The Financial Services Tribunal (FST) yesterday dismissed an application from former Steinhoff International Holdings CEO Markus Jooste to suspend the JSE public censures imposed on him, and the prohibition of him becoming a director of a listed company for 20 years.
However, the JSE said in an update yesterday, Jooste’s application to suspend the R15 million of fines imposed on him by the JSE, was still being considered by the FST.
The Financial Services Conduct Authority also last year fined Jooste for insider trading to R20m, after Jooste was alleged to have sent warning SMSes to other executives encouraging them to sell their shares in the company before the crash for the global home product and furniture group..
Jooste is alleged to have masterminded the accounting frauds that led to South Africa’s biggest corporate collapse of some R200 billion in market capitalisation alone in 2017. He has nonetheless contested the censures and fines imposed on him by the JSE.
“The JSE will await the outcome of the reconsideration application in so far as the enforcement of the fine is concerned,” the JSE said yesterday.
On December 14, 2022, Jooste had applied to the FST for an order suspending the decisions of the JSE. On the same day, Jooste also applied for the reconsideration of the decisions of the JSE on his fines and public censures. The JSE opposed Jooste’s application, and said yesterday it would continue to oppose the reconsideration application.
The JSE said it has concluded its investigation into Jooste.
It said the two public censures and two “maximum permissible” fines were for Steinhoff’s 2015, 2016 and prior year financial statements that did not comply with accounting standards, the JSE listings requirements, and which had published materially false and misleading information. The breaches related to fake transactions at a subsidiary Steinhoff At Work.
Steinhoff At Work was a subsidiary of Steinhoff Investment Holdings whose ultimate holding company was Steinhoff. Steinhoff joined a structure referred to as a “buying group” through its involvement with TG Group Holding SA, whereby volume rebates were purported to be negotiated and collected by TG Group for the Steinhoff Group as well as other third parties.
“During mid-November 2016, Jooste created a handwritten document indicating the pro rata contributions of €23.5 million, which Steinhoff At Work would be entitled to receive, but there was no actual transaction nor any legitimate commercial reason that supported the information or calculations contained in the handwritten document,” the JSE said.
Jooste gave this handwritten document to Ben La Grange, CFO of Steinhoff at the time, to generate a false invoice to the TG Group for the contributions to be received by Steinhoff At Work from TG Group.
Thereafter, other Steinhoff representatives created various documents and gave instructions for monies to be transferred between Steinhoff Group bank accounts to create the impression that the pro rata contributions were actually paid to Steinhoff At Work by the TG Group, and to be used as audit evidence for the Steinhoff At Work September 2016 audit.
However, the contributions were never negotiated or collected by TG Group and TG Group did not pay for any of these contributions that had been accounted for as income by the Steinhoff Group. The result was Steinhoff At Work’s income for 2016 was falsely inflated by R376.67m, which in turn falsely inflated the income of the Steinhoff group.
Jooste, along with other former Steinhoff executives, are expected to appear in court in Germany in the first half of this year in connection with their role in the accounting frauds.
BUSINESS REPORT