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Rob Rose - Steinheist: Markus Jooste, Steinhoff & SAs biggest corporate fraud

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The Steinhoff crash wiped more than R200bn off the Johannesburg Stock Exchange, erased more than half the wealth of tycoon Christo Wiese and knocked the pension funds of millions of ordinary South Africans. When this investors darling was exposed as a house of cards, tales of fraudulent accounting, a lavish lifestyle involving multimillion-rand racehorses and ructions in the Stellenbosch mafia made headlines around the world. As regulators tally up the cost, Financial Mail editor Rob Rose reveals the real inside story behind Steinhoff. Based on dozens of interviews with key players in South Africa, the UK, Germany and the Netherlands and documents not yet public Steinheist reveals: how Bruno Steinhoff formed the company by doing business in the Communist bloc and apartheid South Africa; how the Markus myth started in the dusty streets of Ga-Rankuwa and grew thanks to a bit of luck in a 1998 takeover; how Jooste insiders shifted nasty liabilities off Steinhoffs balance sheet to secretive companies overseas in order to present a false picture of the profits; how Wiese was lucky to lose only R59bn and how Shoprite narrowly escaped getting caught in Steinhoffs web; and what happened behind closed boardroom doors in the frantic week before Jooste resigned.

Rob Rose: author's other books


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Notes CHAPTER 1 Abram Brown The billionaire African behind the - photo 1
Notes

____

CHAPTER 1

Abram Brown, The billionaire African behind the continents greatest retail empire, Forbes , 1 March 2016.

Elisabeth Dostert, Aufgewachsen im Mbelhaus, 17 May 2010, Sddeutsche Zeitung , http://www.sueddeutsche.de/wirtschaft/das-unternehmen-xxxlutz-aufgewachsen-im-moebelhaus-1.772489.

Von Henryk Hielscher, Prozess um Mbeldiscounter Poco startet im Juli, Wirts chaftsWoche , 26 May 2017, https://www.wiwo.de/unternehmen/handel/steinhoff-prozess-um-moebeldiscounter-poco-startet-im-juli/19849978.html.

Ursula Schwarzer and Sven Clausen, Einstrzende Neubauten, 24 August 2017, Manager Magazin , https://heft.manager-magazin.de/MM/2017/9/152773870/.

Paul Theron, interview with author.

Interview with author.

Interview with author.

Bethany Mclean, The smartest guys in the room: The amazing rise and scandalous fall of Enron, Portfolio Trade , 2003.

CHAPTER 2

Interview with author.

Jonathan North, Soviet prisoners of war: Forgotten Nazi victims of World War II, World War II magazine, January 2006.

Ibid.

H. Giliomee, The Last Afrikaner Leaders: A Supreme Test of Power (Tafelberg: Cape Town, 2012).

Transcript of recordings made in 2013 to celebrate Steinhoffs 15-year anniversary of its JSE listing, in possession of author.

Ibid.

Kerstin Schumann, Sie geben Westerstede ein Gesicht, NWZOnline , 26 February 2016, https://www.nwzonline.de/ammerland/wirtschaft/sie-geben-westerstede-ein-gesicht_a_6,1,506044866.html.

Heiner Otto, Hard-working: Via Bremerhaven to Sylt, NWZOnline , 18 June 2018, https://www.nwzonline.de/bremerhaven/bremerhaven-riesen-radtour-fleissig-treten-ueber-bremerhaven-nach-sylt_a_50,1,3311206954.html.

CHAPTER 3

Alec Hogg, Markus Jooste on losing bids, building Steinhoff and drawing inspiration, BizNews.com, 3 June 2016.

Ibid.

Thys du Toit, interview with author.

Author discussion with Rian Oberholzer.

Adele Shevel, Following in the steps of a master deal-maker, Business Times , 24 May 2015.

Interview with author.

Alec Hogg, Markus Jooste on losing bids, building Steinhoff and drawing inspiration, BizNews.com, 3 June 2016.

David Meades, interview with author.

Michael Delport, interview with author.

Companies and Intellectual Property Commission (CIPC), directorship records for MJ Jooste and MM Delport.

Transcript of recordings made in 2013 to celebrate Steinhoffs 15-year anniversary of its JSE listing, in possession of author.

Ibid.

Ibid.

Ibid.

Terence Craig, interview with author.

Author interview with former Steinhoff colleague, who spoke anonymously.

Author interview with Cape Town businessman, who spoke anonymously.

Christopher Rutledge, interview with author.

Christopher Rutledge, The seagulls name was Markus: Steinhoff and the Stellenbosch Mafia, Huffington Post, 12 December 2017, https://www. huffingtonpost.co.za/christopher-rutledge/the-seagulls-name-was-markus-how-a-patriarchal-culture-at-steinhoff-allowed-it-to-hide-the-losses_a_23303325/.

Christo Wiese, interview with author.

