearing?” Not sure, but in dummy terms it’s an attempt to build wealth using someone else’s money rather than one’s own?

your comment sounds like the definition of a criminal: somebody that wrongfully benefit at the cost of someone else.

@Chev; no, I,m asking a question. Wish someone would explain gearing. It’s something all companies do as part of financing, but to the best of my knowledge there are sound ways of doing it, and limits that should be maintained.
Wondering if it’s relevant here?

Well, it’s just a fancy word for debt. Anyone who takes a bond to buy a house is using gearing. And banks borrow 90%+ of the money they lend out. But of course there has to be sufficient cashflow to service the debt, and/or sufficient collateral to secure the loan, allowing for fluctuations in the market value of the collateral. On the face of it, shares worth 900k look reasonable cover for a facility of 350k. But from the bank’s point of view, all the eggs are in one basket. (My bank usually requires cover of 4x and a reasonably diversified portfolio).

The bank stuck its neck out, but that’s no excuse for the borrower, who fraudulently manipulated the market value of the collateral.

Hope that helps.

gearing as I understand it is when your business are running optimal eg. all loans paid up,solvency/liquidity/acid test/stock turnover ratio within normal limits etc. = start making a profit

An ounce of “hearts ease” is worth more than a “ton of gold”!!

Surprised that ABSA was not aware of the asset transfer when it occurred…you only find put a several months later. This was a significant transaction which should have been catered for in loan agreements. Dividend payments would have ranked behind debt repayment in any event. Shocking how useless Banks can be, even to protect themselves.

Except when directors keep the bank in the dark.Fraud may have been committed.

@Bilalh, ABSA knew but just looked away. I mean this is a company to which they/ABSA lent money!! They knew its level of debt and what the moving of those assets mean to them as a lender. To suggest ignorance on their part will implying they did not know the financial status of the entity to which they lent money…a point that will raise so many questions.

Who owns the holding company and where is it domiciled?

absa should be ok, those distributions would have been subject to liquidity and solvency requirements. The transactions can be reversed and the son in law held liable for losses.

Steinhoff shareholders will get zero out of this mess

Steinhoff directors will go to jail

The former will happen a decade before the latter

Good Luck Baker Tilly Greenwoods

Greenwoods? Fidentia’s auditors?

Yes. Markus, son-in-law and his son worked at Greenwoods, which was Mayfair’s auditors

And so the arrogance of these bastions of industry comes home to stare them in the face. Whilst the banks money was rolling in they treated people like sh!@ ts. But now that the shoe is on the other foot they are going to have to go and stand in line to buy their groceries with discount vouchers once Jooste is out of Jail and cannot find a job. And those exact same salaried employees will still land up being civil to them because that is their nature.
Never ever do unto others that you do not want done unto you……

The wheel turns ever so slowly – and especially when you are unfaithful to your wife. I know as I have experience in these matters.

the other issue about infidelity is it ruins your golf handicap. I mean look at Tiger Woods, right?

The plot thickens. Maria Ramos is a snake in bed with these “WMC”. Please explain to me how you lend that kind of money with such undiversified collateral. Young people cant get a bond from these losers but funds for horses? This Van Niekerk is the same. ABSA shareholders left holding the bag again, while ABSA is just a old white boomer jobs for pals holiday. No thanks, Il keep my offshore assets and crypto, have fun with loser SA inc.

My definition of a criminal = somebody that wrongfully benefits at the cost of someone else.

are ABSA then not obliged to also lay criminal charges against this man?

The root of the criminal activity is fraud committed overseas, Absa has no evidence of that to present, it’s up to the assorted investigators. A delinquent debtor is not ipso facto a criminal (and I’m afraid your definition isn’t the legal one).

Ryk can you upload Absa manager Hester van Niekerk’s affidavit please.

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