The Financial Sector Conduct Authority (FSCA) has imposed an R475 million fine on Markus Jooste for his involvement in the fraudulent activities that rocked Steinhoff International.
Markus Jooste handed R475 Million penalty for Steinhoff fraud
The FSCA’s decision comes after an extensive investigation into the accounting irregularities at Steinhoff International Holdings Ltd and Steinhoff International Holdings NV.
Jooste, along with Dirk Schreiber, was found to have made or published false, misleading, or deceptive statements concerning the company’s financial health, involving the omission of material facts.
These actions violated sections 81(1)(a) and (b) of the Financial Markets Act, affecting the company’s financial statements and reports from 2014 to 2016 and the 2017 half-year.
Jooste is ordered to pay the penalty, which includes a contribution to the FSCA’s investigation costs and interest, by 19 April 2024.
How Jooste earned R651 Million from Steinhoff between 2014 and 2017
From 2014 to 2017, Markus Jooste’s earnings from Steinhoff International amounted to an eye-watering R651 million, spotlighting the financial rewards that may have fuelled the fraudulent activities.
This period, pivotal in the unfolding of the Steinhoff scandal, saw Jooste at the helm of the company, with his compensation heavily tied to its inflated performance metrics.
Specifically, Jooste’s lucrative package, including bonuses and share options, was contingent upon achieving certain financial targets, which were ostensibly met through the manipulation of financial statements.
The FSCA’s findings suggest that the drive for increased earnings could have motivated Jooste to partake in and oversee extensive financial misreporting.
The complete timeline of Jooste’s dealings in Steinhoff fraud
The FSCA’s comprehensive timeline of Jooste’s fraudulent acts meticulously documents his manipulation of financial statements to inflate profits, misstate cash equivalents, and overstate operating margins across Steinhoff’s operations.
These manipulations, spanning several years, involved complex schemes to disguise the true financial state of the company, affecting various segments of Steinhoff’s international operations.
9 September 2014
Jooste directly and indirectly influences the publication of inflated operating profits and cash equivalents in Steinhoff’s Annual Financial Statements and Integrated Report.
Notably, an overstated operating profit before tax of R14.122 billion was reported, which was actually R10.863 billion, marking a misstatement of R3.259 billion.
Similarly, cash and cash equivalents were falsely reported at R16.341 billion instead of the accurate R2.613 billion, resulting in a misstatement of R13.728 billion.
These discrepancies highlighted early instances of Jooste’s manipulation, fundamentally overstating Steinhoff’s financial health.
8 September 2015
This year further saw Jooste’s manipulation of financial reports, with the operating profit before tax again overstated, this time reported at R16.638 billion, when in truth, it was R13.393 billion, reflecting a misstatement of R3.245 billion.
The 2015 Integrated Report misleadingly claimed a 17% increase in revenue and an 8.6% margin in the United Kingdom, obfuscating the fact that these figures were significantly bolstered by intercompany transfers lacking economic substance.
6 December 2016
The publication of the 2016 Annual Report of Steinhoff International Holdings NV included Jooste’s direct and indirect publication of materially false information.
Operating profits were again misrepresented, with the report claiming an operating profit before tax of €1.685 billion, whereas the adjusted figure stood at €1.414 billion, marking a misstatement of €271 million.
This pattern of reporting inflated figures persisted, distorting the company’s true financial position to stakeholders.
Half-year 2017
Jooste’s fraudulent activities continued into the first half of 2017, with the Steinhoff International Holdings NV Half-Year Report falsely stating Mattress Firm Holding Corp. in the USA had an operating profit of €21 million.
In reality, it faced an operating loss of €53.64 million, a stark discrepancy made possible through fabricated transactions.