Reports: Steinhoff bought forests at inflated prices

Global retailer awaiting outcome of PwC probe into deal

JOHANNESBURG: A company linked to executives of Steinhoff International Holdings NV bought South African forestry plantations in 2001 and then sold them to the retailer three years later for more than five times their original value, documents show.

Steinhoff, which plunged 96% after disclosing accounting irregularities and chief executive officer Markus Jooste quit in December, commissioned PricewaterhouseCoopers LLP (PwC) to investigate its finances and has said restatements may have to go back to at least 2015.

The forestry deal is similar to car dealership transactions Steinhoff carried out in 2007 where it bought properties from companies linked to Jooste at a multiple of their initial value.

Steinhoff declined to comment on the forestry transactions, saying it is awaiting the outcome of the PwC probe.

Since December the global retailer has been selling assets and trying to persuade creditors owed more than nine billion euros (US$10.6bil) not to force it into insolvency. With the equivalent of almost US$17bil having been wiped off its market value, the saga has become one of South Africa’s biggest-ever corporate scandals.

Steinhoff’s venture into forestry came shortly after Jooste, 57, became managing director in 2000. The company began buying assets to produce the timber needed for the furniture it sold, annual reports show.

Steinhoff agreed in 2001 to pay 15.8 million rand (US$1.1mil) for trademarks, vehicles and equipment owned by forestry companies Thesen & Co (Pty) Ltd and Thesen Properties (Pty) Ltd, sales agreements seen by Bloomberg show.

The deal did not include any Thesen plantations and instead Thesen sold 55 properties to Malenge Sawmills (Pty) Ltd, which took a loan from Steinhoff to help with the 29.5 million-rand purchase, according to tax court documents and sales agreements seen by Bloomberg.

Steinhoff managed the plantations that Malenge bought. In 2004, Steinhoff bought 53 of those plantations from Malenge, by then known as Kota Sawmills (Pty) Ltd, for 159.7 million rand, court documents and company minutes seen by Bloomberg show.

Between 2001 and 2004 the following Steinhoff executives at times served as directors of Malenge and/or Kota – Stephanus Grobler, Frederik Nel, Jan van der Merwe, Gary Chaplin and Danie van der Merwe, who has been acting CEO of Steinhoff since December. Chaplin and both Van der Merwes resigned from Malenge on May 31, 2001, while Grobler and Nel stayed on, according to corporate filings and company minutes seen by Bloomberg.

Chaplin said he resigned from Malenge before the transactions were executed and wasn’t aware of their details. Jan van der Merwe didn’t respond to questions sent by text message and didn’t return phone calls.

“The PwC investigation into Steinhoff has an open mandate to identify transgressions and those responsible,” Steinhoff said, adding that it was also commenting on behalf of Danie van der Merwe and Nel. Grobler declined to comment, citing the PwC probe.

Kota sold the plantations to Steinhoff in 2004, recording a 125.6 million rand profit for that financial year, shortly after entering a funding agreement with Mayfair Speculators (Pty) Ltd, of which Jooste was the sole director.

Kota listed Mayfair as a company to which it was making loans, some of them interest free, according to its financial statements.

Jooste’s lawyer, Callie Albertyn, didn’t respond to emailed questions or return a call made to his office.