Markus Jooste

Between 5 and 7 December Steinhoff's share price plunged from R46.25 to R10, and its bonds fell in line as Moody's downgraded Steinhoff bonds from investment grade (Baa3) to junk (B1). Christo Wiese's Upington Investment Holdings held over 30% of Steinhoff's stock and was the biggest loser in the collapse. South Africa's PIC (holding 7%), Coronation and BlackRock all made multi-billion rand losses. The European Central Bank sold its Steinhoff bonds after these had depreciated by 50%, while JPMorgan, Bank of America, Citigroup and Goldman Sachs all reported substantial loan losses. Lenders were owed over €9 billion ($10.6 billion), but in June 2018 the majority were persuaded to a debt standstill and insolvency was avoided.

In June 2018, a Dutch shareholders association, VEB, filed for damages against Deloitte in Rotterdam, for their failure in vetting the accounts of retailer Steinhoff Int. NV. The association planned to hold the directors, company, accountants, and potentially the banks that promoted Steinhoff's listing, jointly responsible.

Manager Magazin revealed in August 2017 that Jooste was one of the managers being investigated in Germany. Prosecutors suspected that inflated revenues in the hundred million Euro range may have been reported on the balance sheets of subsidiaries. On 4 December 2017 Steinhoff Holdings disclosed that it would release unaudited annual statements, and the next day Jooste resigned his position as CEO amid allegations of fraud and corruption. Soon after he also resigned from Phumelela Gaming & Leisure, Kenilworth Racing, and Mayfair Speculators.

Manager Magazin reported in August 2017 that Jooste was being investigated by German authorities. In response Steinhoff's price slumped by 16% on the JSE, but recovered after the company denied the allegations. This was followed by allegations of accounting impropriety made by Steinhoff's former POCO subsidiary. Steve Booysen also alerted the board to possible accounting irregularities after engagements with Deloitte.

Jooste's December 2017 resignation as CEO of Steinhoff came as the company admitted to "accounting irregularities" within the group, and announced that it had approached PwC to conduct an investigation into these. In a letter to staff on his resignation, Jooste apologized for "big mistakes" and that he had caused bad publicity for the company. Viceroy Research immediately tweeted a link to its 37-page report which detailed how Steinhoff had allegedly used off-balance-sheet entities to obfuscate losses and inflate earnings.

PwC was tasked with an investigation into possible accounting irregularities or non-compliance with laws and regulations, and resumption of audited statements were subject to its outcome. German prosecutors confirmed in December 2017 that they were still investigating four current and former managers of a group (identified in the German press as Steinhoff), for accounting fraud. Steinhoff announced in February 2018 that they had submitted a report on Jooste to the Hawks on suspicion of fraud, for investigation and potential prosecution.

In December 2017 Absa Bank and Investec Plc applied for the liquidation of Mayfair Speculators, when Mayfair's Steinhoff shares failed to provide sufficient collateral for its overdraft facilities. Absa, who was owed R350 million, expressed suspicion about R1.5 billion of assets that were transferred as a dividend in specie to Mayfair's holding company in August 2017. According to court documents, Mayfair owed Sanlam capital markets, Investec Plc and Absa more than R1.2 billion ($94 million) in total. Mayfair disclosed liabilities of R1 billion and assets worth R350 million. The Western Cape High Court postponed the banks' application, and the lenders subsequently agreed to grant Mayfair extension until the end of 2018 to facilitate a favourable disposal of its real estate and racehorses.

As of December 2017 Mayfair Speculators owned 350 horses in training, 100 mares for breeding, a considerable property portfolio, a 49% share in Klawervlei horse-breeding farm at Bonnievale, and Steinhoff shares which were used as collateral. Mayfair Speculators was also a shareholder in Cape Thoroughbred Sales (CTS), of which Jooste was a director.

Steinhoff's share price peaked at R90 a share in 2016, making it the 15th largest company listed on the Johannesburg exchange. The conglomerate employed over 130,000 people on five continents, and had become the second-largest home goods retailer in Europe after Ikea. In 2017, while its stock was held by some 340 investment funds in South Africa, in part due to its low volatility, its financial position began to worsen as its operating profit margin fell and net debt increased. Its March 2017 accounts showed €3.1 billion in cash reserves, and €18 billion ($21 billion) of exposure to creditors.

In March 2015 Steinhoff bought Pepkor from Wiese and his Brait holding company at R63 billion (then €4.8 billion), implying a very high p-e ratio of 37. After a failed merger with Shoprite in December 2016, Jooste and Wiese raised new capital in 2017 to split off Pepkor's South African division, a move received with some skepticism, as it was seen as a way to pay off Steinhoff's South African debt. The Pepkor acquisition also occurred without a cautionary announcement, raising suspicions at the FSB about possible insider trading leading up to the deal. The split implied a 71% holding in new entity, Star, which managed more than 5,000 South African stores, more than any other retailer.

On 4 December 2015 Steinhoff announced that Oldenburg authorities had carried out a 26 November raid on its European headquarters in Westerstede, Germany, in order to review its balance sheet treatment of transfers to subsidiaries or third parties. Three days later, on 7 December, Steinhoff International Holdings transferred its primary listing from Johannesburg to Frankfurt, as, in Jooste's words, the majority of the firm's stores, customers and revenues were in Europe. Though describing it as "an important day in the history of Steinhoff", Jooste chose not to leave Cape Town to attend the event, citing "neck pain" which precluded travelling.

