Scorpio

SCORPIO

Unpacked: SA Reserve Bank’s attachment swoop on ex-Steinhoff CEO Markus Jooste’s billions in assets

Unpacked: SA Reserve Bank’s attachment swoop on ex-Steinhoff CEO Markus Jooste’s billions in assets
Illustrative image | Sources: Former Steinhoff CEO Markus Jooste. (Photo: Gallo Images / Brenton Geach) | A Steinhoff International Holdings NV logo. (Photo: Waldo Swiegers / Bloomberg via Getty Images) | A general view of Lanzerac Wine Estate in Stellenbosch, South Africa. (Photo: Gallo Images / ER Lombard)

The South African Reserve Bank (SARB) links former Steinhoff CEO Markus Jooste to R4.836-billion worth in contraventions of the Exchange Control Regulations. The SARB argues Jooste used companies in the Steinhoff group as well as his racehorse company Mayfair Speculators to syphon money away from Steinhoff to enrich himself and others. In an attempt at clawing back these funds, the SARB is now chasing after all assets linked to Jooste.

On Tuesday, the SARB pushed the pause button on Markus Jooste’s favourite shell game — the movement and dissipation of valuable assets.

The Western Cape High Court on 6 October granted the SARB an urgent, ex parte order heard in chambers allowing the attachment of assets with a realisable value of about R1,4-billion, but may clock up to more. Lanzerac Wine Estate in Stellenbosch, four pieces of land linked to boutique winery Klein Gustrouw in Stellenbosch, the content of Jooste’s Hermanus compound in Voëlklip, the Jooste family’s Silver Oak Trust and five cars registered to Jooste’s wife and chauffeur are assets attached and included in the latest court order.

Scorpio at first understood and wrote that the Hermanus house, too, was attached. This is not correct. The notice of attachment signed on September 1 states that “all the movable goods of any nature which are present at the date of the attachment order on the” Hermanus property, “excluding the clothing of those persons present” and “any foodstuffs and living essentials” must be attached. 

The true ownership is however murky and, if SARB’s omitting  to attach the property is anything to go by, Jooste managed to put some distance between him and the family home.

Financial Mail wrote that the Tekkie Town founder Braam van Huyssteen’s trust took out a R75,4-million mortgage on Jooste’s home in Hermanus. Jooste’s company  which held the property, Erf 2825 Hermanus Pty Ltd, however still reflects as the owner.

The order, crucially, goes further and allows the attachment, copying and mirror imaging of all hard copy and digital books, documents and devices found at the premises, particularly those linked to the finances of Lanzerac and Jooste. The SARB wants to inspect any books or documents belonging to or under control of Lanzerac, Silver Oak and Jooste. These include correspondence and communication, bank accounts, transfers from or to Lanzerac Estate Investments, accounting records and business agreements. Provision is also made for electronic devices, including passwords and usernames, and the attachment of data storage servers, including deleted data.

Lanzerac Wine Estate in Stellenbosch, South Africa. (Photo: Supplied)

The order was executed by SARB teams who on Tuesday rocked up at the premises of Lanzerac, where Jooste was recently seen, and his Hermanus house, where they found him to be calm and courteous.

Because ex parte orders are secretive and therefore sometimes draconian in nature, courts only grant these in circumstances where it can be proven that the subject of such an order — Jooste, in this instance — may remove assets and destroy evidence with the benefit of knowledge of an investigation against them.

Scorpio can further reveal that in a second investigation focused on Jooste’s alleged romantic partner Berdine Odendaal, the SARB issued blocking orders in May 2021 against four bank accounts held in her name at three South African banks holding almost R5-million. The SARB also attached two cars and, ultimately, a plot of land at Val de Vie, Paarl. The attachment order on a second and third piece of land, sold after subdivision and before SARB’s order, was lifted in the meantime and the proceeds are kept in an interest bearing bank account, also blocked by Sarb. The attachment order for Odendaal’s primary residence at Val de Vie remains in force. 

All of this is because the SARB has a suspicion that Jooste and related partners and companies committed several contraventions of the Exchange Control Regulations when, in essence, Steinhoff money was illegally syphoned to numerous entities with the aim to enrich Jooste Inc.

The attachment order is a way to preserve the assets until the SARB has finalised its investigation. Jooste and the ostensible owners of the assets are allowed to keep and use all of the assets, but are not allowed to dissipate, remove or destroy any of the assets or evidence. The SARB representatives have drawn up an inventory and photographed moveable and immovable goods.

If found guilty, these contraventions of the Exchange Control Regulations can result in two consequences:

  1. An amount equal to the contraventions committed is forfeited to the state; and
  2. A fine of R250,000 is payable or a jail sentence of five years, or both the fine and jail sentence, can be imposed. The fine can also equal the amount of the contraventions committed.

This article explores the SARB’s arguments before court which focus on three Notices of Attachment against Jooste, Silver Oak Trust and Lanzerac Estate Investments.

The SARB’s case against Odendaal will be detailed in a second article.

