When Bernard Mostert received an SMS from Markus Jooste about Steinhoff’s implosion, he had no idea he was on the precipice of learning about the biggest case of corporate fraud in South Africa’s history.
The memory of that day is crystal clear, the former Tekkie Town chief executive tells the Mail & Guardian over the phone from his hometown, George, in the Western Cape.
“I was on the phone with a longtime friend of mine. I was driving home. It must have been around five in the afternoon … I said to him: ‘Listen, I have to go. A message has just come in that I don’t understand,’” Mostert says.
“My first thought was that it was likely a corporate political event. Company politics.”
It wasn’t just company politics. On 5 December 2017, Jooste suddenly resigned from the helm of Steinhoff amid an investigation into accounting irregularities at the firm. Steinhoff’s share price plunged by more than 95%, erasing tens of billions of rands in shareholder value.
‘Not in a million years’
Tekkie Town’s former owners — including its founder, Mostert’s longtime friend Braam van Huyssteen — were among the many shareholders who lost out as a result of Steinhoff’s decline. Just a year prior, Van Huyssteen and company agreed to relinquish their 59% stake in Tekkie Town in exchange for shares worth R1.85-billion in Steinhoff.
Tekkie Town’s former owners have since launched various court applications in an attempt to claw back what they lost. They contend that they were defrauded by Steinhoff.
In the latest round of their fight against Steinhoff, last week the former Tekkie Town owners applied to liquidate the JSE-listed retailer, citing its inability to pay its debts.
Shortly after the news broke, Steinhoff said it would oppose the court bid, suggesting that it is aimed at disrupting its proposal to settle the 100 separate legal claims against the company. Steinhoff announced the settlement plan in February. The settlement could see about R17-billion split between the claimants.
In his affidavit to the court, Mostert says that at face value the settlement is designed to rid Steinhoff of any further embarrassment arising from the claims. He also notes that, if the former Tekkie Town owners were to settle — foregoing any future rights of litigation against Steinhoff — they would receive only a fraction of the value they lost through the transaction.
Talking to the M&G on Monday, Mostert says he and the other Tekkie Town shareholders had zero reason to question their deal with Steinhoff. “They made very compelling arguments and they were very professional … What was presented to us, and what seemed entirely plausible at the time, was that Steinhoff was South Africa’s third-biggest company at that stage. It’s listed. It’s audited.”
What happened a year later, Mostert says, he could never have imagined. “Not in a million years. If anything, we thought we were moving from an environment where our own controls were very stringent, to a listed company in which the controls would be even more stringent.”
In March 2019, Steinhoff released an overview of a PricewaterhouseCoopers investigation into the alleged accounting irregularities. The report found that over a number of years former Steinhoff executives concluded various transactions while substantially inflating the firm’s profit and asset values. Steinhoff has yet to release the full 10 000-page report.
Up in flames
In the first months after Steinhoff’s collapse, Mostert was sure any wrongdoing would be corrected. “You know, I’m a Christian. I take a lot from my faith. And at the time, I thought that justice would prevail,” he says.
Believing the matter would be put to rest, Mostert says he spent his time checking in on his colleagues within the Steinhoff Group. “It was just to make sure that they were okay. I was genuinely fearful that someone would take their life. Because you had people who saw their entire life’s work and their reputations go up in flames,” he says.
“For me the preservation of sanity and human life was a priority. And telling people that there would be another sunrise was important. So that was driving my behaviour in December 2017.”
The former Tekkie Town owners, who at the time occupied top positions at Steinhoff Africa Retail (Star), knuckled down to deliver good results, Mostert says. “At the time I didn’t even contemplate that we would be putting those results on the board so that somebody else could walk off with the spoils.”
In 2018, Van Huyssteen resigned from his position at Star, claiming he was pushed out. Mostert was next. About 100 other former Tekkie Town employees followed Mostert and other senior managers out of the company’s head office.(Star changed its name back to Pepkor in 2018.)
On one level the moment was a touching act of solidarity, Mostert says. “But on another level you have this anxiety of, what are you going to do now to look after these people? How are you going to keep them busy and how are you going to give them purpose?”
The walkout fuelled Van Huyssteen and company to start again. They founded competing footwear company Mr Tekkie just a few months later.
A day in court
Mostert insists the fight against Steinhoff is about more than just money. “It’s about having our day in court … On another level, a lot of South Africans paid a very dear price for our constitution,” he says.
“Our constitution empowers us to have our day in court. So if nobody stands up to oppose this proposed settlement programme — which would effectively see no litigation and no prosecution — it would take away from the hard work that has brought our country to where it is.”
Veteran retail analyst Syd Vianello says the case for Steinhoff’s liquidation could be a difficult one to win with the proposed settlement looming over it. But, Vianello added, Steinhoff’s current value to shareholders is likely minimal. “If there is value, it’s not going to be much, let’s put it that way.”
Steinhoff currently only has a few assets of value, Vianello noted. “What else is left at the top? Debt — €9-billion of debt. That’s why it is a zombie company. Because it has got some assets, two of which are pretty valuable, and it’s got a hodgepodge of other assets. But it’s got a bloody fortune of debt.”
Until its debt is resolved, Steinhoff is going nowhere, Vianello added. “Therefore there’s an urgency to settle the debt, otherwise the thing will blow up. That’s the problem.”
A temporary suffering
Meanwhile, Mostert says the former Tekkie Town cohort’s pursuit of justice has never wavered. “I often ask myself, ‘How will my children look at my behaviour one day and what will they say?’ And hopefully they will say: ‘My dad stood up against something that was wrong.’”
For Mostert, the ill-fated Steinhoff deal has come with more than a financial cost. “I think there is an element of post-traumatic stress that lives with you forever. It makes you a little more distrusting. It makes you a little more sceptical,” he says.
“I probably don’t see the impact as much as my family or my friends do. It is traumatic. But at the same time a lot of the applicants have suffered a great deal more than we have.”
He adds: “We are currently embroiled in litigation and we are denuded of our company. But we are highly confident that we will get our business back. So it is a temporary suffering.”