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The Cult of Markus

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There was little to suggest, at least initially, that Markus Jooste, the polite and mild-mannered accounting whizz-kid who had introduced himself to Bruno Steinhoff that day in Westerstede, would become the central figure in what could turn out to be South Africa’s greatest con.

Jooste had grown up in the country’s capital, Pretoria, finishing school at the government-run Afrikaanse Hoër Seunskool, known as Affies, in 1978. In those days, there wasn’t a huge amount of money in the Jooste household: his father worked as a civil servant for the Post Office in Bosman Street, in central Pretoria. It is clear that Jooste idolised his father, who, he said, would spend hours helping him with his homework. “He put his whole life into his children,” he said during an interview in 2016. “He couldn’t afford other things, so that probably helped a lot. He built that drive to be successful.”1

Jooste’s father, however, liked a flutter on the ponies apparently. In those days, there was a betting shop called Tattersalls next to the Post Office in Pretoria. So, on race days, Markus would go with his father to Tattersalls to take a punt. “The experience was totally different in those days. You listened to the commentary via radio. At the age of 12, I was what you call a runner – the guy who ran between bookmakers with tickets laying off their bets with each other.”2 It was exhilarating for the boy to see wads of money being won and lost in an instant, but the betting left a bad taste in his mouth. It stuck with Jooste, so much so that when he later bought racehorses himself, he’d proclaim that he never bet a single cent himself.

Allen Swiegers was one of Jooste’s classmates at Affies, who went on to bigger things. Like Jooste, he studied accounting (though he went to the University of Pretoria, not Stellenbosch). Swiegers would spend much of his career at the auditing firm Deloitte. By the time he retired in 2016, he was Deloitte’s chief operating officer in Africa. “Markus was a popular guy and very social, even though he wasn’t part of the crowd of boys who played rugby seriously,” says Swiegers today. “He was clearly very intelligent, though he wasn’t one of those pupils who aimed to get seven distinctions. He wasn’t top of the class, but he was clearly smart, and Affies took its academics very seriously.”

At the time, Jooste was one of only a few of the Affies pupils to go on to study accounting. “Studying accounting wasn’t sexy in those days,” says Swiegers. (Sexy is perhaps not even a term you’d use too quickly to describe the profession even today.) “Kids became doctors and lawyers – it was what most of those ‘seven distinction guys’ went on to study. That’s what your parents wanted. So Markus and I were outliers.”

From Affies, Markus Jooste won a scholarship to Stellenbosch University. The bursary didn’t pay for everything, so despite the vacation work he did at the small accounting firm of Theron van der Poel, he left university with a student loan debt of R100,000 (or so he claims). Never having had much money early on bred an intense desire to succeed, say those close to him. This drive was already evident early on in the legend that he obtained the highest mark in the country in his board exams.

By coincidence, Johann van Rooyen, the son of the Pep founder, Renier van Rooyen, also began studying at Stellenbosch in 1979, the same year as Jooste. They ended up in the same elite residence, Wilgenhof, as did Rian du Plessis, Markus Jooste’s long-time family friend who’d later become CEO of the racing group Phumelela. “We were in different streams,” says Van Rooyen today from Vancouver, where he now lives. “He was doing accounting, I was doing law. I was an avid supporter of the Progressive Federal Party (PFP) and I don’t think we shared the same political philosophy, so we weren’t close.” Van Rooyen says Jooste had his own clique, often consisting of others from upcountry and especially Pretoria. “I remember him as the sort of person who aspired to be popular and part of the in-crowd.”

Some say Jooste used to boast about his sporting prowess – how he’d played squash for Northern Transvaal. Which, of course, he hadn’t. Others say he was initially unobtrusive: a sluiper – somebody who doesn’t really participate in the sort of extra-curricular jollies you’d expect of students at universities. When he became more senior, he’d relish inflicting embar­ras­s­ing initiation rites on first-year students – something for which Stel­lenbosch was notorious at the time. “If there was some fun to be had, such as catching and ‘punishing’ passing students who shouted ‘bekfluitjie’, you’d find Markus at the centre of the obligatory cold shower, or dunking a bucket of water over the offender’s head,” says Van Rooyen.

Thys du Toit, who later founded Coronation Fund Managers in 1993, was two years ahead of Jooste at Stellenbosch. “One businessman I knew had this saying: employ them poor, bright and with a deep desire to suc­ceed. That was Markus to a T. He has an unbelievable drive to become successful, come what may,” says Du Toit today.3

There were others who studied with Jooste who’d go on to make head­lines too. Someone else who shared the same residence with Jooste was one of the best players ever to pull the national rugby jersey over his head, Carel du Plessis, who would play twelve times for the Springboks during the apartheid years. At the time, Wilgenhof was seen as the Petri dish for creating future Springbok rugby players. The housemaster at Wilgenhof was Danie Craven, the legendary and longest-serving president of the South African Rugby Board, from 1956 until 1993. Jooste was one of a minority at Wilgenhof who didn’t play rugby, but he was still quite close to Du Plessis. Today, Du Plessis doesn’t want to say much about Jooste. “He was a smart guy, a top student, but we didn’t really stay in touch,” he says.

