PREMIUM: Inside Tekkie Town/Steinhoff story – full uncut interview with ex-CEO Bernard Mostert

On the evening of Tuesday August 27th, 2019, Biznews editor Alec Hogg interviewed Bernard Mostert, former CEO of Tekkie Town, one of the last companies bought by Steinhoff before the group crashed in a morass of fraud and financial irregularities. The interview was edited for wider consumption, but here exclusively for Biznews Premium members is the unabridged and uncut copy of the interview. Also attached is interview correspondence between Hogg and Mostert and a transcript of the Western Cape High Court judgement. .EMAIL CORRESPONDENCE AND RESPONSE:.___STEADY_PAYWALL___.From Alec Hogg:.I received this info from a very reliable source which raises all kinds of questions for me..We know Jooste did private enrichment deals with a number of the entrepreneurs whose businesses he acquired for Steinhoff..I am really hoping that we don't discover Braam was one of them. But why else would Braam publicly continue to defend Markus?.Given the source, and the history of inflating prices of acquisitions for personal benefit (and the price of R3.3bn for a R1.3bn turnover retail business) we intend publishing the note below. I need an on the record response from your client which we can use to accompany please:.The note reads…." Another of "Aldrie's" one-time bosum buddies, entrepreneur Braam van Huyssteen, probably has an even worse description in his mind.".Hi Alec.Hope you are well , you would think that Braam and Markus were at odds over this issue..My information is that they are not and Markus is spending a lot of time with Braam helping him with his new venture and his Bentley is seen on regular occasions outside Braam's Fancourt property. If you read radio interview transcripts Braam continues to defend Markus. Makes no sense to me.".Look forward to your earliest response..Best,.Alec.Response from Bernard Mostert….Hi Alec.I hope you are well. Am about to board a flight so please accept my apologies for what is likely to be brevity..On the first point regarding Braam defending Markus. Braam's position has always been that Markus and everyone else who architected all these malfeasances should be prosecuted to the fullest extent possible. If Braam indeed wished to protect or defend Markus I guess the most logical would have been to not filed suit and to not have carried on, but as is evident we forge forward. We were among the first to do so and our claim – including an express statement that the wrongdoing happened through Steinhoff and under Markus' stewardship is captured in original summons served on Steinhoff..Regarding the price paid for which Tekkie Town was exchanged there were two components to it. On the one hand you had a debt free business that generated roughly R1m in Ebitda per store. Hopefully not arrogant when I say that is not a bad business. Pepkor had struggled (and still do) to make a basket of roughly 500 speciality stores work. They were collectively loss making and those that were profitable were not profitable relative to the cost of capital or industry benchmarks. So what was pitched to us was "Accept these restricted shares, put your business with Speciality, apply your skills and talents to Speciality and if you do, then three years from now these restricted shares will reflect the outcome of those efforts." For the time that we were in charge of Speciality before we were forced out by the core of the BVI claimants, we were on track to fix this business and had already returned it to profitability. So hopefully that gives some insight into the valuation that was presented to us, of course what we didn't know is that Steinhoff was a house of cards and that Speciality wasn't the only struggling piece of the pie..Regarding the accusation that Markus is involved in our new venture. That is categorically untrue. Braam and us have suffered enough already not to relive it?.As for Markus's Bentley and Braam's Fancourt property. Braam himself no longer lives there permanently and this year he has not been to Fancourt other than 15 days in July and August. So that accusation certainly is baseless and devoid of truth..As for the radio transcript that the faceless accuser sights, that is likely the first Bruce Whitfield interview of 2018. Lot of water have flown into the ocean since then but if you listen to that transcript Braam states that he is not God nor the judge and that he is not going to join a crowd who casts stones whilst they continue to profit from Steinhoff or have profited from it in the past..For all of us there is a difference between acceptance, forgiveness and defence. Markus is like Warren Buffett's Jet – indefensible. Steinhoff holds all the cards to ensure that justice is done, lets hope they play their role. Bitterness, hatred and a quest for vengeance is not going to get us anywhere. If anything it is going to lead us to a worst outcome. We forgive, we certainly won't forget and we won't paint our forgiveness in a colour that makes it seem that is okay that our business was stolen and profited is now managed by people who themselves are trying to claim some form of repair from the carcass that remains of Steinhoff..Hope this helps.Chat later.Bernard.Transcription of High Court judgement in matter between Braan van Heerden, Bernard Mostert and two others v Steinhoff:.20 AUGUST 2019.So these are the reasons I will hand down in case number 5872/2019 that I