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Steinhoff bought forests linked to executives at inflated prices

Another twist in the fraud scandal.

A company linked to executives of Steinhoff International Holdings NV bought South African forestry plantations in 2001 and then sold them to the retailer three years later for more than five times their original value, documents show.

Steinhoff, which plunged 96% after disclosing accounting irregularities and chief executive officer Markus Jooste quit in December, commissioned PricewaterhouseCoopers LLP to investigate its finances and has said restatements may have to go back to at least 2015. The forestry deal is similar to car dealership transactions Steinhoff carried out in 2007 where it bought properties in Johannesburg from companies linked to Jooste at a multiple of their initial value.

“There may well be deals that ought to be probed, prior to 2015,” said Ron Klipin, an analyst at Johannesburg-based Cratos Capital. “The focus should also be on potential conflict of interests.”

Steinhoff declined to comment on the forestry transactions, saying it is awaiting the outcome of the PwC probe.

Since December the global retailer has been selling assets and trying to persuade creditors owed more than 9 billion euros ($10.6 billion) not to force it into insolvency. With the equivalent of almost $17 billion having been wiped off its market value, the saga has become one of South Africa’s biggest-ever corporate scandals.

Steinhoff’s venture into forestry came shortly after Jooste, 57, became managing director in 2000. The company began buying assets to produce the timber needed for the furniture it sold, annual reports show.

Trademarks, vehicles

Steinhoff agreed in 2001 to pay R15.8 million for trademarks, vehicles and equipment owned by forestry companies Thesen & Co (Pty) Ltd. and Thesen Properties (Pty) Ltd, sales agreements seen by Bloomberg show. The deal did not include any Thesen plantations and instead Thesen sold 55 properties to Malenge Sawmills (Pty) Ltd, which took a loan from Steinhoff to help with the R29.5 million purchase, according to tax court documents and sales agreements seen by Bloomberg.

Steinhoff managed the plantations that Malenge bought. In 2004, Steinhoff bought 53 of those plantations from Malenge, by then known as Kota Sawmills (Pty) Ltd, for R159.7 million, court documents and company minutes seen by Bloomberg show.

Between 2001 and 2004 the following Steinhoff executives at times served as directors of Malenge and/or Kota — Stephanus Grobler, Frederik Nel, Jan van der Merwe, Gary Chaplin and Danie van der Merwe, who has been acting CEO of Steinhoff since December. Chaplin and both Van der Merwes resigned from Malenge on May 31, 2001, while Grobler and Nel stayed on, according to corporate filings and company minutes seen by Bloomberg.

PwC probe

Chaplin said he resigned from Malenge before the transactions were executed and wasn’t aware of their details. Jan van der Merwe didn’t respond to questions sent by text message and didn’t return phone calls.

“The PwC investigation into Steinhoff has an open mandate to identify transgressions and those responsible,” Steinhoff said, adding that it was also commenting on behalf of Danie van der Merwe and Nel. Grobler declined to comment, citing the PwC probe.

Kota sold the plantations to Steinhoff in 2004, recording a R125.6 million profit for that financial year, shortly after entering a funding agreement with Mayfair Speculators (Pty) Ltd, of which Jooste was the sole director. Kota listed Mayfair as a company to which it was making loans, some of them interest free, according to its financial statements. Jooste’s lawyer, Callie Albertyn, didn’t respond to emailed questions or return a call made to his office.

Impairments, loss

Steinhoff said in its half-year results to March that PwC is working to identify all transactions that weren’t done at “arms length” or at market-related prices and a final report isn’t due until the end of the year. Having had to impair some assets involved in questionable transactions, Steinhoff wrote off 12.4 billion euros in the first half and declared a record net loss of 621 million euros.

Read:Steinhoff: ‘One guy couldn’t have done it’

Between 2001 and 2004, Kota was wholly owned by Switzerland’s Fihag Finance Handels AG and Fihag was also one of Steinhoff’s biggest shareholders, company filings and annual reports show.

Fihag was owned by Steinhoff’s founder, Bruno Steinhoff, until he said he sold it in 2003. His daughter, Angela Kruger-Steinhoff, was one of its directors over the same period. She is currently a member of Steinhoff International’s supervisory board. Steinhoff also said Kruger-Steinhoff couldn’t comment because of the PwC probe. Fihag didn’t respond to queries.

