Steinhoff: What’s subsequent for SA’s largest company fraud case?

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JEREMY MAGGS: The suicide of former Steinhoff boss, Markus Jooste, won’t have any impression on the continuing investigation regarding fraud and misrepresentation on the JSE-listed retailer, that’s in response to the Monetary Sector Conduct Authority (FSCA). I wish to discover this in a bit extra element now as I’m joined by the previous editor of the Monetary Mail and creator of the seminal e book, Steinheist, Rob Rose. Rob, a really heat welcome to you. Earlier than we get to the aftermath, if you heard the information, had been you shocked?

Learn:
Former Steinhoff CEO Markus Jooste has died
Markus Jooste’s dying won’t have an effect on Steinhoff investigation – FSCA

ROB ROSE: Afternoon, Jeremy, good to talk to you once more. Yeah, completely, I used to be fully shocked. After I was instructed about it, I assumed it’d’ve been a type of conspiracy theories, but it surely quickly turned clear that that’s what occurred. So it was very bracing.

JEREMY MAGGS: Does anybody, Rob, have any indication of the temper that he was in? He was all set handy himself over, after which it took this very unusual and tragic flip of occasions.

ROB ROSE: Yeah, I don’t assume he was all set handy himself over, I believe he was in all probability weighing up his choices. He’d already had that high quality early within the week from the regulator for R475 million. So he in all probability wasn’t in the perfect of moods, however I believe it was the information that the felony investigation was truly closing in on him, and he’d been telling individuals for years that he by no means thought they’d truly get round to it.

Learn: Markus Jooste slapped with a R475m high quality for Steinhoff misconduct

So I suppose the revelation that they had been truly meaning to arrest him was clearly what tipped him over the sting. I don’t know if he would’ve fortunately handed himself over. I simply don’t assume he anticipated it to get to this stage. I suppose to some extent now, we’ll by no means know; he’s by no means going to seem in entrance of a choose and plead his case.

JEREMY MAGGS: It was, in some ways, a sign of his hubris, wasn’t it?

ROB ROSE: Oh, completely. He was anyone who, he seemed down on different individuals, he was fairly scornful of different individuals’s views. I believe that standing in entrance of a choose and having to clarify what truly occurred with Steinhoff and admit, concede his error, I believe would’ve clashed up closely in opposition to his hubris and his persona, which he’d by no means truly conceded actuality in lots of components of this case, which is why the fraud bought to the stage it did.

Pay attention: Earlier than Steinhoff’s collapse, Jooste was described as somebody with ‘Midas-like enterprise acumen’

JEREMY MAGGS: Rob, I do know that we’re going to step now into the realm of conjecture, however what would’ve occurred or what may have occurred had he turned himself in final week as might need been the case?

ROB ROSE: So he and Stephan Grobler, who was Steinhoff’s firm secretary for a few years, had been ordered to seem in court docket on Friday, and Stephan did seem in court docket. I believe this morning he did get bail, partially, from what I perceive, as a result of the state’s case isn’t 100% full. So I believe that Markus Jooste, the state would’ve argued in opposition to bail, however he in all probability would’ve bought bail on the argument that he has had six years and he hasn’t run anyplace.

So he in all probability would’ve bought bail, after which it might’ve led to a protracted standoff, in all probability a few years, whereas the case dragged onto trial.

Jeremy, in the event you bear in mind the case of Tigon, which was one of many largest 40 corporations within the JSE, its CEO (Gary Porritt) was arrested in 2002, and that trial nonetheless isn’t full. So it may have dragged on for a lot of extra years, however he would’ve confronted fees of fraud and fees of breaching the Monetary Markets Act, and it might’ve been fairly a prolonged trial.

JEREMY MAGGS: What does this say, Rob, about our skill or incapability to successfully examine monetary crimes equivalent to the 2 that you simply’ve simply talked about?

ROB ROSE: Yeah, I believe that that’s been a problem for numerous years because the Scorpions disbanded notably, it’s been a giant subject as a result of Regal Financial institution, for instance, in 2002, I believe they managed to, the Scorpions arrested Jeff Levenstein, who was the CEO of Regal Financial institution, and he was despatched to jail. However since then, we haven’t had many large company crimes.

Within the case of Saambou, for instance, its CEO (Johan Myburgh) and different administrators, I believe one among them truly died earlier than it bought to trial.

So I believe it’s a giant weak point and it’s a type of points that I believe the Monetary Motion Activity Drive (FATF) talked about final 12 months, our incapability to deal with monetary crimes, which is likely one of the causes we had been a greylisted.

So the state, I believe, realises the significance of it, however doesn’t have the abilities to successfully do that and I believe the jury may be very a lot out on that.

JEREMY MAGGS: I’ve referenced the Monetary Sector Conduct Authority already. What occurs now, in your opinion, when it comes to this investigation? What route does it take? What wants to alter, if something in any respect?

ROB ROSE: Nicely, I spoke to a number of the investigators and so they had been saying that they now need to regroup and see what they do with this specific case as a result of they’re going to need to give attention to different individuals concerned in Steinhoff. Actually, there was a giant, I suppose, public demand that folks be held accountable for this, and Stephan Grobler and doubtlessly different individuals being held within the dock will definitely present some extent of accountability, but it surely received’t present a form of nationwide cleanse that having Markus Jooste within the dock would’ve.

So I believe you’ll nonetheless need the felony instances to go on, and I believe you’ll nonetheless need them to carry individuals accountable.

When it comes to the Monetary Sector Conduct Authority, that specific high quality of R475 million will probably be lodged in opposition to his property.

I doubt they’ll get that cash again, partially as a result of I’m fairly sceptical about whether or not Markus Jooste truly had that cash sitting in an account in South Africa. So I’m undecided in the event that they’ll ever get that cash again, however to some extent, I believe the scale of that high quality was symbolic. I don’t assume they ever actually anticipated to get that high quality out of Markus.

JEREMY MAGGS: All of that is after all, contained in your glorious e book, Rob, Steinheist, however perhaps give me a way, give our viewers a way of the dimensions of the fraud that was perpetrated.

ROB ROSE: Positive, it was immense. The PwC (PricewaterhouseCoopers) investigators talked once they launched their findings, which was just a few months after the e book got here out. So I used to be fairly nervous concerning the e book to some extent, hoping that I hadn’t bought it fallacious.

However the PwC investigation discovered on the finish that there was R106 billion of fictitious transactions over greater than a decade.

So truly, the dimensions was bigger than I believe we anticipated. Primarily this runs the gamut from creating fictional corporations in Europe and utilizing it to ship faux invoices to Steinhoff, to spice up the income. It extends far, excess of that. He did offers through which he himself personally benefited out of Steinhoff shareholders to the tune of hundreds of thousands.

It was a big con that was by far the most important, it exceeded Regal Financial institution, LeisureNet, all the large ones we’ve had in South Africa, by a long way.

I believe it forged the highlight firmly on what our regulators do, what our boards of administrators do. You had a board of administrators at Steinhoff, which actually was a celebrity board with three accounting PhDs, and also you had an accounting scandal, which does elevate every kind of questions of governance at this firm.

JEREMY MAGGS: I’m going to depart it there. For those who haven’t learn the e book, Steinheist, the creator is Rob Rose. Rob, thanks very a lot for becoming a member of me.