Intrigued by the Stellenbosch mafia’s complicity in the Steinhoff scandal? James-Brent Styan reveals all in this extract of his latest book…
"Stellenbosch is situated about 50 km from Cape Town on the banks of the Eerste River. After the Mother City, the Eikestad (City of Oaks) is the oldest town in South Africa, and its economy revolves mainly around tourism, a world-renowned university and the wine industry. Nowadays, Stellenbosch is also one of the hotbeds of technological innovation in South Africa, and is probably Africa’s top tech hub – a Silicon Valley for Africa, with many young Afrikaners going on to make their fortunes abroad using the ground-breaking technology they develop in Stellenbosch.
A report by the market research group New World Wealth shows that in 2017 there were 43,600 high net worth individuals in South Africa. These are people whose total wealth exceeds $1-million. The report further states that the Paarl, Franschhoek and Stellenbosch areas are the fastest-growing regions for the super-rich in South Africa, with a 20% increase in the number of dollar millionaires over the past decade. (Incidentally, Johannesburg, Cape Town and Durban, including Umhlanga, are the three places with the most superrich individuals in South Africa, but many more people live in those cities than in the Boland.)
Stellenbosch is perhaps more famous for its old money than for its new.
This is where Afrikaner businesspeople have, over the decades, conceived giants such as Naspers, and where Rembrandt and Reunert grew into international empires. Many big names in the business world call this town home, including GT Ferreira, Jannie Mouton, Wendy Appelbaum and Koos Bekker.
The success of the people in Stellenbosch and the surrounding areas is often a target for criticism, especially from politicians and internet trolls. Long before the term “white monopoly capital” became popular, the wealthy elite of the Eikestad was given the unflattering nickname of the “Stellenbosch mafia”.
The leader of the Economic Freedom Fighters (EFF), Julius Malema, particularly enjoys chastising the “Stellenbosch mafia”. During the national election campaign in March 2014, he went on the warpath against the influence they allegedly exert. Malema addressed a crowd of 2,500 EFF supporters at Mandela Park, in Khayelitsha, and warned them not to underestimate the so-called Stellenbosch mafia.
“They control the judiciary, the economy, the land, the chain stores, the mines and the banks,” Malema said. “If the Stellenbosch boys don’t want you to be anything, you will never become something in life.”
When Malema was still a member of the ANC Youth League in 2014, he got into trouble with SARS and decided to target the businessman Johann Rupert, chairperson of the Swiss luxury goods group Richemont and the South African investment group Remgro, by saying that Rupert “controls SARS”. With this, Malema alleged that Rupert was at the root of his tax problems. “Rupert said the ANC Youth League is like an irritating mosquito in a room and it needs a Doom,” Malema complained.
In 2016, Rupert responded to the allegations when he was honoured at the Sunday Times Top 100 Companies Awards for his life- long contribution to the business world. Rupert said that Malema had made him relevant again. “I haven’t been given an award until Mr Malema arrived and he pointed out that I was running the ANC, the DA and SARS,” he quipped.
But in the same breath he cautioned Malema to stop telling lies about him. He also pointed out that he does not live in Stellenbosch: “I don’t know how I can be part of the Stellenbosch mafia. We live in Somerset West.”
Years before, when Rupert joined the Rembrandt Group, the company founded by his father, Anton Rupert, he decided not to make his home in Stellenbosch. Johann and Gaynor Rupert moved into the estate Paarl Vallei in Somerset West, not far from the Ruperts’ corporate head office in the historic and beautiful old Cape Dutch manor house Groot Paardevlei.
Today, one of Rupert’s old Stellenbosch University friends, GT Ferreira, is one of the richest businesspeople in Stellenbosch. Ferreira owes his success to the banking groups FirstRand and Rand Merchant Bank, established in 1977 by himself and two partners, Laurie Dippenaar and Paul Harris, with a mere R10,000 in capital.
A Cape asset manager relays a story about Ferreira’s penchant for luxury cars: “A few years ago, GT wanted a very unique car that was unavailable in South Africa; I think it was a Maybach. The problem was that the manufacturer said they could only help him if there were at least six buyers for the car in South Africa. GT called all his pals in Stellenbosch, guys who could afford such a car, but nobody would bite. The upshot of it all was that GT purchased all six cars. Later he gave five of them to his friends. But GT got his car.”
