Jooste’s death raises questions about the fate of seized assets and Steinhoff prosecution

As during his life, questions surrounding Markus Jooste’s affairs have been met with half answers and uncertainty following his death two weeks ago.

On Human Rights Day, while most South Africans were enjoying the peace and quiet of a public holiday, the former Steinhoff chief executive shot himself at Kwaaiwater Beach – about 2km from his Hermanus home.

According to the police statement that followed, “the deceased succumbed to a fatal gunshot wound to the head shortly after arrival at a private hospital”.

Since then, speculation has run rife concerning the circumstances surrounding his death. So much so, that doubts are even emerging about the identity of the body recovered on the day of the incident.

The day before, Jooste and Stephanus Grobler, a former Steinhoff executive, were officially notified to present themselves on 22 March to the Directorate for Priority Crime Investigation (the Hawks) in Pretoria. On arrival, Jooste would have faced charges of fraud, racketeering, and contravention of the Financial Markets Act (FMA).

A joint investigation by the Hawks and the National Prosecuting Authority (NPA) that stretched over years would have finally culminated in the arrest of the man who is alleged to be at the centre of the Steinhoff scandal.

A year-and-a-half prior, the coastal town witnessed a media frenzy when teams from the South African Reserve Bank (SARB) arrived at his residence and the Lanzerac wine estate in Stellenbosch. They were there to execute an attachment of assets order issued by the High Court on 6 October 2022 against Jooste, the family’s trust Silver Oak Trust, and Lanzerac Estate Investments.

The court order encompassed assets valued at about R1.4 billion, comprising the wine estate, four parcels of land associated with boutique winery Klein Gustrouw in Stellenbosch, the contents of Jooste’s residence in Voëlklip, the trust, and five vehicles registered under the name of Jooste’s wife and chauffeur.

Back in May 2021, the SARB issued blocking orders against four bank accounts belonging to Berdine Odendaal, Jooste’s alleged lover, holding nearly R5 million across three South African banks. Additionally, the SARB seized two cars and a plot of land at Val de Vie in Paarl.

According to reports by Daily Maverick, the SARB alleged in court that Jooste was implicated in violations of the Exchange Control Regulations amounting to R4.836bn. The SARB contended that Jooste used companies within the Steinhoff group and his racehorse company Mayfair Speculators to divert funds from Steinhoff for personal enrichment and other purposes.

The attachment order was aimed at safeguarding assets until the SARB completed its investigation. Until such time, Jooste and the apparent owners of the assets were permitted to possess and utilise them, but were prohibited from dispersing, relocating, or damaging any of the assets or evidence.

Under normal circumstances, if proved guilty, breaching the Exchange Control Regulations can result in the forfeiture to the State of an amount equivalent to the violations. Alternatively, a fine of R250 000 or a potential jail term of five years, or both, can be imposed. The fine may also match the total amount of the violations.

But, with Jooste having passed away before the conclusion of the SARB investigation or, for that matter, having faced official criminal charges, what happens to these seized assets?

Attached assets – what will happen next?

Louis van Vuren, the chief executive of the Fiduciary Institute of Southern Africa, says although he is not an authority on the legislation under which the assets were attached, he would be surprised if the assets can be kept without due process.

“The question is due process against whom? If Stéhan Grobler and others are successfully prosecuted and it appears from that trial that the assets attached were ill-gotten gains, the different possibilities are interesting,” he says.

According to Van Vuren, the trust assets usually have nothing to do with the reading of the will, because those assets do not form part of the deceased estate, except any outstanding loan under which the trust is indebted to the deceased.

“Of course, anybody can lodge a claim against a deceased estate, and the executor will then have to decide whether to allow the claim or not. Watch this space: there may be interesting litigation about what claims the executor accepts and what not,” he says.

As to whether civil claims or criminal charges can be brought against a deceased party or his estate post the party’s death, Van Vuren says civil claims based on delict can be continued if summons had already been issued.

“In our common law that could only happen once pleadings were closed (litis contestatio), but that was changed by a judgment of the Johannesburg High Court in 2016 (Nkala and Others v Harmony Gold Mining Company Limited and Others – the silicosis case) where it was held that if summons had been issued, the estate can step into the shoes of the deceased.”

Van Vuren says criminal proceedings cannot be instituted after a suspect’s death.

“Therefore, if a civil claim was already instituted against the late Mr Jooste (summons issued), then it could conceivably proceed, but not any criminal charges.”

Administrative penalties – who will pay?

A day before Jooste reportedly committed suicide, the FSCA imposed a penalty of R475m on him for making or publishing false, misleading, or deceptive statements about Steinhoff International Holdings Limited and Steinhoff International Holdings.

