Embattled multinational Steinhoff is facing another drama, with its big U.S. investment Mattress Firm embroiled in an unsavoury legal battle with former executives and a property broker about kickbacks, fraud and "reckless" and aggressive expansion.
According to Bisnow, Mattress Firm sued property broker Alexander Deitch, who was fired by Colliers International, as well the company's in-house real-estate executives Bruce Levy and Ryan Vinson, accusing them of steering the company to high-priced real-estate deals in exchange for kickbacks and other incentives.
Deitch has now filed a counterclaim, saying the company knew and encouraged the deals.
Mattress Firm is one of the biggest players in the U.S. mattress market and was bought by Markus Jooste's Steinhoff in 2016. The purchase raised eyebrows, according to Bisnews, because Steinhoff paid a premium of 115 percent on Mattress Firm's share price at the time, buying the company for $3.8-billion [~R48.25-billion] at $64 [~R813] per share. It rapidly expanded to 3,000 stores, up from 728 in 2015. It is now closing a number of outlets.
Deitch claims in court papers that Steinhoff's financial issues are the reason why Mattress Firm is now suing him and the former executives. He also says Steinhoff was busy with its due diligence investigation at the time Mattress Firm was aggressively "and recklessly" expanding.
Steinhoff imploded in December last year, after it was announced that its financial statements from as far back as 2015 will have to be reissued because of accounting irregularities. Jooste resigned shortly after that.
Mattress Firm claims Deitch and the company's two executives conspired to force the company to enter into real-estate deals that were expensive and out of market range. The three allegedly scored kickbacks in the form of money, yachts and expensive hotel stays.
But Deitch says it was part of the Mattress Firm corporate culture, in which executives were allowed to receive gifts and trips, including tickets to events such as the Augusta Masters golf tournament and holidays to Spain.
He says the company had a "brutal and unrelenting" competitiveness in its culture, which led it to open hundreds of stores in a short time in an attempt to dominate the national retail market.
"Mattress Firm employees and executives not party to this lawsuit would speak of crushing or burying a competitor by any means necessary, including stealing deals, paying higher than market rates, getting property locked down by any means and at any price, to demolish and destroy anyone in their path," Deitch says in court papers.