NOMPU SIZIBA: The former owners of footwear chain Tekkie Town have launched a new legal bid against Steinhoff. They’ve launched an urgent application in the Western Cape High Court to liquidate Steinhoff.
The background to this story is that the owners of Tekkie Town sold it to Steinhoff in exchange for Steinhoff shares. This was in 2016. Then of course December 2017 happened, when there were revelations around accounting irregularities at Steinhoff. Then of course those shares tumbled, with all shareholders losing massive value, making the shares that were used as payment for Tekkie Town worthless.
To expand on the latest developments I’m joined on the line by Bernard Mostert. He’s the former CEO at Tekkie Town. Thank you very much, Bernard, for joining us. Now, you guys are certainly going for the jugular, wanting to have Steinhoff liquidated. Do you see that as the only or best way for Tekkie Town’s original owners to get their money back, and why have you made the application an urgent one?
BERNARD MOSTERT: Nompu, thank you. It’s good to speak with you. I’ll answer the latter part of your question first. Liquidation applications by their very nature are urgent, and the courts accept them as that because, if you file obviously you’ve got no remedy in the form of damages, because the company that you go after is not going to be able to settle [with] you. That answers that question.
The second part, to answer your question, is we think this is a step in the right direction, not only for us, but also for all of those who have suffered at the hands of the Steinhoff fraud. The company prefers to refer to it as accounting irregularities, which is a bit ironic, but they did, in the partial publication of the PwC forensic report, refer to unlawful actions that they identified so we can say they refer to the fraud.
The truth is that in short we think that a South African process, very similar to what we’re seeing with Zondo Commission, which you can do under a liquidation, called a Section 417 inquiry, can lift the lid on exactly what happened.
Right now that PwC report is still under wraps. Steinhoff is defending it vigorously and they are trying to push the settlement through because, again, by their own admission in the papers, it’s very likely that there will be adverse legal findings against them from the latter half of 2021 ….. [2:47] create a desire to put an end to all of this and to move on.
But unfortunately I don’t think that would serve those who suffered well. Of course that is not limited to us, it’s also limited to some luminary South African entrepreneurs, like Christo Wiese and GT Ferreira – and also, most importantly, a lot of people on the street who don’t have the means to defend themselves in the way that we do.
NOMPU SIZIBA: That’s right, ordinary shareholders. And then what about that PwC report which remains under wraps? Surely that’s a little bit of a concern, the lack of transparency? Have you not made an effort to access that in its entirety?
BERNARD MOSTERT: We have not. There are four separate actions. Two media companies launched actions to get access to the report – so did Jayendra Naidoo and the PIC. And ironically the last person who launched that action, to get access to the peer-review report, is Markus Jooste, who’s fingered as the mastermind of all these actions. You would think that constitutionally, if you are accused of something, you would have the right to those papers to defend yourself. But we sit three years down the line and no one has been prosecuted. So I guess the argument is we haven’t prosecuted so he doesn’t need access to the papers. And we believe that you can blow open what happened through that Section 417 process.
NOMPU SIZIBA: The process you mentioned. There’s a vote scheduled for next month on Steinhoff’s scheme to settle a number of claims jointly; that will set the company back by roughly R17 billion. They want to avoid lots of individual court hearings and settle once and for all.
I hear that you guys could stand to get around R110 million. Presumably from your perspective that would be a complete rip-off?
BERNARD MOSTERT: It’s not so much that it’s a complete rip-off because, if you look at the business that we had, it made roughly R250 million worth of cash every year. That business was built from Mossel Bay, and later George, by Braam van Huysteen with what initially in 1989 an investment of R20 000. It never incurred any debt, never bought anything on, just did it one store at a time, drawn the disciplines into those that worked for him.
NOMPU SIZIBA: So it wouldn’t be a bad payday, then?
BERNARD MOSTERT: If you and I had a company that made R250 million a year and we were duped into swapping it for something that was built on fraudulent activity, I would also encourage you that we don’t accept the R110 million, and that we rather pursue the restitution of the business, which is what we are doing.
NOMPU SIZIBA: Bernard, if your application doesn’t come out in the way that you would like, the liquidation, what’s the next step? And are you concerned that when Steinhoff does roll out its settlement-scheme programme in terms of that vote next month, are you worried that people may well vote for it because they may not have the perception that you do – and then you’ll just be back to square one?
BERNARD MOSTERT: Nompu, I must say that there is a lot of fine print within the Steinhoff settlement proposal that is of concern and certainly we would encourage anybody who contemplates participating in that to read it very carefully. We are certainly going to vote against it. We are taking actions to prove it is very serious and it shouldn’t go forth, because it doesn’t treat everybody fairly. Certainly, it robs South Africa of a vast amount of wealth.
If I just look at one section of the Steinhoff settlement proposal, it says that if you accept it, you are bound by the terms of conditions of the compensation plan, regardless of any terms and conditions being illegal, invalid, or unenforceable in any respect under any law.
Again, it’s not something that I would encourage my friends, children, or family to sign. Hence the fact that we would rather have the Steinhoff assets under the control of the South African liquidator, and have that process play out in the open – and take it from there.
NOMPU SIZIBA: Bernard, we are going to leave it there. All the very best if I can say that with your application. When is that happening, by the way?
BERNARD MOSTERT: Nompu, at the moment the set-down date is for the 24th of May. So we’ll see if the date stays the same, but it will be very shortly thereafter if it’s not on the 24th.
NOMPU SIZIBA: Okay. Bernard, thank you so much for your time, sir. So that was Bernard Mostert. He’s the former CEO of Tekkie Town.