heard on the 25th of April this year in which I issued an order, I know I issued the order overnight but it is dated the 26th..Let me explain for the record because I think it's one of the litigants sitting in court, at the back, I am not sure which one..What had occurred was immediately after that day I left and I sent an email to the attorneys to indicate if anyone wants reasons they should alert me to the fact within five days of the order, because I was based in Knysna at the time..For some or other reason there were crossed lines and then a week or so ago we got together and I indicated to the parties, but I am actually ready to give you reasons, so instead of delaying the matter we are going to do it in this fashion..If I have it right, and I never intended to give full reasons in any event, it's going to take while because then it is dictation, it's my handwritten notes, it's a dictation, it's the typing, its editing and all of that where it is unnecessary in my view and we also want to fast track all the Steinhoff matters through the court system as quickly as possible..So I apologise for the delay, firstly to the parties and hopefully we can go forward in a better way. So here it comes..On the 26th of April 2019 I made the following order having heard the matter on an urgent basis..The order reads as follows:."It is ordered that:.The applicants' non-compliance with the time periods, forms and processes prescribed in the Uniform Rules of Court is condoned in terms of rule 6(12);Pending the final determination in the action instituted in the Western Cape High Court under case number 8276/2018:the first respondent (that being Steinhoff International Holdings NV) is interdicted and restrained from dealing with the shares it holds directly or indirectly in any of its subsidiaries or any juristic persons related to it, or permitting them to be dealt with, in any manner which would result in it being unable to give effect to the relief in paragraph 2.2 below, and that sought in prayer A under case number 8276/2018. [I divert to mention that I am aware that at the time of the hearing of the matter there was an amended pleadings filed, or an attempt to amend the pleadings – so this related to the pleadings as they stood and the draft amended pleadings that were presented to me.]the first respondent is directed to exercise (again Steinhoff) the control it has over the second, third and fourth respondents respectively (being Pepkor Holdings Limited, Pepkor Speciality (Pty) Limited, Tekkie Town (Pty) Limited – and those are the respondents), in such a manner that:-the shareholding of the second respondent (being Pepkor Holdings Limited) in the fourth respondent (that's Tekkie Town (Pty) Limited – when it's typed, all of these comments on the side will not necessarily be in the typed form – I'm putting that way because I know one of the litigants are in court – so that he follows and not just the legalese) is preserved and prevented from being alienated, and/or encumbered in whole or in part;the fourth respondent (that is Tekkie Town (Pty) Limited) is prevented from issuing any further shares in itself (meaning diluting the value);the business trading under the name and style of Tekkie Town acquired in terms of the sale agreement entered into by the first respondent and the third respondent with an effective date of 1 October 2017 (as amended in addendum No. 1), is preserved, and third respondent (being Pepkor Speciality (Pty) Limited) is prevented from alienating or encumbering the said business or its assets otherwise than as reasonably required in the normal course of operating the retail business of Tekkie Town;(relates to what went before that – it reads) should –the second respondent intend to alienate, and/or encumber in whole or in part the shares it holds in the fourth respondent (being Tekkie Town (Pty) Limited); and/orthe third respondent intend to alienate and/or encumber in whole or in part the business trading under the aforesaid name and style of Tekkie Town;the second and/or the third respondent be directed to notify in writing all parties to the intended transaction that the aforesaid shares and/or business, as the case may be, are the subject-matter of claims by the present applicants in case number 8276/2018 and in this Court, and to furnish a copy of such notification to the applicants' attorneys of record not later than 10 days prior to the conclusion of any agreement having such effect..Costs to stand over for later determination.".That was the order I issued on the 26th of April 2019..The background and introduction to this matter is as follows:.The applicants are the plaintiffs in an action instituted in this court as is apparent from the order I read above under case number 8276/18 relying on fraudulent misrepresentations by the first respondent to resile from an agreement and to claim restoration of what was given in terms of that agreement..In an amendment to the pleadings in the main action the plaintiffs seek to delineate the subject matter of the transaction as being the whole of the company with all its assets as a going concern, disposal of the equity being the formal and technical means of achieving its goals. In this application the applicants thus seek to preserve the current status quo in order to secure the subject matter in the hands of the current owners. They claim that having pleaded the restoration in the main action the shares and other assets