In the first move against former Steinhoff CEO Markus Jooste by the authorities, five years after the retailer imploded, the Reserve Bank has seized more than R1.4bn worth of assets belonging to him, his wife and his family trust.
The court order, signed by Western Cape judge Andre le Grange on October 6, also effectively freezes Jooste’s home in Hermanus, the Lanzerac wine farm in Stellenbosch, five vehicles, about R100m worth of art, jewellery and other assets.
While this is the first action taken against Jooste in SA, this relates only to suspected exchange control contraventions, rather than the wider fraud involving R106bn in “fictitious and/or irregular transactions” that duped a wide array of pension funds and investors in the country. As it stands, no arrests have yet been made by the Hawks of anyone related to the Steinhoff fraud.
Analysts welcomed this as a sign that the law enforcement authorities are beginning to move on the case.
Peter Armitage, CEO of fund manager Anchor Capital, which had clients who lost money in the Steinhoff debacle, said, “it is great for SA’s image that we [are] actually doing something about the fraud. The Steinhoff debacle ruined many people’s lives. This matters a lot for SA.”
While Armitage said that prosecution of such a complicated case was likely to be difficult, the Reserve Bank’s application to freeze assets could be seen as the first step in the process, and evidence that the authorities are serious about prosecuting financial crimes.
“With greylisting a threat for SA, there is comfort for other global players that the authorities are serious about [acting],” he says.
The disclosures of fraud date back to December 2017, when Jooste resigned with “immediate effect” and the company admitted to “accounting irregularities”, sparking a R200bn plunge in value on the JSE. After an exhaustive probe by forensic investigators at PwC, Steinhoff CEO Louis du Preez in March 2019 named Jooste as part of a “small group” of former executives that had “substantially inflat[ed] the profit and asset values of the Steinhoff Group over an extended period”.
Ultimately, investors who lost out due to the fraud lodged claims exceeding R184bn with Steinhoff, but these were settled for R24bn earlier this year.
Lifestyle
The Reserve Bank court order also provides a hitherto unseen glimpse into Jooste’s personal lifestyle. For example, the court papers specified how he and others linked to him owned jewellery, firearms and art worth R795,000, as well as five cars: a Mercedes-Benz, a Land Rover Defender, a Lexus, a Volkswagen Kombi, and an Isuzu. Although Jooste was a well-known art collector and was believed to have collected a number of works by Pierneef, the R98.7m value of the trust’s collection would surprise many.
This move also suggests the authorities have the appetite to unravel the labyrinthine corporate structures Jooste put in place to hide assets.
In particular, Jooste was accused by Steinhoff in court papers last year of hiding his stake in Lanzerac, the third wine farm established in the Western Cape, in 1692.
Back in 2011, Lanzerac’s former owner Christo Wiese sold it to a consortium for R220m, in a deal engineered by Jooste.
But Jersey business person Malcolm King, who was the face of the consortium, argued that a company called Pavilion actually owned Lanzerac, and Jooste “does not have an interest in Pavilion Capital”.
But in court papers lodged last year, Steinhoff claimed that King and Jooste “conspired to defraud the Steinhoff entities”, in part by hiding assets.
Steinhoff said in the court papers that “Lanzerac is a subsidiary of Pavilion, which is ultimately owned by Jooste”. Evidently, the Reserve Bank appears to have proceeded on this basis.
The court order was given to the Reserve Bank on an ex-parte basis, which means Jooste was not given warning, and he will now get a chance to challenge it in court. Bernard Hotz, a partner at law firm Werksmans, says Jooste, his wife, and the trust can “approach the court to motivate for the setting aside of the order”.
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