South Africa | Disgraced former Steinhoff CEO Markus Jooste fined R122 million for insider trading

Former chief executive of Steinhoff, Markus Jooste.

Former chief executive of Steinhoff, Markus Jooste.

Former Steinhoff chief executive Markus Jooste has been fined R122 million by the Financial Sector Conduct Authority for insider trading. 

This comes 10 days after the Johannesburg stock exchange fined the retailer a total of R13.5 million for breaching its listing requirements. 

The market conduct regulator for financial services on Friday held a briefing where it announced its decision to fine Jooste and others, following an investigation into the Stellenbosch-headquartered retailer, which Jooste led until his abrupt resignation in early December 2017 at the start of an accounting fraud scandal.

According to the FSCA, prior to resigning, Jooste had shared insider information via an SMS to some shareholders close to him, to dispose of their shares. Three recipients acted on his disclosure and encouragement and sold Steinhoff shares, avoiding losses. 

Jooste himself made no money from the insider trading, the FSCA clarified. But as the "tipper" of insider information he is liable, with those to whom he gave inside information - including founding member of PSG Group Jaap du Toit, his acquaintance Dr Gerhardus Diedericks Burger, Jooste's driver Marthinus Swiegelaar and Ocsan Investment Enterprise. Jointly the fine is R241 million.

Jooste has 30 days to pay the fine, once issued as an invoice. The invoice will be issued within the next week, said Brandon Topham, divisional executive for investigations. Jooste may, however appeal the FSCA's decision, and it could potentially go to the Constitutional Court, said Topham.

The FSCA will also likely lodge a criminal complaint with police, said Topham. 

Topham read the SMS, which has been translated from Afrikaans: "You always ask my opinion, it will take Steinhoff a long time to work through all the bad new and America. So there are better places to invest your money. Take the current price immediately. And delete this SMS and don't mention it to anyone."

South African authorities have faced criticism for not taking action against executives, despite an internal PWC report commissioned by Steinhoff finding evidence of wrongdoing and manipulation. 

The report, which has not been made public, found that a "small group" of former Steinhoff executives inflated the profit and asset values of the Steinhoff group for years.

After his resignation, Steinhoff's share price plunged by more than 95%, costing shareholders billions of rands, and leading to multiple class action suites in South African and Europe.

Earlier in July, Steinhoff proposed a R16.5 billion settlement to resolve 90 claims against it. Among those shareholders is former Steinhoff board chairperson Christo Wiese. If the settlement is not accepted, Steinhoff may have to file for insolvency protection, shareholders heard at this year's annual general meeting, held in August.

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