The Financial Sector Conduct Authority (FSCA) has levied a staggering penalty of R475-million against Markus Jooste, the controversial former chief executive of Steinhoff International Holdings Limited.
The penalty, announced on Wednesday, comes after a meticulous investigation into Jooste’s actions revealed egregious violations of financial market regulations.
According to the financial watchdog, the investigation unearthed a pattern of false, misleading, and deceptive statements made by Jooste and his associate, Dirk Schreiber, regarding Steinhoff International Holdings Limited and Steinhoff International Holdings NV.
Contravention of Financial Markets Act
These statements, spanning the 2014–2017 financial years, were found to be in direct contravention of Sections 81(1)(a) and (b) of the Financial Markets Act (FMA) 2012.
The penalty imposed on Jooste comprises not only the substantial sum of R475-million but also a contribution of R10-million to reimburse the FSCA for investigation costs.
Additionally, an interest rate of 11.75% has been applied to any outstanding portion of the penalty until its full settlement.
“In arriving at the amount of the administrative penalty, the FSCA considered, among other factors, the need to deter similar behaviour in the market; the amounts of the losses experienced by the market; Mr Jooste’s level of cooperation during the investigation; the nature, duration, extent and seriousness of the contraventions; the extent of any financial or commercial benefit to Mr Jooste; previous contraventions of financial sector laws [insider trading and the contravention of the JSE’s listing requirements]; the effect of Mr Jooste’s conduct on the financial system and financial stability; the effect of the proposed penalty on financial stability; the extent to which the conduct was deliberate or reckless; and Mr Jooste’s submissions regarding the merits of the case against him, including his submissions regarding an appropriate penalty,” The FSCA said.
Jooste’s counterpart shown leniency
Notably, Jooste’s counterpart, Schreiber, received leniency from the FSCA due to his extensive cooperation with the investigation.
Although found to have contravened the same sections of the FMA, Schreiber will not face an administrative penalty, underscoring the significance of cooperation in regulatory proceedings.
“In terms of the leniency agreement, the FSCA, despite finding that Mr Schreiber contravened Sections 81[1][a] and [b] of the FMA, will not impose an administrative penalty on Mr Schreiber.
“The authority is satisfied that it may publish the leniency agreement as per Section 156[4] of the FSR Act.”
This development comes in the wake of the FSCA’s prior actions against the Steinhoff Group, where an administrative penalty of R1.5-billion was initially imposed and later remitted to R53-million upon application by the company.
Crackdown on fraud
These penalties underscore the regulatory crackdown on fraudulent activities within the financial sector, particularly concerning market manipulation and false disclosures.
As the investigation into Jooste and Schreiber concludes, the FSCA emphasises its commitment to ongoing scrutiny of similar contraventions by other individuals.
“The findings relating to Mr Jooste and Mr Schreiber were made as part of an ongoing investigation by the FSCA,” said the FSCA.
“The authority is continuing with further investigations into similar contraventions of Section 81[1][a] and [b] of the FMA by other individuals.”