Ferreira did not want to comment on this anecdote. His wine farm, Tokara, is located just outside Stellenbosch on the Helshoogte Pass towards Franschhoek.
Another well-known and popular member of the Stellenbosch billionaires’ club is Jannie Mouton, founder of the financial services group PSG. After Mouton was fired in 1995 by Senekal, Mouton and Kitshoff, the brokerage firm he had helped to establish 13 years earlier, he established PSG. Mouton lived in the exclusive Koloniesland complex for a long time, but then bought the farm Klein Gustrouw in the Jonkershoek Valley.
Directly opposite Mouton’s place is the farm formerly known as Bengale, although today there are three farms that share this address. When one looks at the Steinhoff Group’s prospectus for the 2015 listing in Germany, it is salient that three of Steinhoff’s top executives specify this farm as their home address. Danie van der Merwe, Frikkie Nel and Markus Jooste jointly purchased the property in 2003 through a company known as Uhambo Property Investment.
“The purchase price for the three farms was R25.6-million,” said Netwerk24 business journalist Nellie Brand-Jonker, who investigated the story in conjunction with her colleague Nadine Theron.
The Jooste family relocated from Pretoria in 2011 and moved onto the farm. There is a rumour that this is where Jooste is hiding today. Nel, who was the group’s financial director for many years, confirmed to Netwerk24 that the three of them had renamed the farm Jonkersdrift.
“Van der Merwe and I still live on the farm and I unfortunately do not know where Jooste lives now. I communicate with Jooste via SMS regarding the farm’s administration,” said Nel.
Nel still works for Steinhoff as a director of certain subsidiaries. Since December 2017, Van der Merwe has been acting as the CEO of Steinhoff. “I have not talked to him since the crisis (in December 2017),” Van der Merwe told Netwerk24.
Van der Merwe did not want to comment for this book.
Maties and horses
With Jooste’s and Mouton’s Stellenbosch farms directly opposite each other, the two of them started making wine at Klein Gustrouw. In his memoir 'And then they fired me' Mouton elaborates on his friendship with Jooste: “Despite our age difference we are friends, we cultivate wine together and trust each other in much more than business deals.”
Another old Stellenbosch friend who became an important business partner of Jooste’s is Rian du Plessis, later the CEO of the horse racing group Phumelela. He was friends with Jooste at university, and the two of them lived in Wilgenhof. According to various sources, Du Plessis and Jooste also worked at SARS in the 1980s after completing their studies. Du Plessis continues to act on behalf of Jooste’s personal trust in certain legal proceedings, and the two former Maties are major role-players in the world of horse racing.
“Markus was like a dynamite stick in the horse racing industry,” says someone who was close to Jooste for many years and still stands by him. According to this person, Jooste became involved in the horse racing industry “for his own pleasure”: “There can be no doubt. Markus put much more into horse racing than he ever got out. For every 100 he put in, he probably got out one.
For him it was just a source of pure joy and pleasure. He created work for thousands in the industry: jockeys, breeders, trainers. Markus brought horse racing in South Africa out of the dark ages into the 21st century.”
Chris van Niekerk, who later became chairperson of Cape Thoroughbred Sales (CTS), was another ally of Jooste’s in the world of horse racing. Van Niekerk stood by his friend for many years, and it seems as if he still supports him.
But Advocate Brett Maselle, also a horse owner, is critical of Jooste’s influence on the industry. He says Jooste had too much power and it disturbed the balance in the industry: “Money buys influence and he had a lot of money.”
The Durban July
One of the greatest wins in Jooste’s horse racing career was the 2016 victory of his racehorse The Conglomerate in the Durban July. It was the 120th running of the Durban July and Jooste’s horse wasn’t given much of a chance. Yet The Conglomerate, with the renowned jockey Pierre Strydom in the saddle, did not disappoint and won at Greyville.
It was the first win in the July for Jooste’s trainer, Capetonian Joey Ramsden, as well as Strydom’s fourth July victory. “It has been a couple of weeks to remember, culminating in The Conglomerate putting his best hoof forward and winning a smashing race,” Ramsden wrote in his personal blog in 2016.
