Spotlight on R16bn deal
Tekkie Town’s former CEO files court papers that raise questions about Pepkor’s huge loan repayment to Markus Jooste’s Steinhoff
A new legal claim against retail giant Pepkor has raised fresh questions about whether its board cut corners in its rush to bail out its parent, Steinhoff, last year.
Steinhoff owns 71% of Pepkor, which until last year was known as Steinhoff Africa Retail (Star) and included major African brands such as Pep and Ackermans.
But after Steinhoff’s collapse in December 2017 — when CEO Markus Jooste resigned and the company revealed that PWC would conduct a forensic investigation of “accounting irregularities” —
Pepkor became much the stronger of the two companies.
In fact, one of the main reasons that Steinhoff still exists in more or less the same form since its implosion is that Star was quickly able to repay an enormous loan, R16bn, which it owed its parent.
Now, papers filed last week in the Western Cape High Court by Bernard Mostert, the former CEO of Tekkie Town, have raised new questions about how transparent Pepkor executives were about the repayment of that loan.
In October 2016, Steinhoff bought Tekkie Town from Mostert and a consortium of executives led by founder Braam van Huyssteen, in a deal facilitated by Jooste. But after Jooste left, relations soured between Pepkor’s top brass and Van Huyssteen’s Tekkie Town executives.
Mostert, who was CEO of Pepkor Speciality, has since taken legal action against Pepkor, claiming R36.7m for the salary, benefits and bonuses he lost as a result of his contract being terminated 3 ½ years early.
He argues that Pepkor chair Jayendra Naidoo and CEO Leon Lourens effectively engineered a situation in which it was untenable for him to carry on performing his responsibilities.
Mostert’s summons contains disturbing allegations about the extent to which Pepkor bent over backwards to assist Steinhoff during its refinancing last year.
To repay the R16bn it owed Steinhoff, Pepkor had to borrow money from a consortium of banks.
In his court papers, Mostert says he was “instructed” to vote in favour of a board resolution that bound Pepkor Speciality as a guarantor to the deal “without providing him with the information and documentation” he needed.
In particular, Mostert wanted to determine whether that division was allowed to pass that resolution, given the strict rules governing “financial assistance to related/interrelated companies”.
Mostert says he never got that information, so he abstained from the board resolution in writing.
He also raises a second point about a controversial investment scheme, which was created by Pepkor to reward its senior executives, before it was merged into