The man who would ultimately take Craven’s post as head of SA Rugby was also in Jooste’s orbit: Rian Oberholzer, who as boss of the rugby federation presided over an infamous army-style training camp called Kamp Staaldraad. Contacted today, Oberholzer says he doesn’t want to discuss Jooste at all: “I don’t want to get involved in this.”4

Jooste did his articles – the apprenticeship required of accountants and lawyers – at a Cape Town law firm called Greenwoods. Today, it is called Baker Tilly Greenwoods. In the evenings, he studied for his honours degree in accounting with the University of Cape Town. At the time, he shared a house in Cape Town with two people who’d remain trusted friends in Jooste’s life and, later, became colleagues at Steinhoff: Jan van der Merwe and Frikkie Nel.

Jooste would describe their relationship as one of “full trust”, saying that whenever a job came up, “we always looked for somebody within the circle who we could put in”.

Fortuitously, on the first day of his articles with Greenwoods in 1982, Jooste was part of the audit team assigned to a company owned by Christo Wiese, called Octha Diamonds. Both Octha and Greenwoods shared office space in the old Trust Bank building in Cape Town. At that stage, Wiese was an entrepreneur who had a stake in the emerging low-cost clothing powerhouse Pepkor, but he hadn’t yet taken control of the company. He wasn’t then the rock-star businessman he’d later become.

Jooste, speaking about that first meeting years later, says that Wiese made an instant impression on him. “Christo impressed me – he built things, put deals together. I thought, I wanted to be like that.”5 Wiese says he remembers Jooste, but at the time he was one of many accountants coming through his business. “I noticed him as a bright young guy. I’m told he got the top mark in South Africa when he wrote his board exam, so he’s clearly the sort of guy you’d notice.”6 Then Wiese bought control of Pep, and moved to his office in Parow. He lost touch with Jooste. “From time to time, I heard from friends of mine in Hermanus that this young Jooste guy is smart and is building a great business, but I didn’t meet him again for years.”

Jooste’s ambitions in the 1980s went far beyond simply remaining an accountant, sentenced to a life of spreadsheet-constrained drudgery. As he said in one interview: “At 24, I left the auditing firm the day of finishing my articles because I knew that I had to do something for myself – the next morning I became a shareholder of my biggest client at the auditing firm. I think it’s in your blood to want to have ownership.”7 Or perhaps, more accurately, to become wealthy. One of Jooste’s mantras – one he would repeat to people he’d want to hire – was that you can’t get rich by earning a salary. So, he’d liberally dose his executives with share options.

Jooste and Jan van der Merwe, his former housemate, were then con­scripted to serve in the South African Defence Force in 1985, back up on the Highveld in Pretoria. At the time, “national service” was just the way it was for white men, who were forced to serve two years in the army. If you were lucky and had skills, you’d find yourself conscripted to somewhere relatively benign – a desk job perhaps – rather than wedged inside a Casspir army vehicle on any smoke-filled street in Soweto, firing a volley of tear­gas canisters to choke those rioters who’d dared demand the vote. So, with his accounting degrees, Jooste scored a job at the Receiver of Revenue, the tax authority, as a deputy director during his army years. The insight gained by working for the Receiver must have been invaluable training for a man who, later, seemed to be able to find every trick in the book – and some that weren’t in any book – to reduce his tax burden.

Jooste was itching to run his own company, however. So, after the army, he began working for an older businessman named Michael Delport, who ran various companies in a desolate place in the sticks called Ga-Rankuwa. David Meades, a veteran stockbroker who was also a journalist for many years, knew Delport well. “Michael’s family had large asparagus farms in the Northern Cape, but he’d decided to move to Brits, near Pretoria,” says Meades, who has since retired to Somerset West.8 “One day, I was visiting him, and he was gushing about how he’d hired this smart young accountant named Markus Jooste, who was probably only around 25 or 26 years old, but who was clearly going places.”

To deem Ga-Rankuwa “unfashionable” is like suggesting China has a few quibbles with free speech. During the apartheid era, Ga-Rankuwa’s barren, rust-red soil made it the ideal dumping ground to which the National Party confined black people, declaring it part of the so-called independent homeland of Bophuthatswana. The people who were corralled into Ga-Rankuwa were largely labourers who worked on the motor vehicle plants outside Pretoria. Today, the industrial area Ga-Rankuwa is a knotted collection of rusted barbed wire, soulless warehouses, peeling walls where aspiring backyard panelbeaters have scrawled their numbers, and adverts for cheap beer by the case. There’s hardly a blade of grass to be seen. This was hardly an auspicious place for the young Jooste to kick-start a dazzling career that would take him to the showrooms of France or the trading floor of the Frankfurt Stock Exchange.

Today, Michael Delport says that Markus Jooste first arrived at his door as an articled clerk, when Greenwoods came to audit various companies, which Delport owned. “I thought he was bright, and I needed a financial guy. He came to work for me, and was pleasant. I could see he was clever – he could think ten years ahead of me.”9 Delport said that eventually they parted ways. “I was probably not on a hunting trail to take over every other business – maybe I thought too small. I like to keep it simple and I don’t want to go into a lot of debt.” But Delport says he never saw anything shady with his company’s finances. “I trusted the books and would have known if anything was wrong.”