***

Jooste’s son Michael and businessmen and friends Gary Harlow and Rian du Plessis, in their capacity as the trustees of the Jooste family trust, Silveroak, were the first, second and third respondents in the SARB’s case. Markus Jooste and his wife Ingrid were respondents four and five. Lanzerac Estate Investments, the Registrar of Deeds in Cape Town and Jooste’s former chauffeur Petrus Albertus Venter were respondents six, seven and eight. (Since the news about the Sarb attachment broke, Harlow resigned as a director of Blue Label Telecoms and its subsidiaries, including mobile operator Cell C, News24 wrote

 

Former Steinhoff CEO Markus Jooste appears before several committees in Parliament on September 05, 2018 in Cape Town, South Africa. Photo by Gallo Images / Brenton Geach

The SARB filed its case almost five years after indications of alleged financial misconduct at the Steinhoff group first surfaced in December 2017. After Jooste simply did not pitch at a meeting called for him to explain away growing concerns over the retailer’s accounts, Steinhoff management was left to announce to an incredulous public that it had uncovered “accounting irregularities” and that Jooste had quit. This promptly saw the company’s share price on the JSE take a cataclysmic 95% dip in value.

In the process, investors — ranging from small retail investors to major shareholders like the  Government Employees’ Pension Fund and billionaire businessman Christo Wiese — collectively lost more than R200-billion.

A forensic investigation by auditing firm PwC later determined that the alleged accounting fraud and other improprieties at Steinhoff had occurred over several years, between 2009 and 2017. Fraudulent activities, PwC said in a report that has still not been made public, exceeded R100-billion.

Consequently an ace team from the Reserve Bank’s Financial Surveillance (FinSurv) Department’s Compliance and Enforcement Division started investigating exchange control transgressions at Steinhoff International Holdings in early 2018.

FinSurv’s primary purpose includes recouping cash illegally moved out of South Africa. One of the sharpest arrows in the SARB’s crime-fighting quiver is Regulation 22C which provides for the recovery of any money or goods, no matter in whose possession it is, when that person has benefitted or been enriched as a result of a third party contravening the regulations. The SARB then may block and attach linked assets. Importantly, this includes what is called “clean” assets which are not directly proceeds of the original crimes.

Graffiti on Markus Jooste’s Hermanus house, 19 March 2019. (Photo: Twitter / @Gina_and_tonic)

This means that if Steinhoff was used to commit contraventions of the Exchange Control Regulations, the SARB can recoup those assets from the people (Jooste, his friends and family) and companies or trusts (Lanzerac and Silveroak) who benefitted and were enriched from the crimes. Even if these assets were not necessarily bought with money illegally syphoned from Steinhoff, they may be forfeited to the state if the SARB can prove its case.

Detailed reasons were not disclosed to the court, but to prove its case, the SARB’s Deputy Governor, Fundi Tshazibana, on 1 September 2022 signed three Notices of Attachment:

  1. Notice of Attachment against Silver Oak Trust and its assets — R127.5-million.

The SARB investigators argued that “reasonable grounds” exist to suspect that Silver Oak Trust has been “enriched” by about R127.5-million as a result of the contravention of the regulations by racing company Mayfair Speculators.

Mayfair, the SARB argues, contravened regulations when it received about R587-million in funds from FiHAG Finanz-und Handels Aktiengesellschaft.

The court papers seem to disclose a third application against Mayfair Speculators in which this additional R587-million was attached, too, but no further detail was revealed.

Silveroak’s 2019 audited financial statements declared art with a realisable value of almost R100-million, “other financial assets” of R1.2-billion and loans receivable of R131-million.

The SARB attached all of it.

Harlow, as a trustee of the trust, said he has to “embarrassingly concede” that he is not up to speed with all the assets and money movement history of the trust, but is “committed” to help the Reserve Bank with anything it needs. 

  1. Notice of Attachment against Lanzerac Estate Investments and related assets — R184-million.

“Reasonable grounds” exist to suspect that Lanzerac Estate Investments committed at least three glaring contraventions of the regulations and was enriched as a result of these transgressions, the SARB investigators argue.

These transgressions include R64.8-million flowing to Lanzerac from Mayfair Speculators and another R119.1-million from Formal Holdings linked to businessman Malcolm King. False information provided to the SARB about the Formal Holdings deal also resulted in incorrect declarations made, which is a third contravention committed by Lanzerac “as facilitated inter alia” by Jooste, the SARB told the court.

The SARB therefore attached five properties registered to Lanzerac, situated in the Stellenbosch area. These include Farm Lanzerac No 1087 and Portion 27 of the Farm Klein Gustrouw No 334.

The current value of these five plots of land is uncertain.

Farm Lanzerac was bought in 2012 for R132-million, for example, but can be expected to be worth much more in its current state. As will be the four portions of land linked to Klein Gustrouw, which were purchased in 2012 for R50million.

