Argos bid gatecrasher Steinhoff International under tax scrutiny in Germany

The company run by horseracing tycoon Markus Jooste has repeatedly paid way under the official corporation tax rate in South Africa

Steinhoff’s potential tax troubles complicate the battle with Sainsbury’s to buy Argos owner Home Retail (Getty)

The South African retail group which gatecrashed Sainsbury’s £1.3bn bid for the Argos owner Home Retail Group is the subject of a major tax investigation in Germany, where its European offices are based.

Steinhoff International’s offices in the German city of Westerstede were raided by German prosecutors in December as part of an investigation into its tax affairs. In its prospectus when it floated shares on the Frankfurt Stock Exchange later that month, it admitted it was subject to investigations by tax authorities in Austria, Germany and South Africa due to its use of so-called transfer pricing, where companies can shift profits to lower tax jurisdictions. Both Google and Starbucks have come under fire for using such practices.

The company run by horseracing tycoon Markus Jooste has repeatedly paid way under the official corporation tax rate in South Africa. Recent research showed it paid 11.2 per cent corporate tax there over the past five years compared with the official rate of 28 per cent.

News of Steinhoff’s potential tax troubles add further spice to its looming takeover battle with Sainsbury. Steinhoff threw Sainsbury’s takeover into disarray on Friday night when it said it was considering a rival bid for HRG, with an identical plan to offload the Homebase chain and retain Argos.

The Independent understands that Andy Bond, the former boss of Asda, has been advising Steinhoff on its plansin an unofficial capacity. The renownedUK retailer is close to Steinhoff’s major shareholder Christoffel Wiese, whose Pepkor is backing Mr Bond’s discount clothing chain Pep & Co. Mr Bond declined to comment but one source confirmed he was acting as Mr Wiese’s “eyes and ears”.

Mr Wiese is a South African billionaire who currently owns New Look. As well as having a 17 per cent stake in Steinhoff, Mr Weise is also a board director. Sainsbury will this week request an extension to Tuesday’s Takeover Panel deadline for its bid. Thanks to a rise in Sainsbury’s share price, its offer for HRG, funded in a mixture of cash and Sainsbury shares, is worth 167p a share, not far off the 175p Steinhoff proposed on Friday night.