Quickly enough, Delport, who was fifteen years senior to Jooste, faded out of the picture. But official Companies Office records show that he and Jooste had a long association until the mid-1990s, both being joint direc­tors of various companies, including Jurgens.10 But Jooste was, in his bones, a dealmaker. So, when he and Delport were offered the chance to sell their business to the canning company Gants, they leapt at it. “We sold, got paid, and actually were without a job the next day. And for both of us, it was a thing that we didn’t expect in the hype of doing a very good financial deal, in those early days,” said Jooste in an in-house recording made in 2013.11

Then, a moment of remarkable serendipity broke. “We saw a sign oppo­site the street in Ga-Rankuwa, where our canning factory was, saying that on Saturday there’s an auction, to auction off a building. So, on the Saturday we went to the auction and we bought the building, for the simple reason that there was a separate little office park which was empty – and in the building Gomma Gomma was the tenant.” It meant, at least, that he and Delport had a place to go on Monday morning. At the time, Gomma Gomma was largely owned by a man called Rafie Steel. But within three or four months, Steel ran short of cash, so he went to speak to Jooste and Delport. Jooste says: “We got involved, and we recapitalised the com­pany Gomma Gomma and took control. And that’s how we entered the furniture business. So, it was actually by total default. So, don’t believe it’s all a strategy that Steinhoff started many years ago.”12

Jooste’s belief was that the series of steps that led Gomma Gomma from the industrial wasteland of Ga-Rankuwa, to the Westerstede office of Bruno Steinhoff, and ultimately to the Frankfort Stock Exchange, were the result of luck and circumstance more than anything else. “Nobody is clever enough to think out all these things. They just happen, and you must follow your nose . . . I think the big difference in life is with the people who take those chances that get offered to them – that’s really the difference.” Fateful words, in the light of what would happen to him two decades later.

Soon, Markus began repaying his earlier loyalties. Frikkie Nel, discussing Steinhoff’s origins in 2013, says that in the mid-1980s, “I got a phone call from Markus one day, and he said he was joining with Michael Delport, and they were looking for an accountant. I then decided to join them at Gomma Gomma.”13 Jan van der Merwe, who also joined, described it as a tough time. “It was a couple of us . . . getting into the furniture business: Markus running the company, doing the sales, Frikkie the financial director, Iwan looking at all the debtors and the creditors, and myself busy in the factory planning and loading trucks and doing the buying. There wasn’t place for all the accountants to do the financial work.”14

Gomma Gomma wasn’t exactly flush with cash, and it owed a small fortune to its bankers, Absa. Legend has it that cash flow was so tight that when people trudged the short distance from the office to the furniture factory, they’d pick up paper clips from the floor for fear of wasting resources. It sounds apocryphal, but you get the picture.

One thing it had going for it, however, was the fact that during the apartheid years the governing National Party had given plenty of tax breaks to companies to set up their businesses in the “independent home­lands” like Bophuthatswana. But then, for the first time in 1994, all South Africans got to vote for a new government and the winner was the African National Congress, led by Nelson Mandela. For Gomma Gomma, which was already on the breadline, the new regime presented an immense risk. Terence Craig joined investment company Allan Gray as an analyst the week of that landmark vote. A few weeks later, he and a colleague went to visit Gomma Gomma’s factory in Ga-Rankuwa, as Allan Gray had an indirect investment in it. “The first guy who walked up to me when I got there was Markus Jooste,” says Craig today. “Markus came across as very slick, in his Doc Martens shoes and his very polished manner, and he gave us a tour of the factory.”15 Craig was impressed. But as he was leaving, he posed one last question to Jooste: the reason you located Gomma Gomma in Ga-Rankuwa was because of the tax breaks from the apartheid gov­ernment. But now that democracy is here, this tax break will surely fall away. What will happen to Gomma Gomma – will it be profitable then? “Markus’s answer stuck with me until today,” he says. “No, we wouldn’t be profitable in that case, he said, but we’ll always find a tax break some­where.”

It is now more than twenty years later, but Craig says he has thought about Jooste’s answer plenty of times since the revelations of his she­nanigans first emerged.

* * *

Back in those early days, the furniture that Gomma Gomma churned out wasn’t especially memorable. For the most part, it consisted of run-of-the-mill upholstered lounge suites – as many as 150 on some days – as well as a range of coffee tables. But, apart from its massive upholstery and show-wood factory, the company did have one major asset that would in time attract the interest of potential investors: Markus Jooste.

