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. Aided by the Panama Papers, some journalists contend that insider trading occurred since Steinhoff’s listing in 1998, and that the company’s top brass acted on both sides of several deals. Leveraged Steinhoff shares served as currency to remunerate third parties, while shareholder value was diluted to acquisitions in which Jooste and a circle of associates had allegedly acquired prior stakes.
The ensuing 3,000 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 R870 million from Jooste and R272 million from la Grange in a summons lodged at the high court in Cape Town. This would include both salaries and bonuses. Jooste was represented by lawyer Callie Albertyn of DKVG and advocates Jeremy Muller and Matthew Blumberg at his first court trial. A criminal prosecution is not expected soon, as the Hawks investigative unit admitted to making no progress at all, while the NPA lacks the in-house skills to address crimes of this nature. The ruinous impact on pension funds caused some South African lawmakers to express dismay at the lack of prosecution, and some demanded arrests of the culpable parties without delay.
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.
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]
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.
In October 2015 Jooste treated some Stellenbosch colleagues, friends and associates to a lavish excursion to the semi-final of the Rugby World Cup at Twickenham Stadium, which is estimated to have cost Steinhoff shareholders some R84 million.
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.
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.
Steinhoff limited its effective tax rate to between 8% and 12% for years, notwithstanding the company tax rate of 28% in South Africa, a fact pointed out as a red flag in the wake of the Steinhoff fallout.
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. Handelsblatt reported in November 2017 that investors had become decidedly wary of the nestled and intransparent company structure that Jooste had created. Financial Mail journalists, aided by the Panama Papers, allege that Jooste had secret stakes in these daughter companies before they formally entered the Steinhoff fold, and that they were acquired at premiums to their value. They propose that this network of front-running companies would have been set up and operated by George Alan Evans and Malcolm King.
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. Jooste also submitted his resignation as chartered accountant, but SAICA rejected it, preferring instead to suspend him pending the outcome of disciplinary proceedings. According to Jooste, who was drawing a salary of R2,5 million ($190,000) a month at the time, the Steinhoff board had disagreed with his plan to find new auditors to sign off on the financials.