Aside from a few million rand in fines and confiscations, the first person convicted in South Africa in connection with the Steinhoff saga will avoid jail time, provided he testifies in the criminal proceedings against his accomplices.
Last week, the Specialised Commercial Crimes Court in Pretoria sentenced Dr Gerhardus Diedricks Burger (79) to five years in prison, suspended for five years.
The suspension is conditional on his not being convicted of violating section 78(2) of the Financial Markets Act (FMA) during this period. Additionally, Burger is required to testify in the criminal proceedings against his accomplices.
The court further issued a confiscation order for €90 000 (about R1.8 million), funds seized by Swiss authorities following the collapse of Steinhoff.
Burger pleaded guilty to three counts of insider trading and was convicted of the same.
As part of his role within Steinhoff, Burger accompanied company directors on international trips to oversee their health.
Shortly before Steinhoff’s collapse, he received a text from the late Markus Jooste, Steinhoff’s former chief executive, advising him to sell his Steinhoff shares. Following this tip-off, Burger sold all Steinhoff shares held under the Dieter Burger and Lane Burger Trusts – where his children are beneficiaries – as well as 39 722 Steinhoff shares under Stefana Overseas Limited, a Swiss-based entity where he was a beneficiary.
The timing of the sale was significant. Soon afterwards, Steinhoff’s share price plummeted, leaving its stock nearly worthless.
The FSCA launched an investigation, convicting Burger of insider trading and imposing a R3 million administrative penalty. The FSCA referred the case to the National Prosecuting Authority (NPA) for criminal prosecution, which culminated in last week’s sentencing.
Although Burger avoids prison time for now, his testimony will play a crucial role in the broader criminal investigation into Steinhoff’s executives and the company’s massive financial collapse.
A day before Jooste reportedly committed suicide on 21 March, Jooste and Stephanus Grobler (62), a former Steinhoff executive, were notified to report to the Hawks in Pretoria on 22 March. Jooste was set to face charges of fraud, racketeering, and violating the FMA.
Following Jooste’s suicide, Grobler was taken into custody and granted R150 000 bail after his court appearance on 25 March.
Andries Benjamin (Ben) la Grange (49), Steinhoff’s former chief financial officer, was also arrested. Both La Grange and Grobler appeared in the Pretoria Specialised Commercial Crimes Court on 26 June, where La Grange was also granted R150 000 bail.
Read: Steinhoff’s former chief financial officer appears in court
They are facing charges of racketeering, three counts of fraud worth R21 billion, the manipulation of financial statements, and failure to report fraudulent activities.
In an affidavit, La Grange told the court he intended to plead not guilty to the charges and would prove his innocence. Grobler has also said he would clear his name.
However, the NPA’s indictment presented during their 26 June court appearance is damning.
In the indictment, the NPA describes how the Steinhoff Group falsified profits through two elaborate schemes – the TG Group fraud and the BNP Paribas commission transactions. Together, the schemes allegedly generated more than R20.7bn in fake profits from 2014 to 2016.
Read: How the Steinhoff Group propped up its profits
It also claims and sets out to prove that that Grobler and La Grange were generously paid to manipulate the financial statements of Steinhoff International Holdings Limited (SIH) and Steinhoff International Holdings NV (SINV).
Read: Steinhoff former execs accused of reaping hundreds of millions through ‘fraudulent efforts’
On the date marking the beginning of the alleged fraud, 1 July 2013, the group’s share price was R22.55. Three years later, on 30 August 2016, the SIHN share price reached a high of R93.60.
On 6 December 2017, SINV made a public announcement (dated 5 December), via SENS, headed “Steinhoff announces investigation into accounting irregularities, resignation of CEO”.
Just two months before the announcement, the closing share price of SINV on the JSE was R60.03 (30 September 2017). This declined to R55.81 on 1 December 2017, and to R45.65 on 5 December 2017.
A mere two days after the announcement, the share price fell to R6 (8 December 2017). It declined further to an all-time low of R0.82 on 20 December 2019.
During 2022, the shares traded between R2.50 and R1.72 each.
Steinhoff was officially liquidated on 13 October 2023.
Grobler and La Grange’s next court appearance is set for 4 October.