Jooste was not in Durban to experience his horse’s moment of glory. He was in the USA on a business trip. Only his wife, Ingrid, their two daughters and his son-in-law, Stefan Potgieter, were there.
“July Day was special. For once the spotlight was on Mrs Jooste. The celebrations afterwards were even more fun. It was a great weekend’s racing,” Ramsden wrote.
According to tradition, Ramsden sent a cheeky “please call me” message to Jooste to tell him the news about the victory in the July (with its R4.25-million prize money).
Ingrid Jooste accepted the trophy from the guest of honour on the day, then president Jacob Zuma.
“In his typically charismatic style, winning trainer Joey Ramsden performed an elaborate bow and almost kissed the floor in front of a smiling Zuma,” writes the racing magazine Sporting Post.
Another highlight in Jooste’s horse racing career was the historic victory by his horse Variety Club in the epic Hong Kong Mile. Nobody gave Variety Club a chance and no foreign horse had ever won the Hong Kong race.
In total, Jooste recorded more than 1,000 winners in his career as a race horse owner.
Wiese and the cliques
Christo Wiese is also often described as a member of the Stellenbosch mafia, even though he has lived in the Cape Town suburb of Clifton for 42 years, just a few metres from the popular Fourth Beach.
Wiese would occasionally elaborate on the number of groups or cliques in Stellenbosch.
“There were the academics, the professors and the doctors, and they were a group on their own; then there was the Rembrandt bunch; they triumphed where business was concerned, and then there are also the wealthy wine farmers, although there is no longer such a thing as wealthy wine farmers, only wine farmers,” he teased.
He continued: “So you have all these groupings; it is a very difficult town to define as a single community. And yes, I’m friendly with the guys like GT (Ferreira).”
Wiese’s splendid farm Lourensford is in Somerset West, but for many years he also owned the historic farm Lanzerac in the Jonkershoek Valley (just a kilometre or two from Jonkersdrift). And it was this farm that marked the beginning of Wiese’s association with Steinhoff. In an interview in May 2018, he explained: “In 2011, I wanted to sell Lanzerac and Jooste comes to me and says they are a consortium that will buy it.
"At the same time, he wants me to consider exchanging my PSG shares for Steinhoff shares, just like GT Ferreira and the other guys did. I said yes, I will look at it and in the end I did it. Then I was a fairly large shareholder in Steinhoff, probably around R1-billion. Thereafter they invited me to join the board, in 2013. And I became chairperson in 2016, a year before the smash.”
How friendships help
There are definitely several groupings with their own loyalties in Stellenbosch. One commentator says it is unfair to call them a “mafia”, because there are so many competing interests. The fact that the bonds of friendship between Stellenbosch businesspeople are often a great advantage can hardly be doubted. It is a network of people who do a lot of business together. The fact that they sometimes outmanoeuvre each other is also true.
Perhaps the picture is better sketched by means of an example. (Please note that all of the examples highlighted here are completely legal.) In 2008 Wiese exchanged the shares he owned in the Ko-operatieve Wijnbouwers Vereniging van Zuid-Afrika, better known as KWV, for the PSG shares referred to above. By 2011 Wiese owned close to 15.5 million PSG shares (a stake of about 9.2%). By that time Jooste had 20 million PSG shares (about 11.8%).
Shortly after the Lanzerac deal, Wiese and Jooste exchanged their PSG shares for Steinhoff shares. As a result, Steinhoff acquired a 20% stake in PSG.
By 2015, Steinhoff ’s stake in PSG had increased further. Jannie Mouton still served with Wiese and Jooste on Steinhoff ’s board that year.
In June 2015 two PSG directors, Jaap du Toit and Thys du Toit, exchanged their PSG stake for Steinhoff shares. The total value of the deal was about R1.8-billion. This also increased Steinhoff ’s stake in PSG.
A few months later, in December 2015, Steinhoff listed on the Frankfurt Stock Exchange. The share transaction had two interesting features. The first one is well explained by asset manager Magda Wierzycka, of the Sygnia Group.
