Steinhoff’s Jooste accused of ‘naked fraud’

The liquidation hearing of Markus Jooste-owned Mayfair Speculators was postponed to next year, after Judge Siraj Desai ruled that the matter needs a full hearing, as it has far-reaching implications.

In court papers supporting the liquidation application, Absa accuses Jooste and Stefan Potgieter, his son-in-law and currently the sole director of Mayfair Speculators, of “naked fraud” following representations made to Investec and the transfer of assets from Mayfair Speculators to its holding company.

Gavin Woodland SC for Absa. Picture: Tony Beamish

The court papers suggest that Mayfair Speculators owes three banks more than R1.2 billion. Absa claims R226 million, whilst Investec and Sanlam are owed R250 million and R800 million respectively.

Brendan Manca SC on the right for Mayfair. Picture: Tony Beamish

These loans were secured by Mayfair Speculators’ holding of Steinhoff shares. The banks have now called up these loans after Steinhoff’s shares fell from around R60 to less than R5 in recent weeks, following one of the largest ever corporate scandals in South Africa.

Judge Desai said during the hearing that the matter is of “great importance” for several parties and postponed the matter to late in January.

In an explosive affidavit dated December 17, which includes more detailed information than the affidavit signed on December 14 on which this article was based, Absa manager Hester van Niekerk alleges that Jooste concluded several finance transactions prior to Steinhoff’s board announcement on December 6. She says Jooste must have known at that stage that there were financial irregularities in Steinhoff and that this would negatively affect the share price.

She says Mayfair Speculators, represented by Potgieter, with the backing of Jooste, “induced Investec at the end of November to advance a further amount of R93 509 000 as recorded by Investec (in its application), both Potgieter and Jooste must have known, when Speculators applied for and received the further advance from Investec, that the collapse in the Steinhoff share price was imminent. They intentionally failed to disclose these facts to Investec.”

Elsewhere in the affidavit, she says: “There can also be little doubt that the conduct of Potgieter and Jooste in inducing Investec to advance a further amount of approximately R95 million to Speculators on 29 November 2017 was also nothing less than naked fraud. It constituted a further step in the fraudulent course of conduct.”

Van Niekerk also states that the transaction concluded in August through which assets of around R1.5 billion were moved from Mayfair Speculators to Mayfair Holdings constitutes fraud.

“The Applicant (Absa) contends that in declaring the dividend in specie to (Mayfair) Holdings, (Mayfair) Speculators effectively disposed of assets to the value of R1.5 billion when Jooste was a director.

“Jooste and Potgieter knew that when these facts (regarding the financial irregularities) came to light, Steinhoff’s shares would plummet, the loans to the Applicant, Sanlam and Investec would become due and payable and (Mayfair) Speculators would not have sufficient liquidity to discharge those debts. The inevitable consequence would be that there would be an application for the winding-up of (Mayfair) Speculators and that the assets which formed the subject of the dividend in specie would remain ‘trapped’ in the estate of Speculators and be sold by the liquidators in order to discharge the debts owed to the three lenders.

“In the circumstances, the declaration of the dividend in specie by (Mayfair) Speculators in favour of (Mayfair) Holdings constituted nothing less than a fraud, the aim of which was to denude (Mayfair) Speculators of its assets so as to benefit Holdings and the Silver Oak Trust and its beneficiaries which are, in all likelihood, Jooste and his family.”

The only directors of both Mayfair Speculators and Mayfair holders were Jooste and his son-in-law, Stefan Potgieter. Jooste has subsequently resigned. The affidavit also alleges that Mayfair Holdings has liabilities of approximately R1.47 billion and assets of R108 million.

Mayfair has not yet filed responding papers and is expected to do so before next year’s hearing.

Read the full court order and affidavit here.

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