How Markus Jooste conned SA’s brightest

GT Ferreira, widely acknowledged as one of the sharpest business brains ever produced in SA, is hurting plenty.

The man who in 1977 co-founded Rand Merchant Bank and FirstRand with just R10,000 in capital, alongside Laurie Dippenaar and Paul Harris, is one of the most high-profile of the Steinhoff victims.

Ferreira (70) and the farmworkers on his wine estate Tokara, which is on the Helshoogte Pass about 5km outside Stellenbosch, have lost more than R1.2bn due to the 97% plunge in Steinhoff’s share price since 2015, when they invested.

Though reluctant to discuss it, Ferreira admits it’s been exceptionally painful. "At first, when I found out what happened and the share fell, I went through so many emotions. Shock, disbelief, disappointment, disillusionment, anger — but mostly, self-doubt and self-recrimination. You start to ask yourself how it is possible you hadn’t seen what was happening."

Years ago, Ferreira befriended Steinhoff’s former CEO, Markus Jooste, as well as other members of the company’s top brass.

They had a lot in common: both lived in Stellenbosch, both owned wine farms (though Jooste sold his share in Klein Gastrouw to PSG founder Jannie Mouton years ago) and both were ambitious deal makers.

Ferreira says the friendship wasn’t the reason for the investment. Rather, he says, the deal "offered to us at the time was good value" based on the results Steinhoff had achieved over the previous few years, and the prospects it presented.

"But when this sort of thing happens, it makes it difficult to trust anyone around you," he says, before adding: "Especially the auditing profession."

The story is that for about 20 years, Ferreira owned a large stake of shares in PSG. Mouton is also a friend and they remain on good terms; they share a building on Stellenbosch’s Church Street.

But in July 2015, Ferreira accepted an offer from Steinhoff to swap those PSG shares for 5.96m shares in Steinhoff. "The offer came at the right time.

"It made sense: we were offered a chance to swap out of a smaller company and diversify our investment into a larger one which, at the time, seemed like it was taking over the world," he says.

That was the predominant narrative, as Steinhoff was swallowing everything in its path, including Conforama (bought in 2011 for €1.2bn), Pepkor (bought for R62.8bn in 2014), UK discounter Poundland (£597m in 2016), and Mattress Firm in the US ($2.4bn in 2016).

The exchange ratio looked attractive, so Ferreira agreed. At the time, Ferreira’s shares were worth R464m — today, they’re worth just R11m.

But perhaps worse is that Ferreira also swapped 10.1m shares held in a trust that he’d set up for employees of Tokara, which he bought in 1994. Tokara has become one of SA’s top labels, and was recently named one of only three SA wine farms among the world’s 50 most-admired wine brands.

Ferreira’s trusts were one of the more progressive schemes designed to assist farmworkers in Stellenbosch. Altogether, about 80 families benefited.

The employees’ investment was split in two: 5.2m shares in the Tokara BEE Trust, and 4.9m shares in the Tokara Employees Trust.

"I set those trusts up about 12 years ago for the benefit of the Tokara employees. I funded the trusts myself with my own money, and we started investing on behalf of the trustees in a variety of investments.

"They were mostly successful — especially the investments we made in the PSG Group," he says.

So when Steinhoff presented its plan to swap the PSG shares, Ferreira says "we unfortunately accepted the swap on behalf of the trusts as well". Those shares were worth R787m when they were bought in 2015, compared with just R18.9m today.

Says Ferreira: "It’s not the end of the road for those trusts though — this wasn’t their only investment. There are one or two other investments there that are quite valuable."

Five months after Ferreira swapped his shares, Steinhoff listed in Frankfurt, something Jooste described as a "big high point in our lives". Yet that week, prosecutors in Germany raided Steinhoff’s offices, suspecting criminal behaviour. At the time, Jooste dismissed this, saying "these things happen from time to time" and "for the company as a whole, this can really have no material effect whatsoever".

On December 5 last year, however, Jooste offered his resignation, admitting to having made "mistakes". The stock tumbled from R45.65 to just R1.85 this week.

Ferreira is not alone among friends of Jooste who ended up being deceived. Others include Danie van der Merwe, now acting CEO of Steinhoff, who worked with Jooste since 1998 and has been a big loser in hispersonal investments.

While Christo Wiese’s startling R59bn claim against Steinhoff may unlock a series of other claims, Ferreira has not yet lodged his own claim against the company. "We’re still considering our options," he says.

Despite all evidence pointing to a few specific individuals, Ferreira is reluctant to point fingers at anyone yet. "We need to give everyone the benefit of the doubt and wait for the report from [forensic auditor] PwC."

Ferreira remains a shareholder in Steinhoff and he believes the individual units like Pepkor will prevail.

"There are some phenomenal businesses. The question is whether they’ll continue under the Steinhoff flag, or separately. We’ll have to see," he says.