The SARB investigators seemed particularly keen on Lanzerac’s finances, and specifically mentioned investigators’ interest in money flowing into and out of Lanzerac’s bank accounts. The SARB will attach all bank statements, accounting books and financials of Lanzerac Estate Investments, the court ordered.

  1. Notice of Attachment against Markus Jooste and his assets — R4.8-billion.

Investigators argued they had “reasonable grounds” to suspect Jooste committed at least seven contraventions of the Exchange Control Regulations, and was enriched as a result.

These are:

  • Bonuses in British pounds paid to him in March and May 2017 with a rand value of R23.3-million and R7.39-million;
  • Steinhoff At Work Pty Ltd provided false information to the SARB, investigators said, which resulted in incorrect declarations about a R376-million payment received from Steinhoff Alpha. This is a contravention of the Regulations “committed primarily by Steinhoff At Work as facilitated by, inter alia, [Jooste]”, investigators said;
  • Steinhoff Alpha transferred this R376-million payment on behalf of TG Sourcing, investigators said. The effect was that Steinhoff Group’s financials were overstated to look healthier than they were. The inflated profits were used as merit for the “extravagant bonuses” of R23.3-million and R7.39-million, mentioned above, to be paid to Jooste, investigators said;
  • Steinhoff Africa Holdings Pty Ltd made a payment of R4.4-billion to Steinhoff International on 2 November 2016 — an act described as another contravention of the regulations. The multibillion windfall was used to settle Ainsley Holdings Pty Ltd’s sale of its Brait Societas Europea shares to Plum Tree Consultants Ltd, investigators said;
  • If the R4.4-billion agreement was found to have been concluded between Jooste and businessman George Alan Evans during April 2016, this would be a deferred payment and a contravention of the regulations;
  • The SARB investigators say that the sale of Ainsley Holdings’ Brait shares were used to mask the decline in the Brait share price in the 2016 financial year. Instead of showing the truth, Ansley Holdings’ Annual Financial Statements and Steinhoff Group’s financial statements then showed an overstated R1.3-billion in net profit before tax. The massive “profit” was used to support Jooste’s “extravagant bonuses”, investigators said;
  • The sale of Ainsley Holdings’ shares and the subsequent export of capital also constituted a contravention of the regulations.

The massive amounts involved ensure that the “quantum of the benefit and the amount of the contraventions in which [Jooste] has been involved in, exceeds the value of [Jooste’s] movable and immovable assets and the attachment can therefore be made over all his moveable and immovable assets”, investigators told the court.

Under this notice, the SARB attached the content of Jooste’s compound in Hermanus as well as five cars. Three cars are registered in the name of his chauffeur Petrus Albertus Venter, but owned by Markus, the SARB argued: Isuzu 4×4 double cab (R81,200); Mercedes-Benz Sl600 (R434,300); Land Rover Defender 110 (R350,000)

Two cars are registered in the name of his wife, Ingrid: Lexus LZ570 (R293,600); Volkswagen Kombi VN 750 (R344,100)

Personal assets declared by Markus, also attached, include jewellery, paintings and firearms with realisable value of R800,000.

The order allowed the SARB to attach all movable assets present, “excluding clothing of those persons present or resident on the property and any foodstuffs and living essentials”.

Jooste now has 90 days in which to ask the SARB for detailed reasons about why his assets were attached. From the day these are received, Jooste would have 180 days in which to take the court decision on review. DM

This article was updated for clarity and accuracy at 5pm on 20 October.

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Comments - Please in order to comment.

  • Dennis Bailey says:

    Feel nice to know that it’s not just politicians on the make. I wonder if SARB’s “ACE” team could help the NPA to catch a rogue politician or two-hundred? Strangely, this feels like good news, Tx Scorpio et al.

  • virginia crawford says:

    Good news – but why has it taken so long? And the case will go on for years: it’s very disheartening that it is so easy to break the law and get away with it.

    • dwakerley147 says:

      As Virginia asks, why the delay? To which I would add why is it only SARB that is taking action in such a massive fraud? Have their been any repercussions for the auditors?
      Fail to pay your TV licence and a threatening letter arrives within days. Destroying 4% of the value of the JSE and stealing the savings of rich and poor alike does not seem quite so pressing. Even allowing for the complexity of the case, surely some part of the matter could be brought forward to avoid the unedifying sight of the likely perpetrators at leisure in the luxury of their “compounds”.
      No doubt Jooste and his lawyers will have noted the Stalingrad defence so widely deployed by other defendants if things do come to trial or failing that Dali’s new tactic – demand that everyone on the prosecution recuse themselves.

  • Tim Price says:

    Good for the SARB. Corporate gangsters and corrupt politicians. What a delightful mix of both we have here in SA.

  • Pall Catt says:

    Good thing they acted so quickly. Imagine what a joke this would have been if they gave him 5 years to get rid of all the evidence!

  • Steven Burnett says:

    I hope they have his passport, pretty sure his Google search over the past 4 years will include a lot of “countries with no extradition with RSA” entries.

  • Ann Bown says:

    Too late! That horse has bolted!

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