Christo Wiese's Titan Group instituted a claim of R59 billion ($4.8 billion) against the Steinhoff conglomerate to recover cash investments made in 2015 and 2016. The prospects of this claim are however complicated by the fact that Wiese had been Steinhoff director since 2013. Wiese had a 22% shareholding in Steinhoff, the European component of which appears to have been subject to margin loans with different banks.

The German raid of 2015 recovered documents supposedly signed by Andreas Seifert, co-managing director of furniture chain XXXLutz. Seifert denied ever having seen or signed the papers, and filed criminal charges for document forgery. After filing additional lawsuits against Steinhoff in three countries, Seifert managed in April 2018 formalize his controlling stake in POCO, which Steinhoff disputed.

Jooste, in various partnerships, was a regular buyer at racing sales. In 2014 he impressed with his buying power at Arqana's premium sale in Deauville. In 2015 he added 12 yearlings to his stables at Tattersalls Book One, for a total of £4.3 million. In September 2017, Mayfair acquired 9 yearlings at the yearling sale in county Kildare, Ireland for €2.3 million in total. In partnership with MV Magnier, they bought a filly at Tattersalls for £1.68 million in October 2017. In 2017 he was named Equus SA's racehorse owner of the year for the 10th time in a row.

Notably, they acquired Conforama in 2011 for €1,207-million, a deal that boosted revenues and growth. 2014 through 2017 saw acquisitions in South Africa, the United Kingdom and United States, which included Mattress Firm for $2.4bn, and Poundland for £597m in depressed retail conditions. Despite being partially funded with Steinhoff shares, the very large premium paid for Mattress Firm prompted scrutiny by independent analysts. The financial press initially ascribed the growth in Jooste's empire to either good luck or fortuitous timing, but the dissenting voices grew silent as Steinhoff raked in 36% growth in its 2014/2015 reporting year.

After training as a chartered accountant in his 20s, he was appointed financial director of a publicly listed company. At age 27 he became the financial director of GommaGomma, where he met German entrepreneur Claas Daun, who coached him in business. On his part, Jooste convinced Daun in 1998 to merge his business with that of Bruno Steinhoff in Europe, and to list Steinhoff International on the JSE. Jooste and Daun acted as non-executive directors of Steinhoff International from 1988, and Jooste became its CEO in 2000. In his role as CEO, he built the company through numerous acquisitions from a small furniture manufacturer to a large corporation in the furniture industry. Piet Ferreira, a former investment banker who joined Steinhoff in 2002, was instrumental in structuring its public offerings and complex acquisitions during his 15-year tenure.

Jooste's first horse, the stallion National Emblem, was bought for R100,000 in 1993 and became a champion. Mayfair Speculators owned South Africa's best racehorse, Legal Eagle, a six-time Grade 1 winner, and Edict Of Nantes, a dual Grade 1 winner. They were sold in December 2017 for R3.2 million and R9.9 million respectively. In 2016, The Conglomerate won the Durban July as an outsider.

Jooste entered the horse racing industry in the 1990s with 250 horses, and became the second biggest horse-racing investor in Africa, or perhaps the world. Jooste and his son in law, Stefan Potgieter, manage their horse racing interests through Mayfair Speculators, a wholly owned subsidiary of Mayfair Holdings that was founded in 1987. In 2004 Jooste became a partner in Klawervlei Stud, together with Johan du Plessis, Danie van der Merwe and John Koster, and they chose the four-leaf clover as their emblem. In the next decade other prominent investors joined the enterprise.

He obtained a BAcc degree from Stellenbosch University in 1982, and subsequently obtained an honours degree at the University of Cape Town while completing his CA(SA) articles at a company then owned by Christo Wiese.

Jooste's father was a postal worker and an avid horse race punter, instilling also in his son an interest in the races. Jooste matriculated from Afrikaanse Hoër Seunskool in 1978. Before the 2017 fallout in his business empire, he donated R10 million to the school's old-boys trust in his personal capacity. The donation has since been ring-fenced pending possible claims.

Markus Johannes Jooste (born 22 January 1961) is a South African businessman and the former CEO of Steinhoff International. He is an avid horse breeder, and in 2016 was reported to be one of Africa's richest people, worth $400 million. Joining forces with Christo Wiese in 2014, they embarked on an aggressive international expansion programme. Jooste's sudden resignation from Steinhoff on 5 December 2017 was followed by an involved and protracted controversy concerning Steinhoff's accounting practices in its Central European business dating back to 2016, or even 2014. The resulting uncertainty saw some €10 billion (R160 billion) of Steinhoff's value wiped off the markets in a matter of days, with further losses as the situation unfolded. The ensuing 3000 page PwC investigation directly links Jooste and his CFO La Grange to the widespread fictitious transactions and accounting irregularities resulting in the Stellenbosch-headquartered company claiming  R870m from Jooste and R272m from la Grange in a summons lodged at the high court in Cape Town. This would include both salaries and bonuses.