Death won’t void R510m owed
BIG BUCKS: FSCA AND JSE WILL MAKE CLAIM ON THE ESTATE FOR PERSONAL PENALTIES IMPOSED
Reserve Bank has already seized assets worth R1.4bn.
Despite former Steinhoff chief executive Markus Jooste’s apparent suicide on Thursday, there is no escape from the penalties imposed on him by the Financial Sector Conduct Authority (FSCA) and JSE, amounting to a total of R510 million for insider trading and publishing false financial statements and annual reports.
The FCSA had imposed its biggest administrative penalty to date – R475 million, announced on Wednesday. As the penalty in his personal capacity had already been imposed, his death would not affect it, said the FSCA.
“The authority is legally entitled to recover the penalty from the estate of Jooste,” the FSCA said in a statement.
“Whether the authority will claim against the estate will be decided at the appropriate time, considering all the relevant circumstances.”
Alex Pascoe, head of the market abuse investigation team at the FSCA, said on Wednesday Jooste could – and reportedly said he would – appeal any decision and take it on review to the high court and Constitutional Court.
Jannie Rossouw, visiting professor at the Wits Business School, independently agreed and said the penalties would become a claim against Jooste’s estate.
Jooste left his wife and three children behind.
The estate can also continue with the reviews of the findings and penalties, but will have to give reasons for doing so.
Rossouw said it was now, more than ever, important for Steinhoff to release the report prepared by PricewaterhouseCoopers (PwC), following an investigation initiated at the request of the supervisory board in December 2017, on the instructions of Werksmans Attorneys.
Rossouw said it was important the PwC report be released, as all the other people being investigated will now insist it was all Jooste’s doing to avoid being penalised.
He said the Steinhoff matter and Jooste’s suicide had put the spotlight on serious issues around corporate governance.
“It shows it is important to live it and not simply do it,” he said.
“It is also important to watch out in future for overbearing CEOs and boards where directors are overpaid and flown all over the world to make them reluctant to ask important questions.”
Police noted arrest warrants had been issued against Jooste and former Steinhof executive Stephanus Johannes Grobler on Wednesday.
The two were expected to hand themselves over at Pretoria Central police station and thereafter appear in the Pretoria Specialised Commercial Crime Court yesterday.
In October 2020, FSCA imposed an administrative penalty of R161 million on Jooste for breaching sections of the Financial Markets Act that prohibit an insider from disclosing information and/or encouraging or discouraging another person to deal in securities related to the inside information.
He was liable for R122 million, but this was later reduced to R20 million.
Jooste was fined after an FSCA investigation found that on 30 November, 2017, shortly before the near 98% decrease in the market value of Steinhoff shares, Jooste was privy to inside information related to Steinhoff.
He disclosed some of this information in a “warning SMS” to encourage four individuals close to him to dispose of their Steinhoff shares before some of the inside information was disclosed to the rest of the market.
Three of the people acted on his disclosure and encouragement by selling their Steinhoff shares.
In January last year, the JSE barred Jooste from directorships for 20 years and imposed two R7.5 million penalties on him for violating listing rules and submitting false financial statements.
The JSE said Jooste was the highest-ranking executive in the company and had ultimate responsibility for the decisions and actions of management.
The South African Reserve Bank seized assets worth up to R1.4 billion from Steinhoff and the Jooste family trust in 2022. Jooste had already started proceedings to take the first FSCA findings and penalty, and the JSE findings and penalty, on review. According to an overview of the report that Steinhoff released, the PwC findings are the product of a wide-ranging review done over 14 months. A large team of professionals collected, reviewed and processed information and data about Steinhoff. The report contains more than 3 000 pages and over 4 000 documents as annexures.
AmaBhungane and the Financial Mail filed separate requests in terms of the Promotion of Access to Information Act for access to the PwC report and the court found in their favour, but Steinhoff appealed the decision. The appeal is due to be heard this year.
FSCA said in a statement yesterday that Jooste’s death does not affect its ongoing investigation into Steinhoff.
“The investigation will continue as there are other investigated parties involved. The authority will also continue to assist the Hawks and the National Prosecuting Authority with any investigations they may have underway.”
Rossouw says this was not the last big company debacle: “We do not know who will be next, but there will be one.”
– inao@citizen.co.za
It is important to live it, not simply do it