The JSE has barred former Steinhoff CEO Markus Jooste from holding the post of director at any company for 20 years and he faces two fines of R7.5m, the maximum possible.
The local bourse announced the decision on Tuesday after Financial Services Tribunal judge Louis Harms dismissed Jooste’s appeal against the censure. Harms upheld only Jooste’s appeal against the fines, which will be argued at a later date.
Jooste, who was also given an embarrassing public dressing down, was CEO of Steinhoff in 2017 when auditors Deloitte refused to sign off the accounts. That led to the destruction of more than 90% of shareholder value, amounting to about R200bn.
Despite being implicated in the country’s biggest fraud, Jooste, who lives in the wealthy suburb of Voëlklip in Hermanus, has not faced criminal prosecution, with suggestions that the National Prosecuting Authority has been too slow to act.
Investor and Sasfin analyst David Shapiro said: “At least things are beginning to happen five years after the event.”
The move by the JSE is for two incidents and follows a fine against the company in 2020.
One was for Jooste creating a false invoice worth R376m, which inflated accounts.
The fictitious, handwritten invoice reflected money that had allegedly been paid by a company called TG Group to a Steinhoff subsidiary called Steinhoff at Work, but it was not based on any transaction or money changing hands.
The JSE found the fake invoice inflated earnings, showing Steinhoff at Work’s operating profit of R47.5m should have been a loss of R329m and this loss should have been reflected in Steinhoff’s consolidated financial statements.
The other infraction was for false and misleading financial statements about the company’s accounts, including for 2015 and 2016.
“Jooste was the highest-ranking executive in the company and bore ultimate responsibility for the decisions and actions of management,” the exchange operator said.
It said he ought to have known about the false and misleading information in the company’s accounts. It also found Jooste’s actions directly resulted in and/or contributed to Steinhoff breaching the bourse’s listings requirements.
The JSE censure and ban on Jooste came more than two months after the Reserve Bank seized assets worth more than R1.4bn belonging to Jooste, his wife and his family trust — including his house, jewellery, art, cars and cash — on grounds that he may have breached exchange control rules.
He is able to remain in his house but cannot sell it while he is investigated in case he is found guilty.
Trial in Germany
Bloomberg has reported that he will to go on trial in Germany this year for accounting fraud. German prosecutors have charged him with manipulating balance sheets worth €1.5bn (R26.7bn). Additionally, the value of real estate assets was inflated by €820m, according to German prosecutors.
Jooste was, however, able to successfully appeal against a charge of insider trading by the Financial Sector Conduct Authority. The Financial Services Tribunal in 2021 found that an SMS of his that warned people to sell shares was too vague to constitute insider trading.
Last year, Steinhoff reached a R24bn settlement in cash and Pepkor shares with over 8,000 SA and European shareholders who lost money when the share price collapsed.
However, current Steinhoff shareholders saw the share price end almost 90% lower at the end of 2022, as the retail holding firm reached an agreement with the main debt holders to take control of at least 80% of the company and delist it.
Steinhoff, whose €10bn debt exceeds the value of its assets and is due in June this year, is in talks with major lenders about extending the repayment date, in exchange for up to 100% control of the firm.
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