The former CEO of Steinhoff, Markus Jooste, claimed in Parliamentary hearings in September 2018 that it was lawsuits Seifert laid against the company after the joint venture collapsed that resulted in Steinhoff being investigated. Picture: Henk Kruger/Independent Newspapers
Nicola Mawson
The former, deceased, and disgraced CEO of what was Steinhoff, Markus Jooste, long blamed an Austrian businessman, Andreas Seifert, for the company’s demise, arguing that it was Seifert who instigated investigations in what has become known as South Africa’s biggest corporate scandal to date.
However, a 7 000-page PwC investigation into the company, which was delisted in both Johannesburg and Frankfurt in October 2023 as the noose tightened around key players in the fraud, shows that a business deal between the two parties was misrepresented in Steinhoff’s books.
Jooste claimed in Parliamentary hearings in September 2018 that it was lawsuits Seifert laid against the company after the joint venture collapsed that resulted in Steinhoff being investigated.
Steinhoff, in several statements during 2017, initially denied any financial wrongdoing and also stated that its audited statements, as reported on its website, were correct and it had never received a qualified audit opinion.
However, on December 5, 2017, Jooste metaphorically fell on his sword when he resigned, saying in an email to senior executives: “Firstly I would like to apologise for all the bad publicity I caused the Steinhoff company the last couple of months.”
Jooste’s email adds that he made “some big mistakes” and “caused financial loss to many innocent people”. He stated: “It is time for me to move on and take the consequences of my behaviour like a man. Sorry that I have disappointed all of you and I never meant to cause any of you any harm. Please continue to live the Steinhoff dream.”
The former CEO’s resignation had been publicly announced the prior day and followed Deloitte confirming, in 2017, that there were accounting irregularities.
The probe, a copy of which Business Report obtained through a Promotion of Access to Information application, detailed the failed business venture and the resultant misrepresentation of money.
It indicated that there is an amount of some €820 million (about R15 billion at the current exchange rate) carried on Steinhoff’s 2017 financial year results that has been flagged as an asset that may not be valid.
This amount related to a planned deal between Seifert and the Steinhoff Group to expand their retail footprint in Europe. This joint venture was called Talgarth Capital, which, together with various other companies, formed the Talgarth Group.
According to the PwC report, it was alleged that both the Steinhoff Group and Seifert, sold technical know-how, brands, rights and trademarks to the Talgarth Group between 2009 to 2017.
The use of these intangible assets by the Talgarth Group was restricted to certain countries in which Seifert did not already operate. Seifert owned a massive retail chain in Germany and Austria in addition to several small Eastern European companies.
In the context of this joint venture, Steinhoff Group recorded income and receivables. The relationship between Steinhoff and Seifert fell apart in January 2015, resulting in the termination of the deal.
However, after the joint venture failed, Steinhoff did not impair these accounts receivable, instead apparently transferring and reclassifying them to other asset types, PwC’s probe noted.
When the joint venture fell apart, the Talgarth Group recorded further income and intangible assets because it no longer had restricted access into various countries in which Seifert operated.
The Talgarth Group later sold these intangible assets for almost 2bn euros to entities in the Genesis Group, the holding company of which ultimately became Steinhoff International.
It was these deals that became the focus of the investigation by German authorities in 2014. According to the German tax authorities, transactions totalling €2.1bn euros are allegedly misstated.
BUSINESS REPORT