Steinhoff’s Jooste takes his life
Former Steinhoff CEO Markus Jooste, accused of being the mastermind behind SA’s biggest fraud case, fatally shot himself on Thursday to avoid handing himself over for arrest, sources have confirmed.
Jooste was CEO of multinational furniture retailer Steinhoff when it created fictitious offshore shell companies to inflate profits and hide losses.
Despite involvement in SA’s biggest fraud, in which SA and European shareholders and pension funds lost at least R200bn, he was yet to face charges, though it is believed he was set to hand himself over for arrest to appear in court on Friday.
According to charges filed in 2023 in a German court, where he failed to present himself, Jooste insisted that managers of European subsidiary companies created and falsified Steinhoff’s earnings figures from 2011 and 2013 to help him manipulate the Steinhoff books. He and some of his managers also inflated property asset values.
A day before his death, the Financial Sector Conduct Authority (FSCA) fined Jooste R475m for misleading the market about furniture retailer Steinhoff from 2014 to 2017. It concluded that he “intentionally lied” to it during its investigation. It said that in denying being behind any of the reported financial irregularities and by not answering questions adequately Jooste served to “deceive and waste the time” of the FSCA.
LAMBASTED
The FSCA lambasted Jooste in its order, saying he did not cooperate with its investigation even as he attended interviews. He failed to provide answers and information relevant to the investigation in a co-operative manner, it said.
“His responses, in many instances, did not amount to answering the questions put to him and of which he knew or should have known the answers,” it said. He “persisted” in saying there were no financial irregularities that he was aware of or participated in. “As far as the evidence and expert evidence obtained prove the contrary, the FSCA concluded that he intentionally lied.”
The R475m fine, which includes R10m for the cost of its investigation, was to be paid within the next month or incur interest of 11.75%.
The FSCA said: “The investigation found that Jooste and [European finance chief] Dirk Schreiber made or published false, misleading, or deceptive statements about Steinhoff which they knew or ought reasonably to have known were false, misleading, or deceptive. Such publication included the omission of material facts.”
The Financial Markets Act prohibits publication of a company’s past performance or predictions of future earnings, which a person knows or ought to know are false, misleading or deceptive. The contraventions the FSCA flagged were linked to what was reported in Steinhoff’s 2014, 2015 and 2016 annual financial statements and annual reports. They include the statements about the 2017 first financial half.
SETTLED
The interest levied on late payments would apply to any unpaid portion of the administrative penalty until it was fully settled, the FSCA said.
On arriving at the amount of the administrative penalty, the FSCA considered factors such as the need to deter similar behaviour in the market; the losses experienced by the market; the nature, duration, extent and seriousness of the contraventions; and the extent of any financial or commercial benefit to Jooste.
Schreiber, who was jailed in Germany for his role in the fraud, was not fined as he co-operated with the investigation and provided evidence.
In setting the fine, the FSCA took into account Jooste’s earnings, saying that from 2014 to 2017 he was paid R643m as Steinhoff CEO. It said he was one of the highest paid CEOs in the world at the time.
The FCSA also considered his previous contraventions of financial sector laws, which include insider trading and contravention of the JSE’s listing requirements.
Jooste was previously fined R162m by the FSCA for insider trading, with this later reduced to R20m. He then appealed against this lower figure at the Financial Services Tribunal, but lost that case in 2023.
The FSCA said on Wednesday it had expected Jooste to appeal against the R475m fine.
Steinhoff’s share price was R46.50 on the day before auditors Deloitte refused to sign off accounts in December 2017 and the fraud was disclosed. The share price then plunged more than 90%.