Read: Markus Jooste fined R475m for publishing misleading Steinhoff financials

The Authority has since said that Jooste’s death will have no impact on the fine or on the FSCA’s investigation relating to Steinhoff.

Read: Jooste’s death won’t affect Steinhoff investigation

The penalty was in addition to the reduced fine of R20m, plus interest, which was imposed on Jooste in December 2022 for insider trading. The original fine of R162m, also for FMA contraventions, was set aside by the Financial Services Tribunal in December 2021.

Read: FSCA welcomes decision to uphold revised R20m fine on Markus Jooste

And then there are also the two fines totalling R15m imposed on Jooste by the JSE in January 2023.

One of the R7.5m fines was for releasing financial statements that did not comply with the International Financial Reporting Standards and the JSE’s Listings Requirements because they contained incorrect, false, and misleading information. The financial statements were for the 2015 and prior financial periods and for the 15 months to 30 September 2016.

The second fine was for what the JSE called a fictitious transaction that falsely inflated the income of a subsidiary called Steinhoff at Work by about R376m.

Read: Tribunal confirms JSE’s 20-year ban and R15m fine on Markus Jooste

Moonstone asked Van Vuren whether, in a scenario where the deceased has unresolved administrative penalties, the estate assumes responsibility for settling these fines.

“I would think that an uncontested (at the time of death) administrative penalty would be enforceable against the estate, but once again, the executor may decide to contest it and use the case referred to above as authority for an argument that the estate can contest on the deceased’s behalf.”

Van Vuren adds that he does not have enough information about the merits or not of such a course of action by the executor.

“Any such action would have to be with the agreement of whoever the heirs may be in the will (if there was a will) or the intestate heirs if there was no will,” he says.

How will Jooste’s death affect prosecution?

Grobler appeared in the Pretoria Specialised Commercial Crimes Court on 22 March, on charges of racketeering, three counts of fraud (worth R21bn), manipulation of financial statements, and failure to report fraudulent activities.

According to a media statement released by the NPA, Grobler, in an affidavit, told the court that he intended to plead not guilty to the charges.

He was granted R150 000 bail on the conditions that he:

• reports to Brooklyn police station twice a week (Monday and Friday);
• hands over his two passports to the investigating officer and does not apply for a new one;
• hands over his two firearms to the police; and
• does not interfere with State witnesses.

Grobler is not allowed to leave Gauteng without informing the investigation officer.

The matter was postponed to 26 June for the finalisation of investigations.

While the prosecution of Grobler goes ahead, Jooste’s suicide has led to speculation that the Hawks will need to reassess whom to hold accountable.

Commenting on this, Zwelakhe Mnguni, the chief investment officer of Benguela Global Fund Managers, told SABC News that while the death of anyone was unfortunate, it was also unfortunate that the people who had been hurt by Jooste’s alleged actions were now deprived of hearing the truth from his own lips.

Mnguni was among the first to lay criminal charges against Jooste in December 2017.

As a complainant in the case, Mnguni told SABC News that he had closely interacted with the investigators in the case in the past five to six years.

“There were five people who have been charged in this case, and, as a complainant, I got an update about a month ago that they were done and were getting close to getting arrested.”

Mnguni said the investigators have pieced together a solid case against Jooste and the other accused. He stated that taking all of this into account, along with the PwC investigation and the FSCA’s findings, there was “no way” that prosecution could be avoided because of the death of one person.

Steinhoff requested the PwC investigation in December 2017. The report, which includes 3 000 pages and 4 000 annexed documents, took PwC almost two years to finalise. Steinhoff granted the Hawks and the NPA access to the report.

Mnguni said there was no doubt in his mind that the case would proceed.

“The unfortunate thing is that his (Jooste’s) side of the story won’t be heard.”

Steinhoff International was officially liquidated on 13 October 2023. The exact amount of money lost has been hard to determine because of the complex nature of the financial irregularities involved. However, estimates suggest that losses could range from several billion to hundreds of billions of rands.

Mnguni said, considering the multinational holding company’s current situation, the money is lost.

“Steinhoff has been taken over by the creditors, so the people who were owed money in terms of debt have taken the company over.”

He said the equity holders, the riskiest class of investment, have lost out.

“I don’t think there is much that can be recouped. Markus Jooste had R1.4bn. I think the claims at one stage were close to R200bn, so it’s chalk and cheese. Even if they could recoup money, it will be inflicting pain on them, but it will probably not give any solid financial solace to the people who actually lost money in this,” he said.