In those early days, Jooste worked harder than anyone, regularly pulling 16-hour days. Often, he would stay up drinking brandy and whisky with his staff till 1 am or later, after a tough day. But he’d also be the first one up at 8 am, impeccably dressed, chipper and keen to get cracking. “He never really slept a lot,” says one person who knew him well. “It helped him get a lot done, while everyone else wondered how he found the time for what he did.”16 This never changed, even though Jooste later reached the sort of position where he could afford to take his foot off the accele­ra­tor. “He was the hardest-working guy I’ve ever encountered,” says someone with whom Jooste once did a deal. “I once flew to London on the same flight as Markus, and he worked the entire flight. He was going through a balance sheet, and he’d first mark it with a black pen, then a blue pen, then a red pen. When we landed I asked him, ‘Markus, did you sleep?’ He replied: ‘Ek het ’n uurtjie gevat.’”17

Throughout the years, Jooste would cultivate a reputation as a tough-as-nails boytjie. “Markus liked to party hard – staying up late and drinking with the boys. He was never far away from a double Johnnie Walker Black,” says one former businessman who spent plenty of time with him. Famously, Markus could out-drink many people.

Early on, one of the companies that Gomma Gomma bought was a fur­niture maker called Bakker & Steyger, based in Epping in Cape Town, which churned out dining-room suites, coffee tables, wall units and other timber products. Christopher Rutledge, who was a director at Bakker & Steyger in those days, says it was clear that Jooste valued loyalty above all. “He had his lieutenants, Frikkie Nel and Jan van der Merwe, who did every­thing for him. Every decision that was made would pass through them on the way to Markus. It was all about the old Stellenbosch club.”18

In those early days, Rutledge says the culture was rigidly homogeneous: uncompromisingly macho, Afrikaans and steadfastly patriarchal. Everyone deferred to Markus. “Even then, it was a red flag. The fact that he had this close group around him who weren’t prepared to challenge his decisions, who’d all come from the same place and wanted to preserve that hierarchy, was worrying. Markus was untouchable.” Rutledge recounted a story, which he’s also written about for a news website, that provides an insightful example of how Jooste operated. One Friday night, after 8 pm, Bakker & Steyger’s executives got an SMS from Markus, ordering them to be at the factory in Cape Town the next morning at 8 am sharp.19 When they got to the meeting the next morning, Jooste was in “full battle cry”. “He dragged the MD and the rest of the management team on a tour of the factory, pointing out pallets that were incorrectly stacked or unevenly packed, dust on the floor and any small infraction that could serve as fuel for his indignation and disgust at the quality of the management he was about to fire.” Eventually, after running out of steam, Jooste turned to the MD: “Get out of my fucking factory,” he told him. It’s a tale that illustrates the single defining characteristic about which many people agree: Markus was an epic bully.

Speaking about him today, Christo Wiese concurs Jooste was a male chauvinist, uncompromising and not shy to intimidate people. But he says that these were not red flags in themselves. If anything, they were a com­mendation. “That was his assertive style. But I can say I’m not aware of any of the CEOs of my companies, bar maybe one or two, who don’t have that sort of streak. It’s their way or the highway.” This is why Wiese says he has some sympathy for the executives now being blamed for not having detected Jooste’s shady goings-on. “I know how he operated – how he could intimidate people.”20

Wiese is certainly right that Jooste is far from the only exponent of strong-arm tactics in the mahogany row. One of the more famous recent examples was the pugnacious, thick-jawed Travis Kalanick, who was fired as CEO of Uber, but who had thrown his weight around to stifle all his critics.21 Dr Mary Lamia, a clinical psychologist and professor at the Wright Institute in California, says while people think bullies have low self-esteem, their behaviour is usually a response to internalised shame. “Although some people who live with shame have low self-esteem, those who behave like bullies tend to have high self-esteem and hubristic pride. They attack others to take away their shame.”22

The stories of Jooste’s swagger are legendary. Insiders say he would routinely tell his executives where they should be buying a house, what brand of whisky they should be drinking, and if any of them dared sell any of their Steinhoff shares, he’d be knocking on their door that night, asking what unfortunate event had prompted their display of disloyalty. When it came to property, for example, some of Jooste’s senior staff followed him to Val de Vie – the uber-wealthy estate nestled in Paarl in the Cape Winelands, about a forty-minute drive from Stellenbosch. Val de Vie is one of those few absurdly ostentatious places that outdo the bro­chures. A three-bedroom home at the estate goes for around R6m a pop, and even vacant land sells for more than R2m. But, then, perhaps that’s what you expect when your estate has its own wine cellar, coffee roastery, a Jack Nicklaus Signature Golf Course and a swimming school run by an Olympic gold medallist, Ryk Neethling. It bills itself as South Africa’s only “resi­dential polo estate”, which tells you pretty much all you need to know.

Jooste himself had bought land – a large stand next to a bridge over the Berg River – at Val de Vie in December 2015 that set him back R10.5m. (In the wake of Steinhoff’s collapse, he sold it for R13m, paying transfer fees of R1.7m.) But other Steinhoff executives also bought into Val de Vie, bonding themselves to the hilt, some using their Steinhoff shares as col­lateral. Those stories ended unhappily, when Steinhoff’s share price plunged 97%, and the banks came knocking.

Socially, Jooste was never shy of belittling even his senior executives. One person relates just such a tale: “There was this dinner party, attended by all Markus’s executives. As you do, everyone brought a bottle of wine, and one of his friends bought a bottle of average MCC champagne.” (MCC, which is shorthand for Méthode Cap Classique, is pretty much the South African equivalent of bottle-fermented champagne from France. But, unlike champagne, which goes for upwards of R500, you can pick up a reasonable bottle of MCC for around R120.) “Markus immediately held the bottle up and, in a booming voice, told the other guests: ‘Nou wat se kak is dit? Wie het dit gebring?’” Only, Jooste knew exactly who brought it – the act was designed to humiliate.

