Markus Jooste, who died on Thursday at the age of 63 after shooting himself on a cliff path near his home in Hermanus — the walls of which are daubed with graffiti such as “fraudster”, “con artist” and “psychopath” — was the CEO of Steinhoff and mastermind of South Africa’s greatest corporate scam.
His death came the day after the Financial Sector Conduct Authority (FSCA) issued a ruling confirming this and fining him R475m, and the day before he had been instructed to hand himself over to the Hawks.
The scam he perpetrated, according to the FSCA, by among other things publishing “false, misleading or deceptive” statements about the company while engineering transactions with “no economic substance”, wiped R220bn off the Johannesburg Stock Exchange within a week of it coming to light.
Although to the end he insisted in interviews with the FSCA — which he attended under notice — that he was neither aware of, nor participated in, accounting irregularities, the financial authority said he had “intentionally lied” about everything.
Five years ago forensic investigators from auditing firm PwC submitted a damning report that concluded a group of Steinhoff insiders “led by a senior management executive” had implemented “fictitious or irregular” transactions worth R106bn, “substantially inflating the profit and asset values of the Steinhoff Group over an extended period”.
The most prominent investor he conned into believing his lies about Steinhoff’s value was Christo Wiese, who swapped his stake in the premier Lanzerac wine estate in Stellenbosch for shares in Steinhoff, becoming a 23.9% shareholder and Steinhoff chair.
Jooste’s spectacular R350bn house of cards came tumbling down on December 5 2017 when Steinhoff announced it had found “accounting irregularities”, and a tearful Jooste tendered his resignation to Wiese.
The most prominent investor he conned into believing his lies about Steinhoff’s value was Christo Wiese, who swapped his stake in the premier Lanzerac wine estate in Stellenbosch for shares in Steinhoff
Wiese, the retail tycoon behind Shoprite and Pep Stores, had ignored warnings about Steinhoff from portfolio manager Craig Butters as far back as 2009. He lost R59bn when, from a peak of R96.94 in April 2016, the share went into free fall after Jooste’s resignation. By June 2018 the share price was R1.12.
Wiese was lucky. He had intended to merge Shoprite into Steinhoff, to create an “African retail champion”. He only escaped this disaster, which would have cost him many more billions and probably would have destroyed Shoprite too, because of resistance from Shoprite’s former CEO Whitey Basson, who didn’t trust Jooste an inch.
Jooste’s Steinhoff scam cost 50,000 individual investors in South Africa and overseas dearly, many of them losing their pensions and life savings.
Nearly 950 of the 1,651 pension funds registered in South Africa were invested in Steinhoff — which was also listed in Germany and the Netherlands — including billions invested by the Public Investment Corp for the Government Employees Pension Fund.
In October 2022 the South African Reserve Bank attached all assets it could link to Jooste, including Lanzerac, after finding he was involved in at least R4.84bn worth of questionable cross-border money flows in contravention of exchange control regulations.
Jooste was born on January 22 1961, grew up in Pretoria and matriculated in 1978 at Afrikaanse Hoër Seunskool, known as Affies. His father worked for the post office. He won a scholarship to Stellenbosch University where he studied accounting, finished near the top of his year and did an honours degree in accounting at the University of Cape Town. He worked at the Receiver of Revenue during his compulsory army service in the mid-1980s.
He became the owner of a small lounge suite company called Gommagomma, in the dusty, remote backwater of Ga-Rankuwa.
In 1995 he met Bruno Steinhoff, who had built the eponymous company from scratch in 1964 from his base in Westerstede, in northern Germany, importing furniture cheaply from the Eastern Bloc during the Cold War and selling it in the wealthy West.
As told in financial journalist Rob Rose’s definitive account, Steinheist, they were brought together by German lawyer, Claus Daun.
“What Markus was lacking in Gommagomma was the latest technology in furniture production. And Bruno, with his factories, invested huge amounts of money into new equipment and technology... I said to Markus: ‘We must bring this together, try to form a partnership,’” Daun said in an interview in 2013.
Steinhoff listed on the JSE in 1998 and grew into one of the largest companies on the JSE as Jooste bought local companies Ackermans, Joshua Doore, HiFi Corp, Incredible Connection and PG Bison. He also acquired Conforama in France, Poundland in the UK and Mattress Firm in the US among many other companies.
He set up a series of more or less delusive companies in Europe under the pretence that they were independent from Steinhoff; but his real goal was to con the market and investors into believing the group was worth considerably more than it actually was by artificially inflating profits and hiding money-losing business decisions, all the while moving billions of rand out of South Africa.
Jooste used the extraordinary personal wealth he accumulated through side deals to become the second-biggest racehorse owner in the world after Sheikh Mohammed bin Rashid Al Maktoum, the ruler of Dubai.
He had an uncompromising, assertive, intimidating, swaggering style which went with a gruff Afrikaans accent and which for Wiese at least were the marks of a CEO who knew where he was going and deserved to be backed.
Jooste wasn’t regarded as a nice person. He inspired fear. A charming, easy-going ladies’ man, he was also a bully who enjoyed publicly humiliating, at board meetings or dinner tables, the insufficiently sycophantic.
His executives called him “the seagull”, because would “fly in and s**t all over us” and fly out again.
He was someone people deferred to, whose decisions were not to be questioned. He told one MD who forgot this to “get out of my f***ing factory”. It might explain why he got away with what he did for so long under the noses of highly qualified Steinhoff directors.
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