Steinhoff scandal can trip up horse racing industry
Not for the first time this year, the sport of horse racing finds itself in the spotlight for all the wrong reasons.
In March, Pretoria businessman Adriaan van Vuuren, owner of Triple Crown winner Abashiri, committed suicide after he had allegedly defrauded Telkom of half-a-billion rand.
Now Markus Jooste — leading owner for numerous seasons and someone who has backed racing with large investments — is headline news following allegations of irregularities regarding Steinhoff — of which he was CEO.
It has resulted in a huge decline in the company’s share price with the spiralling effects hitting the pensions of people throughout SA.
This has resulted in the Public Servants Association (PSA) call for a boycott of January’s Sun Met should any of Jooste’s horses compete in the race.
The PSA has also written to Sun International asking it to consider the unfolding events and reconsider its involvement in the race to protect the brand and compel the event organisers to exclude Jooste’s horses.
On the Richter scale, this is an earthquake for racing right up there with the biggest ever recorded of 9.5 in Chile in 1960.
Only last year, Jooste’s tie-up with John Magnier’s Coolmore Stud in Ireland was further evidence that he was spreading his racing wings to target the world’s most important races.
The Steinhoff saga has resulted in unprecedented social media comment — the racing newspaper, Sporting Post, has reported more than 40 posts, one on the PSA intervention.
The Sporting Post commented: "I sense hypocrisy and grandstanding here by the PSA. A few weeks ago, Roy Moodley was in the news for his involvement with the president [Jacob Zuma] and not a word was said about his horses. Now everybody and his dog is calling for boycotting and repercussions for horse racing, yet he is only one owner."
To say the whole Steinhoff affair has caught even seasoned financial experts and journalists by surprise is an understatement. Well-known financial journalist Alec Hogg in a story also published in Sporting Post, commented that his "interaction with Markus Jooste has always been direct and honest. It’s like having woken up in a parallel universe seeing [him] mercilessly pilloried on social media and widely labelled a crook."
This sentiment was also taken up by a post in Sporting Post, which stated: "Those who are pillorying the guy should know there is something called the presumption of innocence. As CEO [of Steinhoff] he bore the ultimate responsibility for the running of the company, but until proven otherwise, he did not participate in or initiate any unlawful act."
Another post stated: "Even if Markus has acted badly [and indications are he has] we must not forget the huge contribution to the creation and maintenance of jobs and [that he] has contributed to racegoers seeing many champions."
In a country with huge unemployment, the role Jooste has played in creating jobs has to be applauded and another poster hits the nail on the head when stating "what needs addressing is the issue of how large Jooste and Mayfair Speculators are in the racing industry and what the repercussions are of them pulling out".
The repercussions for the breeding industry could be huge. In the past decade — particularly at sales held by Cape Thoroughbred Sales of which he is (or was) a director — he has bought horses for sums breeders could only have dreamt about.
For example, a horse a breeder might have expected to be sold for around R500,000 at the National Yearling Sale at Germiston has been fetching four times that price at the CTS sales in Cape Town and Johannesburg — more often than not to a bid from Jooste’s racing manager Derek Brugman.
There is a call in the numerous posts on social media for Brugman to clear the air. One stated: "I think it’s important that — if not Mr Jooste, then his racing manager Derek Brugman — should make a statement of the situation so that people who will be affected can try and do damage control to survive."
Was there any indication regarding this whole drama that all was not right in the Jooste empire? Possibly, yes.
At the CTS Premier Sale in Cape Town last January, Jooste spent R6.6m on choice yearlings. That total increased to more than R7m at the sale held at Emperors Palace in Johannesburg in April.
Yet — at the recent Lanzerac Ready-to-Run sale held by CTS at Durbanville — the aggregate reached R30m and no one seemed to spot that Brugman signed for only two lots worth a total of R560,000.
Of course, the law must take its course and optimists are saying that horse racing can weather this earthquake.
Perhaps, but it is a brave man who will wager that Jooste’s possible departure from racing will not have far-reaching repercussions.