Often, even at public events, he’d have no qualms about deriding people, often within earshot. “He’d point at someone nearby, and say ‘Daardie een is ’n poes’. He didn’t seem to care that people could hear him,” said another former colleague.

Christo Wiese insisted he’d never seen Markus bully people like this. “That never would have washed well with me.” But other former colleagues say Jooste would revel in deliberately shaming others – be it a board meet­ing or a casual dinner. “He would go out of his way to make other people feel stupid,” said Christopher Rutledge. “Maybe that played a part in what happened later, and why people were too scared to challenge him.”23 Rutledge says that behind his back, those who worked with Jooste called him “the seagull” because “he would fly in, shit all over his executives and then fly out”. This contrast – between the charming, easy-going ladies’ man and the bruiser with the short temper – ensured Jooste remained enigmatic even to those close to him. Insiders speak of his split personality, and his remarkable ability to shift from Jekyll to Hyde.

“A lot of people at Steinhoff were scared of Markus,” says one senior person who worked with him for years. “He could treat people who reported to him really badly, so many people just didn’t want to approach him for anything.” But, conversely, if Jooste needed something from you, he would flip the switch and turn on the charm. So, for example, if you were an analyst covering his company from whom he wanted a good recommen­dation, or someone with whom he was making a deal, or his superior, he’d treat you like a king. “In that case, he’d really roll out the red carpet. I think, in retrospect, that’s why those guys he treated so well just can’t believe he’s the guy who did all this. They couldn’t reconcile it.”

But for those who reported to Jooste, he could be a tyrant. His own executives often didn’t have the stomach to challenge him, fearing the ferocity of his ridicule. “Some people say Markus was a good leader,” says a former colleague, “but I don’t think that’s true. If your staff are too scared to tell you what’s going on, how can that make you a good leader?”

The cult of Markus was kept alive, in part, by a culture of fear. But at the time his empire was expanding, and his cohorts were making money. Everyone was making money, in fact. And so, he could get away with it.

* * *

On 23 September 1998, Markus Jooste blew the horn to begin Stein­hoff’s era as a public company listed on the JSE in Sandton. It was the culmination of his and Claas Daun’s plan to stitch together Gomma Gomma and Bruno Steinhoff’s European furniture manufacturing assets under one roof. The sales pitch was that investors could now buy shares in a company that made most of its money in Europe, 82% of it actually, right from their desks in Joburg.

Jooste had finally made the big show. For the first time, the public was able to buy into his company, and the ticker symbol would appear in the stock pages of the Business Day newspaper every day. It also meant that for the first time, a wide array of South African pension funds were exposed to Steinhoff. But it nearly didn’t happen.

Ironically, listing on Johannesburg’s stock market was not the first place Steinhoff’s brains trust considered as an option to raise cash. At the time, in early 1998, Jooste was looking to buy a mattress supplier, but wasn’t sure where to get the money. So they bounced around the idea of listing Steinhoff in Frankfurt. The catch here, one to which Jooste was utterly allergic, was the requirement of having to dedicate half the seats on the boards to the trade unions. “It was unthinkable,” he said.24 They settled on Joburg instead. As a result, people would get the combined might of Victoria Lewis, Gomma Gomma, Bakker & Steyger, its recently purchased logistics company, Roadway, and a network of companies inside Steinhoff Europe, such as “young-style” sofa maker Poco and “country-style” upholstered furniture maker Conforta.

A stock exchange listing was a novel idea for Bruno Steinhoff, who, for 34 years, had never taken public money. “To go to the stock market was absolutely new for me,” he says. “I never learned that – I was never in a high school, I was always in my personal high school, learning everything by doing.”25 So, Steinhoff published a prospectus to woo investors. In it, the company billed itself as an “integrated lifestyle supplier that manufac­tures, warehouses and distributes furniture, bedding and case goods”. Steinhoff’s central competitive advantage, it said, was running its 43 fac­tories in low-cost emerging countries, and then selling furniture into the wealthier developed world. Pretty much Bruno’s modus operandi.

With Africa’s largest bank, Standard Bank, in charge of running the show, there was some interest from the pension fund managers who liked the idea of earning “hard currencies” like the soon-to-be floated euro. That August, Jooste and his executives went on a roadshow with potential investors to Europe. The plan was to hire a bus, and drive fund managers and analysts around Eastern Europe, showing them the factories in Poland and the distribution warehouses in Germany. It was atrocious timing. That month, Russia’s economy cratered, after months of being under siege from currency speculators. On 13 August 1998, its stock market collapsed, the yields on its ruble-denominated bonds spiked to more than 200%, and its currency collapsed.26 “Russian officials were left with little choice. On August 17th, the government . . . devalued the ruble, defaulted on its domestic debt, halted payment on ruble-denominated debt, and declared a 90-day moratorium on payments by commercial banks to foreign credi­tors.”27 The problem for Steinhoff was that all emerging markets, particu­larly Brazil and Mexico, had been sucked into the Russian slipstream. In the space of a few weeks between June and August, the rand fell by 20% against the US dollar.28 As the rand bled, skittish New York investment firms dumped any shares they had in emerging markets like South Africa, causing share prices to tumble. As the icing on this disaster, by early September, two weeks before Steinhoff’s planned JSE debut, South African interest rates hit 25.5% – the highest they’d been since before democracy.

