THE TIGON PROBLEM
A fraud case that has been dragging on for 16 years has deep implications for any prosecution at Steinhoff
Revelations that four individuals have been reported to the Hawks over suspicious deals flagged by forensic auditors at Steinhoff International may be the first step in assigning accountability, but don’t get too excited just yet.
These four individuals — former CEO Markus Jooste, former financial director Ben la Grange, ex-company secretary Stéhan Grobler and Steinhoff Europe’s Dirk Schreiber — appear to have been flagged by the PWC investigation, which is entering its final furlong.
But for a variety of reasons, it’s unlikely that criminal charges will stick against all four of them.
For starters, while the case against Jooste is understood to be backed by firm evidence, the case against La Grange is more tenuous. Here, insiders say, the story relates to a “buying group”, which would supposedly negotiate discounts from overseas suppliers.
In reality, it seems this external “buying group” was largely a fiction. Insiders say this supposedly independent “buying group” would borrow money from Steinhoff, and then use this cash to pay “rebates” back to Steinhoff, lowering the company’s “cost of sales” and boosting profit.
Among the contracts that Pwc’s investigators uncovered was an invoice provided by La Grange to this buying group. The story behind this, sources say, is that Jooste told La Grange he needed an invoice to give to the buying group. But La Grange played it straight: first, he asked for the contract (which Jooste magically produced), and then he asked for evidence of cash flow, which he was shown too. It seems he had no idea the buying group was fake.
But when it comes to Jooste, the evidence is apparently far more solid. And that’s before you factor in the SMS that Jooste supposedly sent to a friend in the week before his resignation, advising him to sell his shares.
Still, that might not mean much when the investigation into SA’S largest corporate fraud is in the slippery hands of Hawks Maj-gen Alfred Khana. This is a man whom Popo Molefe, then chair of rail utility Prasa, accused of either world-class bungling or “deliberately seeking to frustrate the effective investigation” of various cases involving that corruption-riddled parastatal.
And there’s a third, perhaps more pressing, reason to remain sceptical of the state’s ability to put white-collar criminals behind bars: Tigon.
That story goes back to the late 1990s when an investment company by that name, founded by former Maritzburg College head boy Gary Porritt, sprang from nowhere to break into the JSE’S top 40. Only, its roaring share price had little to do with its fundamentals, and more to do with a scam in which a R160m investment fund, run by market guru Jack Milne, was secretly boosting Tigon’s share price, allegedly under Porritt’s guidance.
Porritt was arrested in 2002 and co-director Sue Bennett a year later. They were hit with 3,160 charges of fraud, share manipulation and various other violations.
Yet amazingly, they’ve been on trial ever since — for 16 years. You’d be forgiven for thinking it’s all just an extended research project into the joys of the Stalingrad legal strategy, in which every technicality is indulged.
The past week has shown this strategy in technicolour, when the case resumed in the high court in Johannesburg in front of judge Brian Spilg. As Moneyweb’s Antoinette Slabbert has diligently reported, two doctors have now certified that Porritt has been “malingering”— or faking illness — presumably to delay the trial even further. Last week, a shackled Porritt was wheeled to court in “an executive chair with armrests and wheels”, from which he then climbed out and crawled down the stairs to the bench in front of the court. He has spent hours in court lying on the floor, while Milne testified, according to Moneyweb.
As it is, Porritt has spent the past year behind bars at Johannesburg Central, better known as Sun City. Though he was initially given bail in 2002, Spilg revoked the bail last year after Porritt failed to arrive at court, ostensibly because he was too ill. Porritt said he “absolutely” believes he is suffering from a life-threatening disease and shouldn’t be in court — but Spilg didn’t buy it.
In March, Porritt went back to court to ask for his bail to be reinstated, but judge Ramarumo Monama vetoed his request. And the judge said Porritt’s strategy “has the hallmarks of the Zuma Principle – to drag the case through even when there are manifestly no prospects”.
“These particular tactics have since become commonplace in our courts. The delay of some 16 years cannot on any platform be justified. Approximately 17 judges have, in one way or another, dealt with this matter — not on trial but on peripheral issues,” he said.
That’s no exaggeration. At one stage, Porritt and Bennett even applied for legal aid, which the Legal Aid Board refused to provide. Consider, if you will, that Porritt is now 67 years old, but he was barely past his 50th birthday when first arrested.
It’s an alarming indication of just how effortlessly the judicial process can be hijacked — even though the Tigon case was brought in 2002 by a coherent National Prosecuting Authority, which included a crack crime-fighting unit in the Scorpions, which boasted a 92% conviction rate. Jooste will be well aware that Khana has never been in that league.
Gary Porritt was arrested in 2002 and co-director Sue Bennett a year later. They were hit with 3,160 charges