Braam van Huyssteen, the 53-year-old founder of Tekkie Town, has some pretty unpleasant things to say about the sordid governance at Steinhoff Africa Retail (Star), the company that split off from Steinhoff in 2017.
Van Huyssteen is gruff and direct — as you’d expect from a man who built a billion-rand shoe empire from the southern Cape town of Mossel Bay with just R20,000 borrowed from his family in 1989. It’s a story that led to him following in the footsteps of Adrian Gore and Brian Joffe to be picked SA’s entrepreneur of the year in 2011.
Van Huyssteen’s bad luck was bumping into Markus Jooste, Steinhoff’s former CEO, on the racetrack years ago. They got on so famously that, in 2016, Steinhoff paid R3.2bn to buy Tekkie Town from Van Huyssteen and the 1,100 staff who owned it. Disastrously, Jooste paid them in Steinhoff shares. More disastrously, a lock-in clause prevented them from selling any of those shares until 2019.
As Steinhoff’s stock has plunged 97% since December, you can see why Van Huyssteen is mightily displeased.
But what really irks him is that while his staff lost big, Star is sticking to a plan for its shareholders to bail out its top brass for the fall in value of their personal shares in Steinhoff. This will be done under a R440m guarantee Star provided to a company called BVI 1499, owned by 70 Pepkor executives, to finance share purchases.
Says Van Huyssteen: "The way I see it, if you take something without permission, it seems like theft. Star shareholders didn’t agree to bail out these executives — why should they? We lost everything too, so why should shareholders rescue [the Pepkor executives]?"
What is remarkable about this spat is that until last week, Van Huyssteen headed Star’s property arm, which ensured the various stores in the stable — Joshua Doore, Pep, Shoe City and Tekkie Town — got fair leases.
Then, last week, he says he was forced out by Star CEO Leon Lourens. "[Star] unilaterally removed me as the chair of the properties division and the executive committee. I’d had a five-year contract with Steinhoff, so this, I believe, amounts to a breach of contract," he says.
Already in January, Lourens had told Van Huyssteen that while he was a great entrepreneur, he wasn’t cut out for corporate life. He suggested Van Huyssteen resign.
Van Huyssteen refused. "In May they tried to manufacture a disciplinary case against me, but it was a poor case. The only substantial charge they had was for calling Lourens a liar, which ... I’ll stand by to my grave," he says.
That charge, he says, stems from the fact that Lourens promised, within 24 hours, to give details of how he saw Van Huyssteen’s future in the company — but then didn’t.
It’s a bitter rift, especially as Tekkie Town slotted neatly into Steinhoff before being shifted to Star. But after the fraud emerged in December, the knives came out.
"The cultures were like oil and water," says Van Huyssteen. "We watched every cent, but the guys from Pepkor were very arrogant. When I told them they were overpaying for leases, they were very embarrassed."
There are other reasons, too. When you fold a business built by a hard-nosed founder into a hierarchical, highly disciplined corporate, you often get friction. Here, Star was also dominated by the Pepkor old guard, who were seething about being tainted by the Jooste scandal and keen to distance themselves from his deals. (To add further distance, Star will now rename itself Pepkor.)
While many South Africans were hurt by Jooste fiddling the Steinhoff books, the hardest hit were those within his inner circle
— Rob Rose
It does seem true that Van Huyssteen isn’t a corporate guy. He reveals that he was flabbergasted when, "in my first Star executive committee meeting, they spent five of the seven hours discussing their incentive schemes and their salaries. I switched off. The way I grew up, [you] look after the business first — not yourself".
Warren Erfmann, a former Tekkie Town director who was once CEO of Barloworld Logistics, says: "In all my years, I’ve never seen a company bailing out executives like this, at the expense of shareholders."
What makes it worse, says Erfmann, is that when Star was asked if it would bail out the Pepkor executives, the company denied it. "That was a lie," he says.
At this week’s Star results, Lourens defended his company’s decision not to reveal the R440m liability to investors until last week. "To be honest, when we listed, it was the furthest thing from our minds that this scheme would ever go under," he said.
Lourens admitted to the FM that "from a cultural point of view, maybe things didn’t work out very well".
But at this point, it seems there aren’t many choices. One option is for Tekkie Town to be sold to someone else; another is for Van Huyssteen to start a rival firm.
Asked about this, Lourens said: "If anyone comes to us with an offer for one of our businesses, like Tekkie Town, it’s something we’ll consider."
That would be Star’s loss: the results this week showed that sales growth in the footwear cluster, led by Tekkie Town, was 17.3%.
It’s clear this bitter fallout would not have happened had Jooste not fiddled the books. And it’s a further illustration that while many South Africans were hurt by that, the hardest hit were those within Jooste’s inner circle.
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