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The Seagull's Name Was Markus Jooste: Steinhoff And The 'Stellenbosch Mafia'

A former staff member recalls the tactics used by former Steinhoff CEO Markus Jooste and his "Stellenbosch Afrikaner mafia".

12/12/2017 13:14 SAST | Updated 12/12/2017 15:35 SAST
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A Steinhoff International Holdings NV logo sits on display outside the company's offices in Stellenbosch, South Africa, on Wednesday, Aug. 17, 2016.

They called him "The Seagull". This nickname, which was only uttered behind closed doors and among friends, was a name that Markus Jooste had earned, not by virtue of his free-flying nature, but instead, as a result of his uncompromising hard-nosed executive style. Markus was the seagull because he would fly in, shit all over his executives and then fly out.

In one particularly nasty moment in which Markus displayed his propensity for flying in and shitting on people, he made sure that he had a captive audience and used the moment for maximum humiliation.

It was after eight on a Friday evening when I, together with the rest of the executive team of one of the group's companies, received an SMS demanding our presence at the office the next morning at 8am sharp. Being called to an urgent meeting on a Saturday morning by the chief executive officer of the group was a clear indication that we were either going to receive an unprecedented bonus, or there was some serious shitting in the offing.

It was with great trepidation that the management team arrived at the office that Saturday morning. Markus was already in a meeting with the managing director of the company, but it was clear that sparks were flying and Markus was in full battle cry.

The poor MD was at a loss for words as the tirade appeared to have no end. Eventually he literally dragged the MD and the rest of the management team on a tour of the factory, pointing out pallets that were incorrectly stacked or unevenly packed, dust on the floor and any small infraction that could serve as fuel for his indignation and disgust at the quality of the management he was about to fire.

After subjecting the MD to a humiliating tirade, he summarily told the MD to "get out of my fucking factory".

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Markus Jooste, former CEO of Steinhoff. (Photo by Jeremy Glyn/Financial Mail/Gallo Images/Getty Images)

Such was the nature of "The Seagull". The acerbic nature of his displeasure would leave even the most hardened executive with tears in the eyes.

Built around a close group of friends who had all studied at Stellenbosch University, the Stellenbosch Afrikaner mafia, as the close group of trusted lieutenants around Markus was known, instilled a domineering, patriarchal, misogynist and racist culture in which no human emotion was spared when it came to those all-powerful aphrodisiacs: profit and money.

The company that was later to become known as Steinhoff was from its outset built on the same logic that would eventually see the pyramid collapse in spectacular fashion. Using his Afrikaner connections to people such as Christo Wiese, Markus had the uncanny ability to raise funds to acquire loss-making businesses and to continually conglomerate them in order to hide losses while building economies of scale.

The promised economies of scale were notoriously difficult to achieve and soon the logic changed from building economies of scale to vertical and horizontal integration. Starting with the Gomma-Gomma group of furniture manufacturers, acquiring other furniture manufactures along the way, Markus started to buy shares in transport companies and forestry companies promising to integrate the entire value chain, thus delivering super profits.

When the promised returns failed to materialise, the quick fix was to acquire an even bigger company within which the losses could be absorbed or magically made to disappear.

The Stellenbosch Afrikaner mafia that conglomerated the Steinhoff empire were all sophisticated accountants and it soon became a trademark of the group that when a manufacturing business needed a leader, it was to the Stellenbosch-educated Afrikaner accountants that Marcus turned to.

Only the fools would question the mafia about anything from strategy to accounting practices and those who were foolish enough to question, soon found themselves on the streets.

The culture was decidedly macho Afrikaner and management was dominated and controlled in effect by the Stellenbosch-educated Afrikaner accountants. Within this culture where there were no women and only a few faces of colour, the interests of the country were secondary and the importance of BEE and affirmative action a major hindrance to the main project of getting rich.

"We can't get rich by earning a salary" was Markus' common reminder to his executives. Shares were Markus' preferred currency. Executives around him were fed a constant stream of shares through share schemes and this kept all his lieutenants and executives docile and unquestioning.

Only the fools would question the mafia about anything from strategy to accounting practices and those who were foolish enough to question, soon found themselves on the streets.

Markus did not make a mistake, and he did not do it alone, this much is abundantly clear.

It is in light of this macho-domineering culture that Markus' last missive to his colleagues should be read.

He was not sorry that he had done the wrong thing, only sorry that he was caught. In true macho style he was going to face the "consequences like a man". Despite his rise to the top, and maybe because of his rise to the top, Markus had no idea that our society had morphed into a pluralistic society in which the "dumb jock" was no longer the standard by which we measured integrity.

In fact, if anything, his promise to take it like a man shows how corporate culture, ensconced as it is in the central ideas of money, profits and patriarchy, become insulated from developments in the rest of society, simply because their money provides them with the magical power that ensures that everybody looks the other way.

Waldo Swiegers/ Bloomberg via Getty Images
A Steinhoff International Holdings NV logo sits on display outside the company's offices in Stellenbosch, South Africa, on Wednesday, Aug. 17, 2016.

The Steinhoff dream was unmistakably the maintenance of an anachronistic "old boys' club", where misogyny and racism were celebrated and where the pursuit of wealth was all important. One need look no further than the demographic make-up of the Steinhoff head office staff to verify the insular nature of the Steinhoff dream.

From government SOEs that invested in Steinhoff, to investment bankers and fund managers, the most important thing was not the racist patriarchal misogyny of the group, it was about the money and profits that could be derived. The virtue of profit and money had triumphed over the values enshrined in the Constitution, which was won only by the blood of so many.

Markus did not make a mistake, and he did not do it alone, this much is abundantly clear. From Christo Wiese to every single board member and executive manager, they were most certainly aware of the rot that was underfoot, but were either earning too much to blow the whistle, or too spineless to stand up for what's right.

The question South Africa now faces is whether the culture of money and profit has truly grown so powerful that all our constitutional values are worthless in the face of it.

Christopher Rutledge is a former employee of one of Steinhoff's subsidiaries.