On that European roadshow, the analysts were on the phone the whole time to their HQs: should we ditch the trip and fly home? Should we cancel the commitments we’ve made to these Steinhoff guys? One of Steinhoff’s executives on the bus got word from back home: “There’s blood on the streets – don’t even think about it.”

When Jooste got back to South Africa, some of the funds that had agreed to put in money did indeed renege on their plans to invest. Jooste asked Claas Daun what he reckoned they should do. “Listen, if you’re ready, go for it. Now is as good a time as any,” he replied.29 So, Jooste’s team gritted their teeth, and kept going. It was the sort of kragdadigheid – set-jawed bloody-mindedness – that became synonymous with Steinhoff.

Some concessions were inevitable, though, given what had happened in Russia. Initially, Jooste had wanted to list Steinhoff’s shares at R5 apiece. But the bankers cut this back to R4 a share. In the end, Steinhoff listed 650m shares, which began trading at R4 a share that morning. By the time the company’s top brass went for a bang-up self-congratulatory lunch at Sandton’s Michelangelo Hotel, the price had hit R5. “It was a huge mind-shift,” says someone who worked there at the time. “It was exciting. We were going to be a name that was going to appear in the paper every day. Suddenly, a lot of people knew who Steinhoff was, and it was a proud moment.” The listing was a success, raising R520m – even if it fell short of the promises made.

In the prospectus, Steinhoff set out some optimistic forecasts for its following year. It projected it would make total sales of R2.79bn and profit of R199m. This was a little too starry-eyed: for that year, it actually clocked up sales of R2.75bn and profit of R182m.30

One of the more interesting insights from this first prospectus is that it’s clear that, right from the beginning, Steinhoff had set its stall to pay as little tax as it could get away with. For example, it boasted of how “the tax rate and investor-friendly tax policy currently available in Poland is one of the major reasons for Steinhoff’s expansion into that country”. Jooste, as one of the smartest guys in the room, with some experience of working in the bowels of the Revenue Service, wasn’t going to let the taxman take more than he was due.

* * *

Nothing did more to fuel the cult of Markus Jooste than a series of for­tuitous events in 1999 that led to Steinhoff’s first major deal: the stealthy takeover of Pat Cornick for an absolute steal. This is the story. In 1997, the 800-pound gorilla of the local business sector was South African Breweries (SAB), which had tentacles everywhere, from hotels (through Southern Sun) to food (in OK Bazaars) and fashion (Edgars). It also had interests in the furniture sector, through a company called Afcol, which was worth R2bn and which controlled about 40% of its market. At the time, Afcol was an impressive beast, containing the Transvaal Mattress Company (which produced the first Sealy Posturepedic mattress in the country in 1967), Edblo, Grafton Everest and others. But SAB was trying to slim down, so it put Afcol up for auction. Steinhoff put together a bid, delivering an offer for Afcol of R17.25 a share in a sealed envelope. As it turned out, that wasn’t rich enough for SAB, as a rival furniture company called Pat Cornick pitched up with an offer of R17.50 per share for Afcol. Everyone expected a knock-down punch-up for Afcol. But to everyone’s surprise, Steinhoff threw in the towel. “Claus Daun said that’s too much, and we walked away,” said Jooste later.

For Pat Cornick, it appeared to be a coup. With Afcol in its stable, Cornick instantly became the largest furniture manufacturer in the southern hemisphere. But Afcol, it turns out, was the straw Cornick shouldn’t have clutched at. For one thing, its American buyers stopped paying for the goods they were getting, leaving Afcol with R20m in bad debts. This meant that without any money coming in, the R158m that Cornick had borrowed to do the deal – which now had to be repaid – broke the camel’s back.

So, a year after his failed bid for Afcol, Jooste sensed blood in the water. Steinhoff swooped in, ostensibly as a white knight, offering R3.82 per share for all of Pat Cornick, plus Afcol. It was an offer of some chutzpah – less than a quarter of what Pat Cornick had paid just a few months before – but Jooste knew that Cornick had run out of options. Graham Theobald, who was the executive chairman of Cornick at the time, recounts how the well-connected head of a chain of retail stores, David Sussman, suggested he approach Markus about doing some kind of deal to save the company.31 “I met with Bruno Steinhoff and Claas Daun, and we agreed on a rough template for a merger: we’d get two shares for every one we’d put in,” he says. “Steinhoff was quite small in South Africa in those days, whereas Cornick was pretty big, so this would have given them the scale they needed.”

