Former Steinhoff CEO Markus Jooste. (David Harrison/M&G)
The SA Reserve Bank’s seizure of all assets linked to former Steinhoff CEO Markus Jooste including the Lanzerac wine farm in Stellenbosch has come from “left field” while the National Prosecuting Authority (NPA) was “asleep on the job” over the past five years.
This is the view of Paul Hoffman, a director of anti-corruption organisation Accountability Now, who like several analysts, welcomed the move to seize Jooste’s assets on Tuesday, but said it was a pity the NPA had not enforced the action as it was high time Jooste faced the criminal justice system and “paid back the money” to investors.
Analysts, like Hoffman, believe it will be easier for the authorities to build a case against Jooste in the perceived “lesser crimes” of breaching exchange control regulations and insider trading rather than pinning him for complex international investment fraud.
Steinhoff’s financial collapse led to thousands of local and foreign investors losing billions of rands in what has been described as South Africa’s biggest corporate scam. Investors included the Public Investment Corporation (PIC), the Government Employees’ Pension Fund (GEPF), billionaire businessman Christo Wiese and other large and small investors.
A PwC forensic investigation using more than 100 investigators followed and revealed significant evidence of alleged accounting fraud and governance failures that occurred between 2009 and 2017. This included the inflation of profits facilitated by fake transactions. PwC has so far only released the executive summary of the report which alleges losses incurred exceeded R100 billion.
SA Reserve Bank spokesperson, Ziyanda Mtshali, declined to comment on whether charges for violating exchange control regulations and fraud were looming against Jooste, although the granting of a preservation order raises suspicions that charges will follow.
“The Western Cape High Court has granted the South African Reserve Bank an ex parte order to attach the assets linked to former Steinhoff CEO Mark Jooste. The SARB executed the order yesterday, 18 October 2022,” Mtshali said. The SARB published the order on its website.
According to the preservation order, the belongings to be attached included around R1.4-billion worth of financial assets and loans receivable held by Silveroak Trust, Jooste’s property in Hermanus, Lanzerac wine farm in Stellenbosch, at least six luxury vehicles, electronic devices and passwords, firearms and jewellery.
Additional respondents listed in the order include Jooste’s son Michael, Gary Harlow and Rian du Plessis, trustees of the Jooste family trust, Silveroak, his wife Ingrid, Lanzerac Estate Investments, the Registrar of Deeds in Cape Town and Petrus Albertus Venter. SARB investigators also last year attached the assets of Berdine Odendaal, who was apparently Jooste’s romantic partner.
Jooste is facing charges for accounting crimes, along with three other people, in Germany, but SA authorities – the Hawks and NPA – which are investigating the matter have not confirmed what charges, if any, he may be facing locally.
Hoffman said the preservation order showed that the SARB was “seeking to undo money laundering and to punish people” but the NPA had failed at its task.
“The NPA has been exposed as being asleep on the job as they should have gone in years ago and attached all the proceeds of crime sitting in Markus and his orbit, so good for the Reserve Bank for at least preserving the assets,” Hoffman said.
“What we would ultimately like to see is Markus Jooste paying back the money to the SA investors, taxpayers and shareholders. It’s a pity the NPA has taken so long to get its act together, and it is also a greater pity that the NPA has not done anything regarding the inside trading, which is a separate case with very little evidence in it and very little expertise required to prove it,” he said.
Hoffman said it would be simple for a cellphone network technician to provide a report on data that had been sent from his phone and to ask those involved in Jooste’s insider trading if they had received text messages from him and sold their shares on the same day.
“They could then lock him up for 15 years for corruption and deal with the rest of the complicated fraud that was foxing everybody,” Hoffman said.
Hoffman said the country needed a Chapter Nine Integrity Commission, a move that his organisation had called for, providing the government with draft legislation in August 2021, to tackle corruption. Should cabinet not embrace the reforms necessary to comply with the binding findings in the Glenister cases, Accountability Now intends litigating against the government, in the public interest.
“My big take home message is: at the moment in SA we do not have effective and efficient anti-corruption machinery capable of mounting the type of prosecution activity to deal with the Jooste’s, Gupta’s and Bosasa’s of this world and we won’t have them until a new anti-corruption entity is created,” he said.
Protea Capital Management CEO Jean Pierre Verster said he had initially thought that the easiest way to catch Jooste would be via an alleged breach of the exchange control regulations.
“Typically in the US, the big Ponzi scheme guys and the mafia normally don’t get caught on the crime everyone thought was bad, but they get caught on a tax issue. The true crime here is a fraud but one way to get the people who perpetrated the complex crime is to focus on a simple crime they also committed,” Verster said.
“When the Steinhoff bomb first burst, I thought of exchange control regulation [violations] and that it was quite a simple crime to prove and to apprehend Jooste on,” he said.
He said Jooste had used a loop structure, which was illegal at the time, to buy Lanzerac from Wiese in exchange for Steinhoff shares.
“It was a potential curtain raiser where other SA assets would be sold to Steinhoff and the seller would get Steinhoff shares,” he said.
“Jooste is not clever enough that he could stay within the bounds of the law which is why I think the SARB has a strong case. SARB now has access to a lot of additional documents, both electronic and physical, and it will be interesting to see if they find anything else because Jooste has had years now to get rid of any incriminating evidence,” he said.
Wiese, who said he lost around R69 billion which today would be worth R100 billion, welcomed the SARB’s move saying “the signs” of Jooste being criminally charged in future had always been present.
“I think it comes as a great relief to the many people who suffered because of what happened at Steinhoff so that they can see that finally people hopefully will be brought to account for what has been done,” he told Mail & Guardian.
“I think those signs [of criminal charges] have been there all the time but as people by now realise, it is obviously a very highly complicated fraud involving various jurisdictions and one has to be patient. I always point out to people that they may be critical of the SA authorities but the German authorities who are beyond reproach have not made too much progress. At one point they said they had arrested two co-conspirators, but I am in the dark,” Wiese said.
Wiese said he had been paid out 20 cents in the rand for his losses but “what I am hoping to recover is Lanzerac because he bought the estate from me and paid me with worthless paper”.
NPA spokesperson Mthunzi Mhaga referred questions to the Directorate for Priority Investigations (DPCI, the Hawks) saying only “the matter is still under investigation by the DPCI”.
Asked whether charges were looming against Jooste, Hawks spokesperson Brigadier Thandi Mbambo said: “What we can confirm at this stage is that the Steinhoff investigation in still in progress and we unfortunately cannot comment on any particular individual until such person has been formally charged and brought before the court of law.”
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