More than a year after Steinhoff mastermind Markus Jooste successfully got his insider trading fine reduced from a whopping R161.6-million to just R20-million, the Financial Sector Conduct Authority (FSCA) has hit him with a R475-million penalty.

The regulatory authority is not stopping there and plans to open a criminal case against Jooste shortly.

The penalties issued on Wednesday against Jooste and Steinhoff’’s former European finance chief, Dirk Schreiber, are for having made or published false, misleading or deceptive statements about Steinhoff International Holdings Limited and Steinhoff International Holdings NV, which they knew or ought reasonably to have known were false, misleading or deceptive. This included the omission of material facts.

The FSCA found that Jooste and Schreiber contravened the Financial Markets Act (FMA) in respect of Steinhoff International Holdings Ltd and Steinhoff International Holdings NV’s annual financial statements and annual reports for the 2014 to 2016 financial years, and the 2017 half-year. 

The Steinhoff International securities were listed on the JSE and the Frankfurt Stock Exchange during this period. 

It is worth noting that between 2014 to 2017, Jooste earned more than R651-million from Steinhoff International alone. 

The FSCA noted in the court order that he had received income from other sources during this time but failed to disclose that income despite being asked to do so.

The Financial Markets Act prohibits a person from directly or indirectly making or publishing any false, misleading or deceptive statement. The Act also prohibits the promise or forecast in respect of any material fact regarding the past or future performance of a company which has listed securities on a regulated market, and which the person knows, or ought reasonably to know at the time and in light of the circumstances in which it is published, is false, misleading or deceptive. 

It similarly prohibits such a publication if, for the reason of the omission of a material fact, the statement, promise or forecast is rendered false, misleading or deceptive.

One month to cough up

Jooste has to pay the administrative penalty of R475-million to the FSCA on or before Tuesday, 19 April 2024 – giving him a month to come up with the funds. 

The R475-million includes a contribution of R10-million to reimburse the FSCA for costs incurred in connection with the investigation of the contravention, and interest at the rate of 11.75%. The interest will accrue on any unpaid portion of the administrative penalty until it is fully paid.

When calculating the penalty amount, the FSCA considered:

• The need to deter similar behaviour in the market.
• The amounts of the losses experienced by the market.
• Jooste’s level of cooperation during the investigation.
• The nature, duration, extent and seriousness of the contraventions.
• The extent of any financial or commercial benefit to Jooste.
• Previous contraventions of financial sector laws (insider trading and the contravention of the JSE’s listing requirements).
• The effect of Jooste’s conduct on the financial system and financial stability.
• The effect of the proposed penalty on financial stability.
• The extent to which the conduct was deliberate or reckless.
• Jooste’s submissions regarding the merits of the case against him, including his submissions regarding an appropriate penalty.

‘Unaware’ of financial irregularities

Although Jooste attended the FSCA interviews under notice and on dates arranged with his lawyers, his responses to most questions were not actual answers to the questions. 

“He persisted that there were no financial irregularities that he was aware of or participated in. To that extent, he complied with the notice to attend but failed to provide all answers and information relevant to the investigation in a cooperative manner,” the FSCA said in its signed penalty order.

Penalty waived in return for cooperation

Schreiber, on the other hand, negotiated a leniency agreement with the FSCA in exchange for his cooperation with the investigation. The leniency agreement effectively means that although Schreiber was found guilty, he will not face an administrative penalty.

In September 2019, an administrative penalty of R1.5-billion was imposed on Steinhoff International. Upon application made by Steinhoff 3 International, the penalty was reduced to R53-million and it was paid before Steinhoff International became a new private Dutch holding company at the end of 2023. 

The findings relating to Jooste and Schreiber were made as part of an ongoing investigation by the FSCA.

Alex Pascoe, head of market abuse at the FSCA, told journalists on Wednesday that further investigations are underway into similar contraventions of the FMA by other individuals. 

Daily Maverick tried to contact Jooste for comment, but he did not respond by the time of publication. DM