Who could still be charged for financial irregularities at Steinhoff?

Just more than two weeks after Markus Jooste, former CEO of Steinhoff shot himself before he had to hand himself over to police and his close associate Stehan Grobler (64) appeared in court, the question is who else could still face criminal charges for the financial irregularities at Steinhoff?

Jooste was supposed to appear with Grobler in the Pretoria Specialised Commercial Crimes Court on charges of racketeering, three counts of fraud worth R21 billion, manipulation of financial statements and failure to report fraudulent activities.

The court granted Grobler, former company secretary and head of legal at Steinhoff, bail of R150 000. In his affidavit to apply for bail, Grobler indicated that he will plead not guilty to all charges.

ALSO READ: Steinhoff legal head Stephan Grobler to plead not guilty

Warrant of arrest for Jooste and Grobler

The warrant for the arrest of Jooste and Grobler was issued after the Financial Services Conduct Authority (FSCA) announced on 20 March that it had decided to impose an administrative penalty of R475 million on Jooste for contravening section 81(1)(b) of the Financial Markets Act regarding Steinhoff’s annual financial statements and annual reports.

The FSCA made a similar finding against Steinhoff’s former finance head, Dirk Schreiber, but he was not fined, subject to strict terms and conditions. A warrant for Schreiber’s arrest was not issued with the warrants of arrest for Jooste and Grobler.

The FSCA did say that the findings regarding Jooste and Schreiber were made as part of an ongoing investigation and the authority is continuing with further investigations into similar allegations of contraventions of section 81 by other individuals. The FSCA declined to name these individuals.

With Jooste dead, Grobler already arrested and Schreiber seemingly working with authorities, who is left?

ALSO READ: No more anonymity for Steinhoff execs implicated in PwC report

Eight people identified in PwC report

When the parliamentary standing committees on finance and public accounts together with the portfolio committees on trade and industry and public service and administration met with Steinhoff and the various role players in cleaning up after Steinhoff in 2019, chairperson of the finance committee, Yunus Carrim, insisted that the names of those implicated in “the biggest corporate scandal in this country’s history” be released.

Then-CEO of Steinhoff, Louis du Preez, then told the meeting the implicated people mentioned in the PwC report are directors of Steinhoff – Markus Jooste, Dirk Schreiber, Stehan Grobler and Ben le Grange – as well as Siegmar Schmidt, Alan Evans, Jean-Noel Pasquier and Davide Ramano from outside Steinhoff.

• Ben le Grange was financial head from March 2013 to December 2017. He told the committees that he did not think he did anything deliberately wrong. The JSE fined him R2 million for violating listing rules and barred him from holding an office in a listed company for 10 years.
• Dirk Schreiber was CEO of Steinhoff Europe Group Services since October 2011. He was handed a three-and-a-half year jail sentence by a German court in Oldenburg in August last year.
• Siegmar Schmidt who was CEO of Steinhoff Europe Group Services before Schreiber. The Oldenburg court gave him a suspended sentence of two years.
• Alan Evans was Jooste’s British co-defendant and according to News24 he appeared in the Oldenburg court in Germany on 18 April 2023 and agreed to a fine of €30 000 (R610 000).
• Jean-Noel Pasquier is French and according to Viceroy Research, he was the director for many of Steinhoff’s off-balance sheet entities including Campion Capital and its subsidiaries.
• Davide Ramano, an Italian, who was also a director of Campion Capital, according to News24.

Schreiber, Schmidt, Evans, Pasquier and Romano have not publicly commented on being named by PwC.

ALSO READ: First Steinhoff exec gets jail time

PwC report on accounting irregularities

PwC had to analyse and investigate allegations of potential accounting irregularities and/or potential noncompliance with laws and regulations, made against various Steinhoff entities and its former executives, concerns raised by Steinhoff’s external auditor, Deloitte and any other issues brought to PwC’s attention requiring investigation in relation to the Steinhoff Group.

After 14 months, PwC produced a report of more than 3 000 pages with over 4 000 documents as annexures. At the time, on 15 March 2019, Steinhoff said it could only provide an overview on its understanding of the report’s key findings, adding that the report and the related information gathering and investigation is subject to legal privilege and is confidential.

Steinhoff added that the work PwC performed was focused on accounting irregularities and non-compliance with laws and regulations but does not constitute legal advice or legal opinion. According to the overview, PwC interviewed or submitted questions to 22 then-current and former directors and officers.

However, Jooste and “certain other individuals” did not make themselves available for interviews.

ALSO READ: Who will pay Markus Jooste’s R510 million penalties now?

Key findings about Steinhoff of PwC report in overview

The key findings of the PwC report that Steinhoff included in the overview are:

• A small group of Steinhoff Group former executives and other non-Steinhoff executives, led by a senior management executive, structured and implemented various transactions over a number of years, which had the result of substantially inflating the profit and asset values of the Steinhoff Group over an extended period.
• The PwC investigation found a pattern of communication which shows the senior management executive instructing a small number of other Steinhoff executives to execute those instructions, often with the assistance of a small number of persons not employed by the Steinhoff Group.
• Fictitious and/or irregular transactions were entered into with parties said to be, and made to appear to be, third party entities independent of the Steinhoff Group and its executives but which now appear to be closely related to and/or have strong indications of control by the same small group of people.
• Fictitious and/or irregular income was, in many cases, created at an intermediary Steinhoff Group holding company level and then allocated to underperforming Steinhoff operating entities as so called “contributions” that took many different forms and either increased income or reduced expenses in those operating entities. In most cases, the operating entities received cash for the contributions from another Steinhoff Group or from non-Steinhoff companies (funded by Steinhoff), resulting in intercompany loans and receivables.
• The transactions identified as being irregular are complex, involved many entities over a number of years and were supported by documents including legal documents and other professional opinions that, in many instances, were created after the fact and backdated.

ALSO READ: Steinhoff challenges court ruling ordering it to open its books to media

Steinhoff did not hand over PwC report as instructed by Parliament

During a briefing of the committees by the directorate for Priority Crime Investigation (DPCI), Major-General Alfred Khana, head of the commercial unit, said four complaints received together with a report in terms of Section 34 (1) of the Prevention and Combating of Corrupt Activities Act relating to the Steinhoff matter were combined into one criminal investigation.

Khana said Steinhoff did not hand over the PwC report as instructed by Parliament in a previous meeting and that Steinhoff did not plan to share it. Investigators only had “two peeks” at it, Khana said.

AmaBhungane and the Financial Mail has fought and won in the court to have the PwC report released, but Steinhoff’s holding company, Ibex, is appealing. The appeal will be heard in the next few months.

Prof. Jannie Rossouw, visiting professor at the Wits business School, has called for the PwC report to be released after Jooste’s death, saying it is now, more than ever, important for Steinhoff to release the report.