Sussman, who’d acted as the intermediary, was a big shot in the furni­ture industry back then. A tall and blunt hard-nosed retailer, he’d started in the furniture industry as a warehouse clerk at the Joshua Doore chain of stores. Joshua Doore’s slogan was “You’ve got an uncle in the furniture business”, and Sussman would end up as that uncle. In 1983, he founded JD Group when he opened two Price ’n Pride stores. But within a few years, Sussman had worked his way into opening plenty more brands and 600 stores. His network, by the late 1990s, included discount stores Brad­lows, Russells and, somewhat ironically considering it’s where he got his start, Joshua Doore. The point is that the JD Group was, at the time, Cornick’s biggest buyer. But Sussman’s loyalties were divided, as he was also an enthusiastic supporter of Markus Jooste. Sussman would later describe his relationship with Markus in this way: “From day one, it was a very close relationship, and of course, we wanted him to succeed – over and above that personal relationship and that chemistry.”

In 2007, Steinhoff first tried to merge with JD Group, but that failed. There were then a series of deals, which led to Steinhoff taking control of JD Group. It seemed predestined. But back in 1997, what happened is that at the last minute, Steinhoff altered the ratio, so that Cornick would only get one share, in exchange for every share they put in. All of a sudden, at the eleventh hour, it turned out that they’d be getting 50% less than they’d expected. “I tried to get out of it after they changed the terms, but it was too late – they’d already sold it to the shareholders,” says Theobald. “The idea was that I’d take over as CEO of the local business, but the way they’d changed the deal left such a bad taste that on the day I was meant to move into their offices, I resigned and left.”32

In every sense, the Cornick takeover was a typical Markus deal: the pur­chase of a struggling business, done on the fly with just a handshake, the price paid for by not using cash, but rather Steinhoff’s shares. Signi­ficantly, there was hardly a due diligence or thousand-page lawyer’s docu­ment in sight. Jooste had done it on the basis of his instinct. “The top entrepreneurs are all successful today, because they do move quickly,” said Jooste. “I think, if you’ve lived and worked with a guy like Claas, who set this example of listening, thinking and making decisions – and not wanting a due diligence and big books by auditors and big reports, to basically cover your arse.”33

More than anything else, this deal was the making of the Markus myth. Jooste would crow, accurately: “That bit of luck made us a powerhouse in South Africa, it triggered the escalation of Steinhoff.” Daun also charac­terised the Cornick decision as “the most important event in the devel­opment of Steinhoff”. “A year later, a lot of problems came out from [inside] Afcol: losses, bad business from the United States . . . we were lucky to reject this,” said Daun.

The Cornick deal would be a template for the “Steinhoff way”, which other executives would cite admiringly as evidence of Jooste’s ability to wring a good deal out of any scenario. Danie van der Merwe, a logistics expert who linked up with Jooste when Steinhoff bought his logistics company, Road­way, as a better means to transport furniture, remembers that Afcol deal well. He reckoned it was the “wise old men” of the business who had tempered the impetuous younger Steinhoff executives, who might other­wise have got into a bidding war over Afcol the year before.34 “Claas said: ‘You never pay too much for a business. You must never want it too badly, because otherwise you’re going to overpay. And once you’ve over­paid, you never get that money back.’ And Bruno said: ‘We are all hunters. You must load your gun and wait. The animal will come. You must be patient. ”

Danie van der Merwe would become a fundamental cog in Markus’s machine. The relationship had first warmed back in 1997 over one of their shared passions: rugby. “I gave him four seats in our box at Ellis Park [the rugby stadium south of Johannesburg], he gave me four seats at Loftus [the stadium in Pretoria] and that’s how we started com­municating,” he said. But Van der Merwe would end up as one of the big losers from Steinhoff’s implosion in December 2017. His family had owned 6.1m shares in Steinhoff, which, at their peak, would have made him fabulously wealthy with a fortune of R550m. By September 2018, those shares would have fetched barely R15m.

When Jooste quit overnight, it was Danie whom the board asked to step into the role of CEO – much to the surprise of those who’d seen their close relationship deepen for decades.

* * *

The Cornick coup changed Steinhoff in more ways than one. Firstly, and most obviously, up to that point the early Steinhoff was a relatively inconspicuous furniture maker in South Africa. Sure, it had the Gomma Gomma factory, Bakker & Steyger making case goods, and a few businesses that made lounge foam, but it wasn’t a big deal. It didn’t have much clout when it came to getting its product into the big stores. “All of a sudden, we had all the brands,” says one insider. “We became the dominant player in South Africa, all of a sudden. We had the manufacturing sewn up, and we could really go into negotiations with retailers and be someone.”

But the second shift was more intriguing. While the Cornick takeover was indeed a dramatic catalyst, the intense desire to make it work and show the rest of the industry how smart Steinhoff was raised other sharp questions. Christopher Rutledge says that already there were some blinking red lights. What happened after the deal, he says, “was a shock for all of us”. Initially, he says, there was no sense that Jooste would permit any corners to be cut. Rutledge tells the story of how, early on, it emerged that one of the managers was cooking the books. “It seemed that this person wasn’t passing along the credit notes, in which we acknowledged we owed somebody for something, to the accounting guys. This would obviously have meant it wasn’t accounted for as a liability, so it would have made our profits look too good. But when Markus heard about it, he lost his nut.” At that stage, he says, Jooste appeared to stand for clean governance.

