‘Bad news’ texts damn Jooste

Former Steinhoff International chief executive Markus Jooste advised friends to sell the retailer’s shares days before the stock collapsed, according to a phone text message seen by Bloomberg.

The message, sent around November 30 to at least two people, told recipients there was impending, unspecified bad news coming. At the time, Steinhoff was in discussions with Deloitte LLP about the viability of its accounts.

On December 5, the company said it had uncovered accounting irregularities and that Jooste had quit, causing the shares to plunge 63% in a single session.

South Africa’s financial regulator has been made aware of the message, two people familiar with the situation said, asking not to be identified.

“The Financial Sector Conduct Authority is conducting comprehensive investigations into possible market abuse offenses regarding Steinhoff International,” Solly Keetse, head of market abuse, said. “All information is confidential. The investigations are ongoing.” Speaking to lawmakers last month, Jooste, 57, said he wasn’t aware of any financial irregularities on the day he resigned. He, instead, blamed the crisis on a protracted dispute with Austrian business partner Andreas Seifert, which triggered investigations into Steinhoff by European regulators and tax authorities. Steinhoff settled the impasse with Seifert by selling half its German furniture chain POCO to him.

Steinhoff’s shares have lost over 95% since December. Jooste referred to trouble with Steinhoff’s business in the US in his text message.

It’s not clear whether anyone who got the text acted on its contents. On November 30, 14.4 million shares changed hands, compared with a 15-day simple moving average of 13.9 million in 2017, up until December 6.

The figure soared to 33.4 million shares on December 5, just before the irregularities were announced, but by then Deloitte had refused to sign off on Steinhoff’s accounts and this had been disclosed to the market.

In the hours before Steinhoff’s shock announcement, Jooste wrote other messages to some former colleagues and friends asking for forgiveness for his role in the scandal and named four fellow executives that he said had nothing to do with any of his mistakes, said a third person, who declined to be identified. – Bloomberg