More than six years after South African retail giant Steinhoff was rocked by a €6.5bn accounting scandal, authorities were finally closing in on the alleged orchestrator of the country’s largest ever corporate fraud: Markus Jooste.
On Wednesday the Hawks, the country’s elite crimes unit, had obtained arrest warrants for the company’s former chief executive as well as for its former legal head Stéhan Grobler. The pair had been ordered to appear in court on Friday, a moment that would have opened the possibility of a trial — and for the country a way of showing it is serious about tackling white collar crime.
But on Thursday, hours before being arrested, Jooste decided otherwise. Authorities and witnesses said he apparently shot himself not far from his house in Hermanus, a wealthy coastal town south of Cape Town, beneath the cliff paths overlooking the ocean. The 63-year-old executive died on his way to hospital, local police said.
Jooste’s trial “would have been an opportunity for the South African prosecuting authorities to showcase its ability to convict corporate fraud cases successfully”, says Asief Mohamed, chief investment officer of the Cape Town-based Aeon Investment Management.
“The collapse of Steinhoff, spearheaded by Marcus Jooste, remains one of South Africa’s most egregious corporate scandals. The immense loss of worker retirement savings exposes a critical failing in governance.”
The apparent suicide of the flamboyant retail boss, who until the end insisted he had no knowledge of accounting irregularities, has sent shockwaves through South Africa’s business community.
Listed in Johannesburg and Frankfurt, Steinhoff was once the second largest furniture retailer in Europe behind Ikea, owning brands including Conforama in France and Poundland in the UK. But after the scandal broke in December 2017, the stock plunged 98 per cent. Last year, creditors took ownership of it and delisted it.
Dubbed South Africa’s Enron, forensic investigators at PwC said in 2019 that Steinhoff’s profits had been falsely inflated by €6.5bn in “fictitious or irregular” transactions over a decade — all under the nose of audit firm Deloitte and a qualified board that included three directors with PhDs in accounting.
Although German authorities issued an arrest warrant for Jooste earlier this year, South African prosecutors had failed to move on the case for more than six years, raising questions about the country’s ability to convict white collar criminals.
In a push to turn that record around, a year ago the country’s National Prosecuting Authority hired a crack team of top private sector lawyers, led by Wim Trengove, Michelle le Roux and Michael Mbikiwa.
“My sense is that he never thought the authorities would get it together,” says one legal source close to the case. “It would have been a serious shock to him when the police arrived and told him to appear in court on Friday.”
It meant that when Grobler handed himself to police on Friday morning and appeared in court to be presented with seven charges of fraud and racketeering — the first Steinhoff executive to face criminal charges in South Africa — he was alone.
Jooste was due to face charges of fraud, racketeering and breaching the Financial Markets Act. The charge sheet drawn up for Jooste included his role in manipulating Steinhoff’s accounts between 2014 and 2017 and insider trading under the Financial Markets Act, according to one person close to the case.
Grobler, a former lawyer who had begun working with Jooste in the early 1990s and later became Steinhoff’s company secretary, will spend the weekend behind bars, with legal arguments over bail due to recommence on Monday.
In court, Grobler said he was “confident that I will be able to clear the charges levelled against me.”
While Jooste will no longer be in the dock, the criminal trial is a sign that South Africa is intent on successfully prosecuting financial criminal charges. The country’s inability to tackle white collar crime was one of the deficiencies cited by international anti-money laundering body Financial Action Task Force (FATF), when it demoted South Africa to a ‘greylist’ of countries with holes in their anti-money laundering regime in 2023.
Convictions have been rare in high-profile white — collar fraud cases in South Africa in recent years. In one long-running case, Gary Porritt, the former CEO of once Johannesburg-listed financial services group Tigon, was arrested in 2002 on more than 3,000 criminal charges. He remains in detention while the trial continues. Porrit has denied wrongdoing.
In another incident with similarities to Jooste’s fate, Brett Kebble, the former CEO of mining companies JCI and Randgold & Exploration was killed by assassins on a highway overpass in Johannesburg in 2006, shortly after his role in misappropriating stock had been revealed. Hitmen claimed in court they had been hired by Kebble himself.
Earlier this week, South Africa’s financial regulator issued a record R475m ($25mn) fine against Jooste for breaching the laws governing the country’s financial markets by publishing “false, misleading or deceptive” financial statements.
It said the scandal had “affected market confidence and South Africa’s reputation as a well-regulated and safe market”, while leaving a lasting suspicion over the quality of financial statements published in the country.
Insiders close to the case said other alleged accomplices would be added to the case at a later point.
David Shapiro, a veteran analyst at investment firm Sasfin Wealth, doesn’t believe Jooste’s apparent suicide spells the end of efforts to ensure accountability at Steinhoff — besides cases against possible accomplices, the state will probably try to seize his estate.
“It’s a big concern that it’s taken so long for this to come to a head. The big question now is who else was involved? Jooste didn’t do this on his own,” he says. “He was a typical sociopath — very charming and engaging. He was very entertaining. Those were his weapons.”
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