This is how many of Jooste’s advisers saw him at the time. In the words of one of Jooste’s long-term bankers, who’d known him for years and had often gone to dinner with him and his wife: “I’d never have suspected this in a million years. I always saw him do everything by the book. He was conservative, smart. He never once asked us to do anything we felt com­promised by doing.”35

Allen Swiegers, who’d gone to school with Jooste, said he’d often bump into Markus Jooste from time to time. Swiegers, by that time, was climbing the ranks at Deloitte, which audited Gomma Gomma’s accounts and, later, Steinhoff’s. While Swiegers wasn’t involved in those audits, he’d see Jooste a few times a year at client events. “He was still the same Markus I knew at school: very confident, pleasant and entrepreneurial. He wasn’t shy of speaking his mind – if something was wrong, he’d tell someone to fix it, in very direct language. But never in my wildest dreams would I have sus­pected him of the things currently alleged in the media.”36

But as the years went on, and Jooste’s prestige and wealth expanded, it seems he began to believe the myth of his own grandiosity – that his pres­ence somehow demanded grovelling respect. There is one story that deftly illustrates this point.37

Veteran journalist and radio presenter David O’Sullivan emceed a few Steinhoff events for Jooste. They knew each other, in other words. So, one day, at Cape Town’s airport, O’Sullivan bumped into Jooste. “Hey, Markus, how you doing?” he asked, making conversation.

At that point, Jooste’s wife Ingrid stepped between them and glared at O’Sullivan. “How dare you speak to my husband like that,” she spat. “It’s Mr Jooste to you.”

Behind her, Markus Jooste stared at O’Sullivan with cold, lifeless eyes, saying nothing.

Well, screw you, thought O’Sullivan. Who does this guy think he is?

It’s an interesting question. The answer, most likely, is that Markus Jooste thought he was corporate royalty, in the presence of whom others should display unbroken fealty.

But many businessmen found Jooste suave and charming – even if their wives, in many cases, didn’t agree. Over dinner, he’d dish out aphorisms that were the sort of pearls that could, perhaps one day, be collected into a Rough Guide to Business by the Rough. In one case, an executive was describing how his company was being rationalised, which meant job cuts and departments shrinking. Jooste leant into him and whispered know­ingly: “Hey, be careful you don’t cut yourself to bankruptcy.” Which is sound advice.

But with the Cornick deal, some felt a discernible, if subtle, shift. Says Rutledge: “Cornick was losing money hand over fist. Yet shortly afterwards, Steinhoff claimed it was showing profits from those assets. We knew that company well, and we just couldn’t see where they were getting that profit. Our suspicion was always that the finance guys were shifting around assets to manufacture a profit.”38

Whether anyone who might have been doing this saw it as crooked is, however, uncertain. Those who knew the company at the time say there was a sense that Steinhoff would use every accounting trick it could to make its figures look better than they were. But this wasn’t seen as blunt crookery; rather, it was just being smart, and moulding the system to suit one’s purposes. “The guys working there, like me, understood that the busi­ness would be run on the basis of ‘smoke and mirrors’. All the focus was on the accounting, and how to present something,” says Rutledge. “We’d know, for example, how one of the companies was struggling, yet then we’d read in the annual report how well it was doing. It was astonishing.” This, he says, is the essence of the discomfort he felt around Pat Cornick.

It was never obvious enough that people felt compelled to say some­thing, but, intuitively, they sensed that something felt wrong. It was hard to put your finger on it. But every time it came to publishing financials, the Steinhoff accounting boffins had found some way to capitalise some expense or other, or discontinue some business, so it wouldn’t reflect in a way that looked bad. This magic – the ability to transform companies that looked sickly into models of corporate vigour – burnished the legend of Markus Jooste. It would become his trademark.

Another manager who was there at the time says he left the group precisely because he spotted certain “accounting tricks” that he wasn’t happy with. “Right from the beginning, I believed that companies were being set up – special purpose vehicles – specifically to hide certain losses, and make it seem like the profits were much better than they were. It made me feel uncomfortable. I didn’t want to be part of it.”

Of course, hiding losses in companies that don’t reflect in your accounts – an “off-balance sheet company”, in accounting terms – is one of the oldest tricks in the journal. This is ultimately what felled Enron, when it emerged that it owed far more debt than it had let on. It is ironic that those adrenalised early years at Steinhoff coincided with the last few years of Enron’s life, when these sorts of accounting high jinks had become some­thing of an open secret.

For Steinhoff, there would have been a number of benefits to doing this, besides simply boosting profit. For one thing, Jooste’s preferred currency for paying for new companies that he bought was Steinhoff’s own shares. So, by making the shares appear more valuable than they really were, he was able to boost Steinhoff’s negotiating firepower.

Rutledge reckons that after Cornick, the finance whizzes at Steinhoff believed they could do anything, applying lipstick to pretty much any porcine figure that staggered through the door. It may have started inno­cently enough, but it placed pressure on the pencil jockeys to repeat the trick with every deal after that. And the one thing you didn’t want to do was disappoint Markus . . .