are res litigiosa until the final determination by the court..First to fifth applicants, together with the company known as ACTIS 4 PCC owned the entire issued shares in the fourth respondent, being Tekkie Town. During 2015 when fourth respondent's business had approximately 230 stores spread throughout the Republic of South Africa, Mr Marcus Jooste, the CEO of the first respondent enquired from Mr Abraham van Huyssteen, chairman and founder of the Tekkie Town business, about the possible acquisition by first respondent, being Steinhoff, of the whole of the Tekkie Town business..In order to conclude this quest of Jooste and the first respondent, Jooste and first respondent, being Steinhoff International, facilitated the fifth respondent, by then a shelf company, to acquire the shareholding of ACTIS for a consideration of R1.5bn. Currently the sole director of the fifth respondent is also the CEO of the first respondent, being Steinhoff. He however, according the papers herein, recently, before I heard the matter, disclosed that the previous directors of the fifth respondent together with Jooste was part of the group that perpetrated some of the unlawful activities that led to the current dire financial state of the first respondent, Steinhoff. I do not deem it necessary nor prudent to delve into the details of the transactions that led to the business of Tekkie Town ultimately being placed in the third respondent, that's Pepkor Speciality (Pty) Limited, nor the issues of control and/or the placement of the shares in the second respondent by the first respondent or any of its subsidiaries, as I am aware that these matters might be the subject of further litigation before this and potentially other courts..The applicants claimed the matter was urgent as it became apparent at that time that the Tekkie Town business and the shareholding related to it were not core assets of the first respondent. First respondent had commenced a process of disposing of its non-core assets in order to regain or sustain some form of liquidity. I was referred to a range of decisions dealing with the question of whether the claim as currently claimed, with or without the amendment sought, would define (can't read my own handwriting) the property sought to be preserved as res vendita that would entitle the applicants to the preservation thereof pendente lite..The strongest defence made out on the papers in the argument to the applicants' claim for restitution is mounted by the second and third respondents as they claim inter alia that they obtained the shares for value and had grown the business in the third and fourth respondents substantially since the time of takeover. Further that neither the second to the fourth respondents are parties to the main action, they are therefore inter alia not subject to the doctrine as it was only applied to the first respondent. These assertions lose sight of the nature of the relationship inter se in the Steinhoff Group. That it seems, might also not be always what it portrayed to be at first sight. As an example, the flow of this transaction is set out in detail in the papers in the annexes that are referred to from page 154 and onwards to the founding affidavit. The transfer passed of the Tekkie Town business and its shares was clearly plotted, having regard to the timeline before the first transfer took place..These timelines are common cause. Some of the decisions were made the day before the transaction would take place and on the same day the flow would go from one subsidiary to another at either the same price and/or an inflated price, and there is still an issue of the missing millions on the first transfer. Over and above that, despite what was disclosed in this matter, the applicants have pointed out in an affidavit made in the restraint of trade application, it was stated clearly on behalf of the second to the fourth respondents that the so-called sale of shares and the Tekkie Town business was part of, and I quote "an internal restructure caused pursuant to which assets and liabilities were transferred at net book value between two entities within the Pepkor Group"..The answer further to their perpetration is to my mind simply, that as possessors of the shares and the businesses and/or owners of the shares, it would defeat the relief if granted against the first respondent, if no relief is granted against the second to the fourth respondent, as they are the possessors and/or current owners of those shares. The Applicants relied on the dicta of Rumpff JA, as well as another matter of Holmes JA, in the matter of van Heerden v Sentrale Kunsmis Korporasie at paragraph 31H and further in the old style of reporting under 1973 (1) SA 17 AD. I do not deem it necessary to repeat the quotations from these cases that were contained in the heads of argument and presented to me. I mention this because when counsel prepare their leave to appeal application they can read it at their own time and see what it says. I further do not deem it necessary for purposes of this application to delve into the distinction between, whether the underlying transaction to the litigation was an exchange or a sale as it is apparent from the agreement itself that insofar as it relates to the applicants, that it was an exchange of the entire shareholding together with the business operated by it and the associated assets for shares in the first respondent that turned out to be fool's gold as a