Christo Wiese gets green light to pursue civil claim against Steinhoff fraud accused Markus Jooste

12 Jun 2023

The retail tycoon wants to overturn the sale of Lanzerac or receive his money’s worth, arguing he was duped into selling the prized asset.

Retail tycoon Christo Wiese is one step closer to regaining Lanzerac from the clutches of Markus Jooste, whom he has accused of duping him into swapping the prestigious Stellenbosch wine estate for shares in Steinhoff which turned out to be virtually worthless. He wants the deal scrapped and to either regain his prized asset, or its monetary value in exchange for the worthless shares.

Wiese, once one of the world’s wealthiest men, lost more than R220-million in the November 2011 “deal”, in which he thought he was selling to a consortium of buyers. He took the matter to the Western Cape High Court in 2021, in a bid to either regain ownership of Lanzerac or to recoup the full monetary value, alleging the former Steinhoff CEO had swindled him.

Wiese bought Lanzerac in 1991, revitalised the property and built its hotel.

It is currently in the hands of the state after Jooste’s assets were seized.

Wiese’s Titan Asset Management, CPW Wine Brands, Titan Premier Investments and Wesfam Trust are listed as the seller-plaintiffs, with Jooste and Lanzerac Estate Investments (formerly Morpheus Property Investments) as the respondents.

Wiese alleged that he didn’t know that he was selling Lanzerac to Jooste, who pretended to be representing a consortium of investors. He argued that they should be allowed to resign from the contracts, and not be bound by any of its terms, because they had been induced by Jooste’s fraudulent non-disclosure.

Wiese and Jooste briefly worked together at Steinhoff, before Jooste abruptly resigned in 2017. Wiese had invested heavily in Steinhoff, was the group’s chairperson, and owned about 22% of the group. He had built up his stake in the global household goods retailer, which was competing for market share with the likes of IKEA.

Once SA’s richest man, Wiese lost about 80% of his investment overnight and saw his billions whittled away to millions. He resigned from the Steinhoff board in December 2017 after the fraud scandal broke.

On Friday, the Western Cape High Court dismissed three exceptions raised by Jooste, who had claimed Wiese’s requests were vague. Judge Ashley Binns-Ward also made a cost order against Jooste, including the fees of two counsel.

Jooste’s exceptions were that the terms of the contract — that neither party shall be entitled to cancel the agreement — precluded him from cancelling it; that the claims for rescission and restitution are invalid because the plaintiffs are unable to tender or make restitution of what they obtained in the transactions; and that Aussenkjer Boerdery should not be entitled to join the action.

The judge’s findings

In rejecting the first exception, Judge Binns-Ward wrote: “The first defendant’s exception effectively postulates that the clauses upon which it relies exclude the innocent parties’ right to terminate the contracts even when it was discovered that they had been induced by fraud. If that is indeed the import of the clauses, I cannot conceive that any court would enforce them in the circumstances pleaded in the plaintiffs’ particulars of claim.”

On the second exception, the judge commented: “To apply ‘the contractual standard’ for the purposes of any form of substituted restitution [that is by way of Steinhoff NV shares] in the current case would be to make the first defendant the beneficiary of its agent’s [Jooste’s] inducing fraudulent nondisclosure. It would be to give it the contractually agreed value of the fraud-tainted ‘consideration shares’ as if they weren’t so tainted.”

He said that the matter is not affected by the sale of the consideration shares by the seller-plaintiffs to Wiesfam Trust. “It seems from the information given in the pleading that the transactions were probably effected at the book values at which the shares had been acquired by the seller-plaintiffs from the first defendant.”

On the third exception, that Wiese’s claims cannot be adjudicated without Aussenkjer Boerdery joining as a party, the judge said: “Whilst it might well not be appropriate on the face of the facts that are apparent from the particulars of claim to try the plaintiffs’ claims without the joinder of Aussenkjer Boerdery to the action, it has not been suggested in the notice of exception, save to the extent apprehended in the second and third exceptions of which I have already disposed, that the particulars of claim do not make out a cause of action.”

The judgment now enables Wiese to pursue a civil claim against Jooste.

Wiese’s attorney failed to respond to a request for comment by the time of publication.

Sham deals

On Thursday last week, Bloomberg reported that Steinhoff International’s former head of finance in Europe, Dirk Schreiber, told a German court that he was aware of sham deals at the group and would give German prosecutors more evidence to bolster their case. He is the first person connected to the scandal-hit firm to admit to such wrongdoing.

Schreiber admitted in the court in Oldenburg that he should not have accounted for the bogus business deals.

He is set to appear in court again on 19 June, alongside co-accused Siegmar Schmidt.

Jooste was also due to appear in the German court in April, but failed to do so (apparently due to missing travel documents). There he faces fraud charges including five counts of accounting fraud committed between 2011 and 2014.

The men are among eight people implicated in 2019 after a forensic probe by auditor PwC uncovered €6.5-billion of irregular transactions with eight firms over eight years.

On 10 January, the JSE fined Jooste R15-million and banned him from directorships at listed companies for 20 years. He is appealing against the fine.

Another fine, imposed by the Financial Sector Conduct Authority, was slashed by 90% after Jooste lodged an appeal with the tribunal. That reduced the massive R161.6-million fine, announced in October 2020, to just R20-million.

Jooste’s Hermanus home, Lanzerac and other properties were attached by the SA Reserve Bank in October last year. DM

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The judge’s findings

Sham deals