After these early deals, Steinhoff went on to buy assets ranging from furniture retailers in South Africa to discount chain Poundland in the UK, Conforama in France and Mattress Firm in the U.S. South African billionaire Christo Wiese became a major shareholder and Steinhoff’s chairman after a series of deals that started in 2014. He’s now suing the retailer for R59 billion over losses he incurred as a result of the disclosure of accounting irregularities. Steinhoff has said it’s assessing the claims and will determine “the appropriate course of action.”

The company behind the forestry transactions and the car dealership sales still exists. It’s now called Kluh Investments (Pty) Ltd, with Kota having changed its name again in 2007, and Jooste’s son-in-law Stefan Potgieter is its sole director. He’s also the only director of Mayfair Speculators. Potgieter didn’t respond to queries.

© 2018 Bloomberg L.P

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Seems the little apples did not fall far from the tree.

As for the others,,,,,,,,, well of course they knew nothing.

This would explain why there are no Directors dealings by Marcus Jooste – he stole shareholders money in other ways it seems, premeditated and trying to cover his tracks. You can’t tell me that CW was unaware of these transactions and is as uninvolved as he claims!
What a bunch of shysters…in my opinion

CW knew what was going on….. The whole unbundling and listing of Star just before Steinhoff imploded was not coincidence. the story that it was linked to him trying to merge Star with Shoprite made sense, but it was smoke and mirrors. That wasn’t the true reasoning behind the unbundling of Star.
CW realised that the numbers couldn’t be covered up any longer and he knew where the company was headed. The separate listing of Star and him now suing Steinhoff for something close to the value of Star is essentially just coz he wants to get his hands on Star. He must just hope that he can convince a court to grant him his R59bn settlement before Steinhoff is forced to sell some of its bigger assets (Star) to remain afloat.

You comment made sense until you referred to the 59 BN.

When will people realize it is just for effect.

Steinhoff is worth 8bn now. And he is behind creditors. He’s not seeing a cent. This is quite clear by now. Hos case gets weaker with each leak of inflated purchases.

Agree! They all knew – now we really start seeing the depravity of the Stellenbosch Cabal…

Wait until we start to hear about the wine farms and such…

And there Markus Jooste thought he had a handle on preventing people from seeing the wood for the trees

”If the law supposes that..the law is a ass – a idiot”
Charles Dickens (1812-1870)

I don’t know Stefan Potgieter at all and find it amusing that ”Renee Bonorchis, Sam Mkokeli and Loni Prinsloo, Bloomberg”, wants to call him to explain what happened to certain ”SA Forestry transactions etc” many moons ago,long before he even joined the company – as PWC is busy with the audit anyway ?

Until they change the name Accounting irregularities to Corruption, Marcus Jooste will remain a free man. I am also surprised how CW fail to recognise that there was a dirty game played by his boys behind him?

Wiese did not and is not failing to recognise what went wrong. It’s just convenient for him to say so.

The description of the word “hubris” now has a synonym- “jooste”. May he rot in orange

…can’t see the forest for the trees….. 🙂

Back to the day that the house came crushing down.

One has to wonder why didn’t JSE let the company stop trading or to suspend it’s shares. Any other company they would have suspended it immediately.

Steinhoff the ‘ANC’ of corporate South Africa. Now investors can choose whether to invest in Steinhoff or not unfortunately we don’t have the same choice with the ANC.

Sies man – this is scum of the earth stuff. And by the way what in hecks name does Jooste slick his hair back with? Brylcreem or Vitalis? Maybe his future handle can be Vitalis Boytjie, he’s slippery enough to warrant it.

Afrikaner corporate integrity, assuming it ever existed, now in shambles. Destroyed by ruthless and limitless greed. Disgraceful, to say the least. Trust eradicated, irrevocably.

Lekker man, lekker!

A few forests here, a few car dealerships there, a billion from absa and sanlam co-directors and pretty soon one has a nice heap of wealth.

I think PWC should go look very deep. We’ve been traveling down from Maun to Cape and noticed replica little malls in many small towns along the way. They all have the same retailers from the clan at Shoprite and STAR. I would lay bets on related parties in all those property and construction deals, with Sanlam/Absa in there to the hilt. It is easy business writing debt for a property devco that has signed leases for full occupancy at full rate from the devco owners’ pet public retailer.

When will these people get arrested??????

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