result of misrepresentations by Jooste on before the first respondent, Steinhoff..In my view the applicants made out a proper case for both urgency and the harm they seek to prevent is apparent. In an attempt to not unnecessarily disrupt or undermine the business of the second, third and fourth respondents that very well might also be victims of the apparent grand scale schemes of Jooste on behalf of Steinhoff – I saw to frame the relief with the safeguards built into it. I ordered that the costs stand over, as I am not sure what will happen to the matter when it is properly ventilated in a court and it will be premature to punish the respondents collectively and/or individually at this stage with a costs order. Those are the reasons for my decision..I decided to write brief reasons. Counsel with the leave to appeal application can be well advised to, if they want to listen to the argument that we had in court for almost the whole day, because I expressed various views in the argument as I engaged the parties in argument, which I do not deem necessary to repeat in the reasons for the order. Those are the reasons..The court may be adjourned..An Open Letter to Pepkor CEO Leon Lourens.25 August 2019.Dear Leon.It is fair to say that a lot of water has made its way to the ocean since that day in a coffee shop in Stellenbosch where you attempted to remove me from the Pepkor Exco. It was mere weeks after the collapse of Steinhoff. You said I was "too entrepreneurial" and that I "didn't gel that well with your 'corporate' team"..The reality is that we are all, in our own way, trying to move on from the wreck of Steinhoff and the events of December 2017. In this process there is a role for the truth, accountability and justice but also for forgiveness. So let me say this – despite my life's work having been stolen, I bear no personal grudges against you, against Markus, against the board of directors, against the auditors, against the ratings agencies and everyone who created an environment in which our business could be stolen and then held hostage. But the fact that I forgive those who are responsible must not be mistaken for the fact that we will not pursue justice. Everyone responsible must be held accountable for his or her actions. Pepkor has our company and we are entitled to get it back and we will enforce our rights..It is not difficult to recall in what a state you and your "corporate" team were after the Steinhoff implosion came to light. "What about the BVI?" you asked. Panic stations aplenty. When the press asked you if any Pepkor executives had been shielded from Steinhoff losses, you said "no". Then miraculously and mysteriously a "historic" guarantee appeared and shareholders had to foot a R500-million bill for the Steinhoff losses of those BVI executives including you. A bail-out by every definition. Your chairman, Jayendra Naidoo, promised an enquiry through your attorneys. The outcome of this enquiry never saw the light of day. The moral of the story? When you are "entrepreneurial" you lose your own money and you have to bail yourself out. But at least you can still defend yourself..Unfortunately, there are those that can't defend themselves and they are some of the most vulnerable people, including pensioners and government employees, who partly suffered their losses, according to the press, through the investment of your chairman Jayendra Naidoo and his Lancaster investment vehicles in Steinhoff and in its subsidiary Pepkor. According to the press, Mr Naidoo allegedly also scored a R120-million fee windfall for his investment in Steinhoff..You recalled a BVI member from retirement to take my place as the head of Pepkor's property division. You used two BVI members to replace Bernard as the CEO of both Speciality and Tekkie Town – two bailed-out men supposedly doing the job of one..So on Wednesday, after Judge Erasmus handed down his reasons as to why he deemed it fit to protect our rights and why he interdicted Steinhoff and Pepkor, you came out firing. You criticized the Judge, pointed fingers and made insinuations about my history with, and my alleged defense of, Markus Jooste. This is a spectacular attempt to obfuscate from the real issues. Steinhoff, led by Markus Jooste and its board of directors pursued and concluded the Tekkie Town transaction. You also know too well that the transaction was done on the explicit basis that we would be grouped by Steinhoff with Speciality. Judge Erasmus understood and explained that clearly..In any case I have said from the start that I am not God and that I am not a judge. Markus must have his day in court and so must everyone else who played a role in this landscape-altering saga. Let them be charged, let them be prosecuted, let them defend themselves and when found guilty, let them be sentenced. To facilitate those guilty parties being held accountable, Steinhoff must enter the proverbial playing field. Your parent company, who you yourself are suing, must release the PwC forensic report in full and cooperate entirely with the authorities..If you have nothing to hide, let the law run its course and assist the authorities in seeing to this. As for you and me, let's look in the mirror each morning and ask ourselves what our reaction was to the Steinhoff events..Happy trading.Braam.

PREMIUM: Inside Tekkie Town/Steinhoff story – full uncut interview with ex-CEO Bernard Mostert

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