Three years and three months after the Steinhoff share price collapsed, following the disclosure of widespread ‘financial irregularities’, disgraced former CEO Markus Jooste might be about to face his first criminal charge.
While the latest move in this very long-drawn-out corporate scandal will be welcomed by Steinhoff shareholders, who suffered the pain of a R200-billion wipeout in the company’s market capitalisation back in December 2017, legal experts are not holding out much hope for any early court victories by prosecutors.
According to an article in a leading German magazine – Manager Magazin – the public prosecutor’s office in the city of Oldenburg in Germany has completed a six-year criminal investigation into “balance sheet manipulation”.
The investigation, which was launched back in 2015, was first flagged by Manager Magazin in an article published in August 2017.
At that time the report that German prosecutors were investigating Steinhoff and some other senior managers in connection with suspected accounting fraud rattled investors and knocked the share price.
However it was met by swift and indignant denials of any wrongdoing by the company.
Earlier this week Manager Magazin said that following completion of its investigation: “The public prosecutor’s office is bringing charges against three people from within the Steinhoff Group and one other person.”
If found guilty of balance sheet manipulation the three individuals face a maximum sentence of three years imprisonment.
Action in SA
Coincidentally, the day after Manager Magazin’s latest report, South African Minister of Justice and Correctional Services Ronald Lamola was in Parliament defending the SA law enforcement agency’s slow pace of action against Steinhoff.
On Wednesday he told parliamentarians that the National Prosecuting Authority (NPA) had not halted its investigation into the circumstances surrounding the company’s collapse.
Lamola dismissed allegations that the NPA is moving at a snail’s pace.
According to a news report on Jacaranda FM, Lamola said the NPA was dealing with the matter “without any fear, prejudice or any favour to anyone”.
He urged patience and reminded the MPs that this kind of investigation takes time.
One company law expert told Moneyweb on Wednesday that while the German authorities might be able to act speedily with regard to German-based individuals, any attempts to prosecute Jooste would involve extradition proceedings.
“Given his track record Jooste would fight this through every possible court in South Africa and that could take three to five years,” said the lawyer.
He said the best chance of getting Jooste into court lay with the NPA, but only if it focused on prosecuting just one criminal offence.
“The clearest one and therefore the one most likely to succeed is insider trading.”
On Wednesday a spokesman for Steinhoff told Moneyweb it is aware of the Manager Magazin article but could not comment on the details of any regulatory investigation.
However in the recently released 2020 Annual Report, the Supervisory Board said the company was fully co-operating with the various prosecution authorities not only in South Africa but in other jurisdictions.
“The Supervisory Board is eager that those responsible for past failings are brought to book and while we have a full appreciation of the historic events that took place at Steinhoff NV we are concerned at the slow pace of progress being made in this regard.”
The group says it is committed to maintaining “open communication lines” with all regulators.