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Investec's Bernard Kantor caught in Steinhoff headlights

Cape Town – Disgraced former Steinhoff boss Markus Jooste’s horse racing company, Mayfair Speculators, has refused to repay a R250m credit facility extended to the company by Investec, despite a close personal and business relationship between Jooste and Investec managing director Bernard Kantor.

Jooste enthusiastically proclaimed himself the "Robin Hood of Epsom" after his Steinhoff-owned Poundlands secured a 10-year lease for the hill overlooking the Epsom racetrack. The deal was closed with the assistance of Investec.

Jooste's words foreshadowed events later that year, as he displayed a fondness for taking from the rich - especially if the rich happened to be Jooste's friends and business partners. 

Following Jooste’s resignation in early December 2017, the Steinhoff share price fell from nearly R58.00 per share to a low of R6.00, wiping out billions of rand of investors’ money in the process. This included investments from the Public Investment Corporation, private investments and retirement funds as well as prominent individuals.

Enter Bernard Kantor

Investec group managing director Bernard Kantor has close personal and business relationships with Jooste. The 68-year-old Kantor has been the bank's MD since 1978. In September 2016 Kantor told Biznews' Alec Hogg that he is "quite close to Markus Jooste. I think he's unique. He has everything".

Kantor and Jooste have joint directorships and shareholdings in several entities related to race horse breeding, training and racing. They were also part of several horse racing partnerships registered with the National Horseracing Authority, which unceremoniously stripped Jooste of his racing participation rights on December 22 2017.

Chris van Niekerk, Bernard Kantor and Markus Jooste. (Source: www.sportingpost.co.za)

Klawervlei Stud

Jooste, Kantor and Stefan Potgieter (Jooste’s son-in-law) are among the joint directors of Klawervlei Stud, a renowned horse stud near Bonnievale in the Western Cape that describes itself as a "corporate entity owned by John Koster and a syndicate of businessmen".

Chris van Niekerk, a friend of Jooste and also a director of Klawervlei Stud, came to Jooste's defence during an address made at the opening ceremony of the Cape Premier Yearling Sale in Cape Town on January 21 2018. "I'm not here to sing anybody's praises or to cast any judgement. I'm in the sad corner. I'd rather remember the value added over the years to the industry and to peoples' lives," he said.

"Mayfair Speculators owned 25% of CTS [Cape Thoroughbred Sales]. The other 75% are still represented here tonight. I’d like to thank my fellow directors, fellow shareholders. I need to thank Bernard Kantor for playing a key role in stabilising matters at this difficult time."

                                      Klawervlei Stud Farm near Bonnievale in the Western Cape

Phumelela Gaming and Leisure

Kantor, Jooste and Van Niekerk also served as directors of Phumelela Gaming and Leisure, a licensed horse racing operator. Kantor is currently the chairperson of the board after he replaced fellow Investec director Peter Malungani in December 2017.

Phumelela Gaming has been the subject of a Public Protector investigation concerning the alleged misappropriation of state assets for the benefit of the horse racing operator, although the final report is still outstanding.

The issues investigated by the Public Protector include allegations that Phumelela Gaming irregularly secured government funding and state-owned racecourses around the country, referred to as a "smash and grab" by insiders with knowledge of the complaint.

Cape Thoroughbred Sales

Kantor, Jooste and Van Niekerk are also directors of Cape Thoroughbred Sales (CTS). According to the CTS website, the company takes pride in being an "independent, commercial, sales company, uniquely devised to be dedicated to the growth of the sport of horse racing and the thoroughbred breeding industry". It hosts the annual Cape Premier Yearling Sale.

Mayfair Speculators dominated the yearling sale in previous years, purchasing tens of millions of rand worth of horses from Klawervlei Stud. 

Industry insiders have raised concerns that the businesses owned by Jooste are acting as both buyer and seller, causing an artificial inflation of yearling horse prices.

Company records show CTS shares the same business address as Mayfair Speculators. Signage at the Technopark Office Park in Stellenbosch where the two businesses are situated has been removed, but parking allocations still reserved a parking area for CTS at the premises. Google street view also displays Mayfair Speculators' signage at the office in 2015, whereas the same image from 2009 indicated Steinhoff as the tenant of the building.

                                           Jooste and Kantor’s shared business and shareholdings.

Mayfair asks for more money

Court papers show that Mayfair Speculators, represented by Stefan Potgieter, requested an extension of the company's existing credit facility with Investec in late November 2017. A total of R93.4m was paid in two tranches to Mayfair Speculators on November 29 2017, secured by Steinhoff shares held by Mayfair Speculators. This brought the total facility Mayfair Speculators held with Investec to a quarter of a billion rand.

Less than two weeks after extending the credit facility with Kantor’s bank, Jooste stepped down amid allegations of irregular accounting practices. This sent the Steinhoff share price plummeting and rendered Mayfair Speculator’s collateral pledged to Investec as insufficient to secure the facility.

It is unclear where Mayfair Speculators will find the money to repay Investec, as Absa also claims a further R226m owed to it in terms of similar agreements backed by Steinhoff shares as collateral. In a meeting on December 9 2017, Mayfair Speculators told Investec and Absa that it has nearly R1bn in debt and can only raise a third of this if its assets are sold at their true value.

Yet only weeks earlier, Mayfair Speculators paid a dividend in specie of R1.5bn to its two directors, Jooste and Potgieter. These assets, shares and cash were paid in August 2017.

Investec ended up granting a R250m facility to a business associate and friend of their top executive, which has now claimed it has insufficient assets to honour its agreement with Investec. Kantor appears to have been caught unawares by Jooste's intentions, and shortly after Jooste’s resignation Investec instituted legal proceedings to freeze the dissipation of Mayfair’s assets.

This prompted Absa to approach the court asking for similar relief, to be heard in the Western Cape High Court on April 30 2018.

Notwithstanding detailed questions on whether Investec knew of Kantor’s relationship with Jooste and that Mayfair Speculators shares an address with Kantor’s CTS, Investec merely stated that they are "satisfied there was no breach of their conflict of interest policy".

Investec announced this week that Kantor would resign as MD from 1 October 2018, citing succession planning as the rationale behind the move. 

Emailed questions posed to Kantor regarding his business and personal relationships with Jooste have not been responded to.

          An expanded breakdown of Jooste and Kantor’s shared business and shareholdings.

Click here to see a high resolution version of the breakdown

Wiese lost 87% of his wealth

Kantor was not the only friend and business partner of Jooste left embarrassed following the 52-year-old businessman’s step-down from the furniture retailer. 

Christo Wiese, the billionaire businessman and a friend and mentor to Jooste, lost a staggering R30bn in less than three days following the news of Steinhoff's accounting irregularities. Wiese was heavily invested in Steinhoff, and Jooste’s calamitous exit lost one of Africa’s richest men about 87% of his wealth.

Wiese took over from Jooste as the acting chief executive in early December 2017 before resigning as both CEO and chairperson of the Steinhoff board later that month, citing conflicting interests as the reason for his step-down.

 Google Streetview images of the business premises shared by Mayfair and Cape Thoroughbred Sales.

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