Jooste ‘not just Steinhoff CEO, he knew its rights and wrongs’

• Tribunal dismisses former head’s defence that he did not benefit financially when he advised friends to sell shares

The Financial Services Tribunal has torn apart former Steinhoff CEO Markus Jooste’s defence that because he did not benefit financially when he tipped off his associates to sell their stock in the company before its share collapse in 2017 he should be spared punishment.

“While Mr Jooste did not benefit financially from sending the warning SMSs to his friends, two benefited,” judge Louis Harms ruled. “This, by implication, caused loss and damage to others. Indeed, those persons were ignorant as to the problems at Steinhoff, and who therefore purchased the shares sold by the two recipients suffered substantial losses when the share price dropped dramatically.”

The Financial Sector Conduct Authority (FSCA) in December issued a revised penalty of R20m to Jooste, down from the R162m announced in October 2020. This reduction did not satisfy Jooste, who stands accused of defrauding Steinhoff. He approached the tribunal for recourse, arguing that the R20m fine was incorrectly calculated.

The tribunal rejected this argument and pointed to the seriousness of his actions.

“Mr Jooste was not only the

CEO of Steinhoff, a multinational company, but he was also Steinhoff. He knew Steinhoff and the rights and wrongs within the company. If he, uninvited, advises three friends to dispose of their Steinhoff shares and destroy his advice SMSs, it shows, as Mr Jooste submitted, that his actions were deliberate, premeditated and calculated.”

Jooste’s argument that his wealth was depleted after his exit from Steinhoff in December 2017 did not gain traction with the tribunal.

“Despite being invited to disclose his financial position, Mr Jooste only referred to his last aftertax income from Steinhoff, which exceeded R100m for the tax year. For the rest he kept mum. Whether his legal problems and destruction of his business career were self-inflicted or due to external factors over which he had no control are matters we are not called upon to speculate since Mr Jooste did not enlighten us.”

Jooste, former CFO Ben la Grange and former executive Dirk Schreiber are on the list of the individuals implicated in a report by audit firm PwC on the collapse of Steinhoff. The report found that Jooste and other directors recorded income from fictitious and/or irregular transactions between the 2009 financial year and 2017. PwC said the group’s profits were inflated by €6.5bn during the period.

Steinhoff is also pursuing former executive Stéhan Grobler, demanding that he pay back nearly R300m in salaries, bonuses and other incentives.

Grobler, who worked for the group in various capacities for 19 years, is facing a demand of R238m from Steinhoff Africa Holdings, €1.3m from Steinhoff Europe Group Services and €315,000 from Steinhoff Europe.

In their particulars of claim the entities say the money paid to Grobler during his stay with the group, in particular bonuses and share incentives, was paid out in the false belief that the financial statements of the group accurately reflected its true financial position as well as its profitability and performance.

The group says that in light of the fraud that took place at the company, which saw its asset base inflated, it has been impoverished by the payments to Grobler and that he was unjustifiably enriched in the process.

Business Day reported in June that retail billionaire Christo Wiese is a step closer to regaining ownership of the Lanzerac wine estate from Jooste after clearing a legal hurdle in the drawn-out dispute. Wiese launched a lawsuit in 2021 against Jooste in a bid to get back the exclusive property in Stellenbosch, or alternatively the monetary value of the transaction, claiming the latter had bought it under false pretences. Wiese’s entities, Titan Asset Management, CPW Wine Brands, Titan Premier Investments and Wesfam Trust, are the plaintiffs.

At the heart of Wiese’s argument is that he did not know in 2011 that he was actually selling his prized possession to Jooste, who pretended to represent a consortium of investors looking to buy the property. Wiese sold the property to the “consortium” for 10-million Steinhoff International shares, valued at R220m at the time.

The value of the shares is also important to Wiese’s case as he claims Jooste knew at the time they were overstated due to the fraud that he allegedly masterminded.

At the time of the transaction, Jooste was Steinhoff’s CEO. Wiese would go on to invest heavily in Steinhoff, ending up as the group’s chair and owning about 22% of the company, the stake he built in 2014 when he sold his clothing retailer Pepkor to Steinhoff for cash and shares.

JOOSTE’S ARGUMENT THAT HIS WEALTH WAS DEPLETED AFTER HIS EXIT FROM STEINHOFF DID NOT GAIN TRACTION