Markus Johannes Jooste (22 January 1961 – 21 March 2024) was a South African businessman and the CEO of Steinhoff International. He was 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. The share price of their conglomerate reached a peak in March 2016, favouring their strategy of paying for dividends and acquisitions by sales of stock.
Following a dispute with business partner Andreas Seifert, European regulators, journalists and law enforcement were alerted to the conglomerate's inflated profit and asset values, besides off-balance-sheet deals with third parties, causing Deloitte LLP to demand an internal investigation before the 2017 financials would be signed off. Jooste resisted this demand and could not convince the Steinhoff board to appoint new auditors. Jooste submitted his resignation on 5 December 2017, followed by Wiese 9 days later when a large investor, PIC, called for independent oversight.
Jooste's sudden resignation was followed by an involved and protracted controversy concerning Steinhoff's accounting practices in its Central European business dating back to 2014. The resulting uncertainty saw some €10 billion (R160 billion) of Steinhoff's value wiped off the markets in a matter of days, with continuing losses as the situation unfolded. Insurmountable debts and claims would lead to Steinhoff's demise in 2023.
The ensuing 3,000 or 7,000 page PwC investigation directly linked Jooste and his CFO Ben la Grange to widespread fictitious transactions and accounting irregularities resulting in the Stellenbosch-headquartered company claiming R870 million from Jooste and R272 million from Ben la Grange in a summons lodged at the high court in Cape Town, which aimed to recoup salaries as well as bonuses. Aided by the Panama Papers, some journalists contend that insider trading had occurred since Steinhoff's listing in 1998, and that the company's top brass had 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.
As South Africa's Hawks investigative unit admitted to making no progress at all, while the NPA lacked the in-house skills to address crimes of this nature, criminal charges were not forthcoming. 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. The JSE has meanwhile found Jooste guilty of two contraventions of listing requirements, and imposed a maximum fine of R15 million on him personally, while barring him from acting as a director of a listed company for a period of 20 years.
Early life Markus Jooste was born on 22 January 1961. His 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.
Jooste 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 where one of his audit clients was a company then owned by Christo Wiese.
Career 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 then owned over 40 retail outlets,. 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, alleged 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 proposed 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.
Steinhoff scandal
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. Chairwoman Heather Sonn revealed later that Steinhoff’s proprietary electronic records had been destroyed, complicating their investigation. In a letter to staff on his resignation, Jooste apologized for "big mistakes" and that he had caused bad publicity for the company. In an SMS sent on 6 December to former Steinhoff director Jo Grove, Jooste supposedly admitted that he had tried to cover up the impact of losses incurred by Steinhoff's American assets. 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.
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.
It was soon labeled as the biggest corporate scandal in South African history and the biggest corporate crash in the country's history. As a result of Jooste's resignation, $11.4 billion was wiped off the value of the global furniture and clothing retailer. This in turn had a ripple effect on several other companies, including its subsidiary Steinhoff Africa Retail (Star), which may have guaranteed some of Steinhoff's debt. In seven days of trading, the Johannesburg exchange was hit by losses totaling about R295 billion ($24 billion), equivalent to 8% of South Africa's GDP.