Steinhoff’s costly forests

A company linked to executives of Steinhoff International 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.

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

Steinhoff declined to comment on the forestry transactions, saying it was awaiting the PwC probe.

Its venture into forestry came shortly after Jooste became managing director in 2000. The company began buying assets to produce the timber needed for the furniture it sold.

Steinhoff agreed in 2001 to pay R15.8 million for trademarks, vehicles and equipment owned by forestry companies Thesen & Co and Thesen Properties.

The deal did not include any Thesen plantations and instead Thesen sold 55 properties to Malenge Sawmills, which took a loan from Steinhoff to help with the R29.5 million purchase.

Steinhoff managed the plantations that Malenge bought. In 2004, Steinhoff bought 53 of those plantations from Malenge, by then known as Kota Sawmills for R159.7 million.

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 chief executive of Steinhoff since December. Chaplin and both Van der Merwes resigned from Malenge on May 31, 2001, while Grobler and Nel stayed on.

Kota sold the plantations to Steinhoff in 2004, recording a R125.6 million profit for that financial year, shortly after entering a funding agreement with Mayfair Speculators, of which Jooste was the sole director. Kota listed Mayfair as a company to which it was making loans, some of them interest free. – Bloomberg