- Four men received an SMS from Markus Jooste a few days before he quit as Steinhoff CEO.
- He warned them to sell their shares in the company, which went on to lose 90% of its value.
- Three of them acted on the tip-off, which saved them a lot of money – until now.
The Financial Sector Conduct Authority (FSCA) on Friday fined Markus Jooste and three others around R241 million for insider trading.
On 30 November 2017, Jooste sent an SMS to four men who were close to him.
"You always ask my opinion, it will take Steinhoff a long time to work through all the bad news and America. So there are better places to invest your money. Take the current price immediately. And delete this SMS and don't mention it to anyone," read the SMS – translated from Afrikaans, and presented to the media by head of investigation and enforcement at the FSCA, Brandon Topham.
On 5 December 2017, Jooste resigned as Steinhoff CEO after auditors Deloitte refused to sign off on the company’s results for the financial year to end-September of that year.
Then followed possibly the largest corporate crash – and uncovering of fraud – in South Africa's history. Steinhoff’s share price crashed 90% and investors lost R200 billion.
But three of the SMS recipients sold off some or all of their Steinhoff shares and were spared the worst of it. Until now.
After a marathon investigation, the FSCA found Jooste and three men guilty of insider trading. Jooste was fined almost R161.6 million– but is also jointly liable for around R56 million of the fines for the guilty parties. If they can’t afford to pay, he has to cover for them.
Here’s what we know about the recipients of the SMS:
Jaap du Toit, PSG founder and director
Du Toit, 66, was the only one of the four men who didn’t act on Jooste’s SMS.
So Du Toit wasn’t fined anything, but Jooste received an extra R1 million fine just because he sent the message anyway.
Still, Du Toit’s relationship with Jooste has cost him a lot of money.
Du Toit, a chartered accountant, worked with Jannie Mouton – later billionaire chairman of PSG - at the stockbroker Senekal, Mouton & Kitshoff, where Du Toit was financial director. After Mouton was spectacularly fired at SMK, Du Toit joined him as a founder of PSG, which would later spawn Capitec, Curro and many other businesses.
In 2015, Jooste proposed to Du Toit and another PSG director, Thys du Toit, that they should exchange their stakes in PSG for Steinhoff shares in a deal worth R1.8 billion. They agreed – as did founder of FirstRand GT Ferreira, who later also swapped his shares in PSG for a stake – to the ire of Mouton, who wasn’t aware of the dealings.
Jaap du Toit lost R740 million as part of the deal, and two years ago, via the Le Toit Trust, sued Jooste for that amount. Jooste tried to have the lawsuit thrown out, claiming that the case is vague and embarrassing. But the court disagreed.
Du Toit has been chairperson of KAP Industrial, which owns various holdings including the transport group Unitrans, and the timber group PG Bison, since 2012. Steinhoff controlled KAP until last year.
Ockie Oosthuizen, a friend of Jooste
Oosthuizen, a former Springbok prop, died last year from cancer at the age of 64. He owned the Molenvliet wine farm in Stellenbosch, and was also a founder of the sports agency Megapro.
The FSCA found that Oosthuizen “deliberately misled investigators during questioning and thus failed to provide meaningful cooperation”. His company Ocsan Investment Enterprises was fined almost R116 million. Ocsan is responsible for R77.2 million of the fine, while R38.6 million is a joint liability with Jooste.
Dr Gerhardus Diedericks Burger, a friend of Jooste
Burger dumped all his Steinhoff shares, held by two of his family trusts, after receiving the SMS.
He was fined more than R3 million – which is double the loss he would have avoided as a result of the insider trading.
Company records show that Burger is a director of a company in Hermanus, where Jooste resides.
Marthinus Swiegelaar, Jooste’s chauffeur
Swiegelaar was only fined R18,380 – he sold some of his shares after the Jooste SMS, but the FSCA says he “provided the highest level of cooperation during the investigation” compared to the other parties.
He also sold significantly less shares than the rest of the investigated parties. The penalty imposed on him represents the loss he avoided by selling his shares.
What’s next for Jooste?
He has a month to pay the fines, and also looks set to face a criminal charge for the insider trading.
FSCA’s Topham says the authority is still investigating Jooste and others who misrepresented financial information at Steinhoff, to hold them individually responsible for these transgressions. Fin24 reports that their findings will be announced in April 2021.
