German court to put Markus Jooste on trial

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Authorities in southern Germany have indicted former Steinhoff chief executive Markus Jooste, two former directors of companies in the Steinhoff group and the trustee of a company in the Virgin Islands on charges of accounting fraud, the office of the public prosecutor in Olderburg said on Friday.

Prosecutors have asked the Oldenburg regional court to set a trial date and expect that the case will get underway in early 2023, a spokesman for the office said.

Jooste is not named in a media statement issued by the prosecutor’s office, but is referred to as the 61-year-old former CEO of Steinhoff International Holdings until 2017, and representative of Steinhoff Europe AG, based in Austria, and Steinhoff Europe Group Services GmbH, based in Westerwede in Lower Saxony.

Because Jooste and the trustee, who stands accused of aiding and abetting balance sheet fraud, are not resident in Germany, the commercial court decided to split the case and institute separate proceedings against the pair.

The two accused who live in Germany are identified as former executives at Steinhoff Europe Group Services and Steinhoff sister company Tau Enterprises, which was central to the inflating of profits at the global retail giant. The value of that company’s fixed assets was overstated by more than €800 million in 2014, the prosecutor’s office said.

Steinhoff overstated its assets and profits by R105 billion.

The court said the charges stem from sham transactions totalling €839 million that reflected as sales profits in Tau’s results for 2011 and skewed the group’s consolidated balance sheets.

Further bogus transactions involving the sale of shares in Tau and Omega Enterprises, another inactive company in the Steinhoff stable, to other entities in the group while presenting it as external income followed in the 2012 and 2013 financial years, according to the charges prepared by the German authorities.

One of the former managing directors of Steinhoff will face charges of committing credit fraud by knowingly submitting incorrect financial statements when applying for bank loans. This pertained to two bank loans of €680 million and €250 million secured respectively in 2015 and 2016.

It is reliably understood that in South Africa, the National Prosecuting Authority has also been preparing to charge Jooste, who is considered the mastermind of the biggest accounting scandal ever in the country. 

German authorities have asked their South African counterparts for mutual legal assistance in the matter, but the prosecutor’s office in Oldenburg said on Friday it had not had direct contact with South African investigators.

Steinhoff’s share price plunged by more than 95% of its value in 2017 when the balance sheet irregularities came to light, erasing tens of billions of rands in shareholder value.

Jooste resigned on 5 December 2017. He has consistently denied any wrongdoing.

On 18 October, the South African Reserve Bank executed an ex-parte order to attach the assets of Jooste and his wife, as well as those of former Steinhoff chief financial officer Ben la Grange.

Reserve Bank governor Lesetja Kganyago said the investigation that preceded the court application spanned four years and several jurisdictions.