Markus Jooste, the former Chief Executive Officer of Steinhoff International, faced a hefty penalty of 475 million rand ($25.15 million) levied by the Financial Sector Conduct Authority (FSCA). This action comes in light of Jooste’s involvement in publishing false and misleading financial statements, contributing to one of the most scandalous episodes in the country’s recent corporate history.
Steinhoff, a conglomerate with a diverse portfolio including the majority ownership of Pepkor, a prominent South African discount retailer, was thrust into turmoil in December 2017. The revelation of substantial discrepancies in its accounting records marked the beginning of an unraveling that exposed deep-seated fraud within the organization. This crisis precipitated a dramatic loss in value and triggered numerous lawsuits against the company, pushing it to the brink of collapse.
In response to its precarious financial position, Steinhoff embarked on a comprehensive debt restructuring plan last year. This strategic maneuver, aimed at staving off bankruptcy, entailed delisting the parent company from both the Frankfurt and Johannesburg stock exchanges. A new, unlisted holding structure was established, granting shareholders a 20% stake in this newly formed entity.
The FSCA’s investigation into the matter concluded that both Jooste and Dirk Schreiber, the group’s European finance chief, were complicit in the dissemination of financial information that was either knowingly false or should have been recognized as misleading. Their actions, according to the FSCA, involved not just the dissemination of incorrect statements but also the omission of critical material facts that misled shareholders and stakeholders about the financial health and operations of Steinhoff International Holdings during the fiscal years 2014 to 2016, and the first half of 2017.
While Jooste has been ordered to pay the substantial fine by April 19, including an additional 10 million rand to cover the FSCA’s investigative costs, Schreiber faced no administrative penalty. The FSCA noted Schreiber’s cooperation during the investigation and other mitigating factors as the reason for this decision. This regulatory action underscores the South African authorities’ commitment to maintaining transparency and accountability within the financial sector.
