Scathing ruling for former Steinhoff CEO
Breaching listing requirements
The JSE barred Markus Jooste from serving as a director of a listed company for 20 years for failing to carry out his responsibilities as a CEO with due care.
In a scathing ruling, the Financial Services Tribunal has dismissed former Steinhoff CEO Markus Jooste’s application to have sanctions imposed on him by the JSE set aside.
In January, the JSE imposed two maximum penalties of R7.5 million on Jooste for breaching listing requirements.
But at a hearing last month, his legal team claimed there was no evidence he knew of the accounting irregularities behind South Africa’s biggest-ever corporate scandal.
Jooste’s legal team, led by Francois van Zyl, SC, had argued that Jooste could not be held responsible for accounting regularities at Steinhoff as it was a complex group that operated across 32 countries that did not all conduct business in English, and which had different tax and accounting regimes. Van Zyl had further argued that Jooste had relied heavily on local CFOs, accountants, auditors and audit risk committees at various levels within the group.
However, the tribunal dismissed this, saying Jooste's own emails showed he was intimately involved in how Steinhoff’s finances worked and how book entries shifted funds from one subsidiary to the other in an intricate web of accounting subterfuge. It also labelled some of Jooste’s defences as "spurious".
The accounting irregularities, which led to Jooste’s resignation in December 2017 and a consequent collapse in the Steinhoff share price of more than 90%, could not be attributed to outside events such as "some eruption of Mount Krakatoa [a volcanic island in Indonesia]," retired Judge Louis Harms, who chaired the tribunal panel hearing in Jooste’s application, wrote in its final decision on 10 October.
Relevance
"The fact that the applicant [Jooste] lost part of his fortune is an irrelevant consideration in this matter because he was, at least in part, responsible for the demise of Steinhoff. He did not implicate or accuse anyone else for it - and he would know," the Harms-led panel wrote.
"As to public interest, it is important that a message be sent to the business community that playing around with book entries, creating a false image of the financial health of a company and misrepresenting to the public the true state of affairs, whether intentionally or because of gross negligence, is serious and demands appropriate penalties and not slaps on the wrist.
"Mr Jooste is immediately liable for the payment of the financial penalties imposed and disqualified from holding the office of a director or officer of a listed company for a period of 20 years," the JSE said in a statement on Wednesday afternoon.
The JSE also barred Jooste from serving as a director of a listed company for 20 years for failing to carry out his responsibilities as a CEO with due care. Jooste’s legal team made no submissions about the 20-year disqualification with the tribunal, saying this was likely due to his "concession that it is highly unlikely that he will ever again be a director of a JSE-listed company".
The Harms-led panel did not award costs to the JSE, as per the bourse’s request, as it found that while Jooste’s application had been "without merit", the proceedings were not exceptional, meaning the tribunal was not entitled to make a costs award.-Fin24
In January, the JSE imposed two maximum penalties of R7.5 million on Jooste for breaching listing requirements.
But at a hearing last month, his legal team claimed there was no evidence he knew of the accounting irregularities behind South Africa’s biggest-ever corporate scandal.
Jooste’s legal team, led by Francois van Zyl, SC, had argued that Jooste could not be held responsible for accounting regularities at Steinhoff as it was a complex group that operated across 32 countries that did not all conduct business in English, and which had different tax and accounting regimes. Van Zyl had further argued that Jooste had relied heavily on local CFOs, accountants, auditors and audit risk committees at various levels within the group.
However, the tribunal dismissed this, saying Jooste's own emails showed he was intimately involved in how Steinhoff’s finances worked and how book entries shifted funds from one subsidiary to the other in an intricate web of accounting subterfuge. It also labelled some of Jooste’s defences as "spurious".
The accounting irregularities, which led to Jooste’s resignation in December 2017 and a consequent collapse in the Steinhoff share price of more than 90%, could not be attributed to outside events such as "some eruption of Mount Krakatoa [a volcanic island in Indonesia]," retired Judge Louis Harms, who chaired the tribunal panel hearing in Jooste’s application, wrote in its final decision on 10 October.
Relevance
"The fact that the applicant [Jooste] lost part of his fortune is an irrelevant consideration in this matter because he was, at least in part, responsible for the demise of Steinhoff. He did not implicate or accuse anyone else for it - and he would know," the Harms-led panel wrote.
"As to public interest, it is important that a message be sent to the business community that playing around with book entries, creating a false image of the financial health of a company and misrepresenting to the public the true state of affairs, whether intentionally or because of gross negligence, is serious and demands appropriate penalties and not slaps on the wrist.
"Mr Jooste is immediately liable for the payment of the financial penalties imposed and disqualified from holding the office of a director or officer of a listed company for a period of 20 years," the JSE said in a statement on Wednesday afternoon.
The JSE also barred Jooste from serving as a director of a listed company for 20 years for failing to carry out his responsibilities as a CEO with due care. Jooste’s legal team made no submissions about the 20-year disqualification with the tribunal, saying this was likely due to his "concession that it is highly unlikely that he will ever again be a director of a JSE-listed company".
The Harms-led panel did not award costs to the JSE, as per the bourse’s request, as it found that while Jooste’s application had been "without merit", the proceedings were not exceptional, meaning the tribunal was not entitled to make a costs award.-Fin24
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