Jooste’s directorship ban upheld
Former Steinhoff CEO Markus Jooste is barred from being a director of a listed company for a period of 20 years, after the Financial Services Tribunal declined his application for the JSE to reconsider the sanction it meted against him in January.
BusinessLIVE reports that the decision means that Jooste (62) can only be a director of a listed entity when he is in his 80s, effectively ending his corporate career. Jooste’s legal team, led by Francios van Zyl, tried in vain to persuade the tribunal that the local bourse was harsh by barring him for two decades.
The argument on behalf of Jooste was that Steinhoff was too complex for him to have picked up the fraud he is accused of having participated in. His legal team said he and the group placed reliance on local CFOs and accountants in the 32 jurisdictions Steinhoff operated in and that some of the countries did not have English as an official language.
Van Zyl also argued that Jooste and the JSE had not had sight of the damning PwC report into the rot at Steinhoff.
These arguments failed to sway the tribunal.
‘Dealing with probabilities, the question is what was the cause of the demise of Steinhoff? It was not because of Covid or some eruption on Mount Krakatoa. The applicant (Jooste) did not even attempt to offer an explanation nor did he deal with the financial restatements,’ reads the ruling.
‘We have already explained why we found that the financial information published under his watch was false in material aspects. This was not because of language or legal issues or some rogue employees in far-flung countries. It was about the core companies in core countries.’
The JSE has argued that Jooste ought to have known that Steinhoff was publishing and reporting misleading financial statements, thus duping investors.
Jooste’s sudden resignation from Steinhoff on 5 December 2017 was followed by a protracted controversy concerning Steinhoff’s accounting practices in its central European business dating back years.
In 2019, PwC released a damning report that pointed to Jooste and other directors who, it said, had recorded income from fictitious and/or irregular transactions between the 2009 and 2017 financial years. PwC said the fraud saw the group’s profits inflated by €6.5bn in the period.
The tribunal said Jooste cannot extricate himself from the accounting fraud that took place at Steinhoff.
This is because emails show that Jooste was intimately involved in how finances worked within the group, it said.
The tribunal’s ruling is a second blow for Jooste after the watchdog last month also tore apart his 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.
The Financial Sector Conduct Authority in December issued a revised penalty of R20m to Jooste, down from the R162m announced in October 2020, reports BusinessLIVE.
He approached the tribunal for recourse, arguing that the R20m fine was incorrectly calculated.
Article disclaimer: While we have made every effort to ensure the accuracy of this article, it is not intended to provide final legal advice as facts and situations will differ from case to case, and therefore specific legal advice should be sought with a lawyer.