She describes this move by the two directors, shortly before the Steinhoff listing in Germany, as a “cynical move by shareholders in PSG to, in a sleight of hand, swap their shareholding in PSG shares in South Africa for a suddenly- Frankfurt-listed Steinhoff, thereby externalising their wealth without the need for foreign exchange control approvals”.
The second story about the PSG directors’ share exchange is that Mouton did not know about the plans of his two board members. “Mouton was angry about it. Angry and disappointed. It was the first time that members of the PSG inner circle sold PSG shares,” says Doringdraad, the pseudonym of a well-known analyst who has long kept an eye on the PSG Group. In May 2016, Mouton resigned from the Steinhoff board and sold all his Steinhoff shares.
The well-known political and economic analyst JP Landman says that if you have good contacts, you have a greater chance of achieving success in South Africa. He refers to this as “social capital”: “All the research indicates that social capital is vital to succeed, whether you are in Stellenbosch or in the Free State or in other parts of the country. Social capital is just the relationships, the trust or simply the people who talk to each other.”
Landman says he doubts whether it’s accurate to refer to the Stellenbosch elite as a “mafia” or a “club”: “I don’t know if it is really a club, we know of big fights between people who are evidently included in the group. I don’t think the guys spend Christmas Eve together. So, it’s actually a fictional thing, the notion of a club. What is actually important is to have and to build networks.” He says the Steinhoff saga would definitely have caused tensions between people who trusted each other.
Is there a new generation of super-rich on the way? Landman offers his view: “As the saying about billionaires goes, one third is entrepreneurs who build new businesses; one third works for large companies where they are well paid; and one third is the ‘lucky sperm club’ who inherit wealth. In all three categories, people can perform outstanding work and create value. So, yes, new players will emerge as the old generation moves on. The process will continue within, but also beyond Stellenbosch.”
The alleged affair
It was not only Jooste’s so-called business tricks that were exposed in December 2017. His alleged extramarital affair with a 34-year-old blonde polo player named Berdine Odendaal also made the news. On 13 December 2017, HuffPost South Africa reported that Odendaal drives around in a silver Bentley and a white Ferrari and owns 10 multimillion-rand properties in the pristine Val de Vie polo estate near Paarl. She lives in a luxury apartment in Bantry Bay, near Clifton. Stefan Potgieter, Jooste’s son-in-law, apparently manages the apartment on behalf of a group called Coy’s Properties.
One Malcolm King, a friend of Jooste’s, owns Coy’s Properties. The Bantry Bay apartment was bought for R21.5-million in 2012, Huff-Post South Africa reported. Odendaal did not want to talk to the media in December 2017, and in May 2018 she also declined the opportunity to comment. After the Steinhoff scandal broke, Odendaal disappeared from the public eye for months. In March 2018, she appeared in public again at Val de Vie for the Veuve Clicquot Polo Championship.
Two senior Steinhoff managers say Steinhoff chauffeurs regularly drove Odendaal around. “Many people in the group knew about the affair.”
Wiese says he was not aware of the relationship: “If it is true that he has a secret lover, I would never have trusted him.” He says that in his time as chairperson of the Pepkor Group he fired three senior executives because they cheated on their wives: “If a man can lie to his wife, he will lie to me too. Whitey sometimes had the same issue at Shoprite. He always said he could forgive a footprint, but not a footpath.”
Anger in Stellenbosch
Stellenbosch residents are angry about the reputational damage done to their town as a result of the Steinhoff scandal. Johann Rupert, chairperson of Richemont and one of the wealthiest people in South Africa, was born and raised in Stellenbosch. Rupert tweeted the following on 11 December 2017, a few days after the scandal broke: “Although I left Stellenbosch in 1975, it really irritates me that none of the so-called ‘Stellenbosch mafia’ who is causing so much damage to the town’s reputation was born or raised in Stellenbosch. All of them are ‘immigrants’.” Rupert’s comment upset other Stellenbosch residents who were not born in the town.
“It is quite wrong to paint everyone who lives and contributes here with the same brush as Jooste and his men,” one well-known resident said.
Steinhoff: Inside SA’s Biggest Corporate Crash by James-Brent Styan
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Article supplied by Lapa Uitgewers/James-Breyn Styan