Fredrick Kunkle, Here are some takeaways from the Uber founders departure, Washington Post , 20 June 2017, https://www.washingtonpost.com/news/tripping/wp/2017/06/20/here-are-some-takeaways-from-uber-founders-departure/?noredirect=on&utm_term=.0862061ab77c .

Dr Mary Lamia, The psychology of a workplace bully, The Guardian , 28 March 2017.

Christopher Rutledge, interview with author.

Transcript of Steinhoffs 15th anniversary recordings.

Ibid.

Abbigail Chiodo and Michael Owyang, The case study of a currency crisis: The Russian default of 1998, November 2002, Federal Reserve Bank of St Louis, https://research.stlouisfed.org/publications/review/2002/11/01/a-case-study-of-a-currency-crisis-the-russian-default-of-1998.

Ibid.

International Monetary Fund, The crisis in emerging markets, from Spillover Effects among Emerging Markets: The Extent of Differentiation .

Transcript of Steinhoffs 15th anniversary recordings.

Steinhoff pre-listing prospectus, 9 September 1998, p. 27; and for comparison, Steinhoff annual report 2000, p. 44.

Interview with author.

Ibid.

Transcript of Steinhoffs 15th anniversary recordings.

Ibid.

Author interview with former Steinhoff banker.

Allen Swiegers, interview with author.

David OSullivan, discussion with author.

Author interview with Rutledge.

CHAPTER 4

Knysna Woodworkers, http://knysnawoodworkers.co.za/articles/knysna-woodcutters-3/.

Barloworld sells timber stake to Steinhoff, Fin24 , 5 July 2001, https://www.fin24.com/Companies/Barloworld-sells-timber-stake-to-Steinhoff-20010705.

Judgment by Judge Owen Rogers in the Western Cape High Court, Kluh v SA Revenue Service , 9 September 2014, paragraph 11.

Steinhoff annual report 2002, pp. 81 and 100.

Kluh v SA Revenue Service , judgment, paragraph 12.

Ibid., judgment, paragraph 34.

Ibid., judgment, paragraph 19.

Forestry South Africa, statistical data industry facts 1980 to 2016, http://www.forestry.co.za/statistical-data/.

Kluh v SA Revenue Service , judgment, paragraph 19.

Moneyhouse Swiss company records, accessed by author, https://www.moneyhouse.ch/en/company/fihag-finanz-und-handels-13199007851/messages.

Affidavits, obtained by author.

Stehan Grobler, interview with author, 2011.

Rob Rose, Taxman targets the rich, Sunday Times , 9 October 2011.

Blog post on African Betting Clan, 10 October 2011, https://www.africanbettingclan.co.za/index.php/kunena/abc-forum/13805-the-tax-man-cometh.html.

David Clegg, Do SARS and the courts have a Kluh?, Tax Talk magazine, March 2017.

Adele Shevel, Steinhoff ready for European retail takeover, Sunday Times , 27 February 2011.

Transcript of recordings made in 2013 to celebrate Steinhoffs 15-year anniversary of its JSE listing, in possession of author.

Ibid.

Ibid.

Steven de Bruyn, interview with author.

Ibid.

Former Unitrans executive, interview with author.

The dangerous race to the bottom on corporate tax, Oxfam policy paper, 12 December 2016.

Danny Hakim, Europe takes aim at deals created to escape taxes, New York Times , 14 November 2014, https://www.nytimes.com/2014/11/15/business/international/the-tax-attraction-between-starbucks-and-the-netherlands.html.

Jeremy Kahn, Googles Dutch sandwich shielded 16 billion euros from tax, Bloomberg , 2 January 2018.

Alec Hogg, Markus Jooste: On losing bids, building Steinhoff and drawing inspiration, BizNews , 3 June 2016.

Presentation by Stehan Grobler, Will we see a return of traditional financing structures?, Karlsruhe, Germany, October 2010.

Steinhoff 2011 annual report, p. 12.

Announcement by Steinhoff, Hemisphere real estate valuation, 3 April 2018.

Andrew Cuffe, interview with author.

CHAPTER 5

Craig Butters, interview with author.

JP Morgan equity research by Sean Holmes, Steinhoff: flatters only to disappoint, 3 April 2007, in possession of author.

Andrew Cuffe, interview with author.

Ibid.

Greg Davies, interview with author.

Steinhoff Africa Retail pre-listing prospectus, 4 September 2017, accessible from https://star-group.co.za/2017-listing/, p. 30.

Miles Johnson and Ben McLannahan, JP Morgan reveals paper Steinhoff loss of $143m, Financial Times , 12 January 2018.

Ibid.

Mark Baker, US banks face more taxing issues than meets the eye, Euromoney , 26 January 2018, https://www.euromoney.com/article/b16ngtvd4gkysq/us-banks-face-more-taxing-issues-than-meets-the-eye.

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