Jooste, Steinhoff knowingly paid us in 'fool's gold', says ex-Tekkie Town CEO in court papers

Steinhoff created Steinhoff Africa Retail (STAR) - now called Pepkor - to insulate valuable assets against coming legal headwinds arising from the subsequent Steinhoff collapse.

This is the most explosive claim made by former Tekkie Town CEO Bernard Mostert in an answering affidavit filed in the Western Cape High Court in Cape Town on Thursday.

There is no rational basis for Pepkor to claim that the Steinhoff shares former shareholders in Tekkie Town received in exchange for their Tekkie Town shares, constituted "a handsome price", Mostert responded to in the restraint of trade application brought by Pepkor against him, Tekkie Town founder Braam van Huyssteen and four others.

Pepkor launched its restraint of trade application after the respondents announced in August that they plan to launch a new retail chain supplier of branded sports apparel and footwear called Mr. Tekkie in November this year. Mostert says about R195m has so far been invested in the new venture.

Pepkor's restraint of trade application is separate from a court case brought by the former Tekkie Town owners against Steinhoff in relation to the 2016 sale of Tekkie Town to Steinhoff International Holdings. Mostert argues there is no real differentiation between Steinhoff and Pepkor.

Tekkie Town is now part of Steinhoff’s subsidiary Pepkor, formerly known as Steinhoff Africa Retail (STAR).

The court challenge by the former Tekkie Town owners was launched on the basis that Steinhoff acknowledged accounting irregularities in its financial reports. They are claiming restitution of the business.

Steinhoff's CEO Markus Jooste abruptly resigned in December 2017 and the firm's shares have lost over 95% of their value.

A text message

On 5 December 2017 Jooste sent Mostert a text message in which he admitted that he (Jooste) "made some big mistakes and [has] now caused financial loss to many innocent people".

Mostert also points out that Ben la Grange, former Steinhoff CFO, recently conceded to Parliament that the "false profit" in the Steinhoff system started "way way way back".
In his latest affidavit in Pepkor's restraint of trade application, Mostert claims Pepkor wants to portray him and the other former Tekkie Town executives as "villains" and "dishonest thieves" who want to destabilise the Tekkie Town business and provide unlawful competitive advantage by means of Mr. Tekkie.

He also denies Pepkor's claim that the former Tekkie Town shareholders were paid a "handsome price" in the sale to Steinhoff.

"When the former shareholders of Tekkie Town negotiated and concluded the terms of the sale agreement with Steinhoff - represented by Jooste and its board director Piet Ferreira - the Tekkie Town business was valued at (and worth) R3 257 million and the Steinhoff shares were valued at R3 257 million or R75.75 per share," Mostert states in his affidavit.

"However, had the state of affairs at Steinhoff been revealed at the time, the Steinhoff shares would have been worth no more than a mere fraction of this amount, if they were indeed marketable at all, and would have been recognised for the 'fool's gold' they were subsequently shown to be."

A conspiracy theory

Mostert goes as far as to claim in his affidavit that, given the emerging history of Steinhoff in recent months, "it is apparent that Steinhoff, in collaboration with the applicants (Pepkor), in fact swindled the former shareholders out of their shares in Tekkie Town".

He further claims that Pepkor is now simply using the sale which turned out to be based on being paid in "fool's gold" and the restraint provisions which formed part of it, "to stifle perceived competition".

Mostert accuses Pepkor of wanting to create "an atmosphere of a conspiracy theory" by using "a good deal of irrelevant or vexatious material".

"(Pepkor has) publicly stated that the operations at Tekkie Town are continuing as normal," states Mostert.

He adds that, in his view, the goodwill of Tekkie Town is in any event likely to return to the former shareholders once Van Huyssteen's court case against Steinhoff is finalised.

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