- The Financial Sector Conduct Authority is investigating a "number of persons" involved in the management of Steinhoff prior to December 2017 to find out if anyone knowingly allowed false or misleading financial statements to be published.
- As part of the ongoing probe, the financial market regulator is questioning Steinhoff's former CEO Markus Jooste.
- PwC found in 2019 that a tight-knit group of Steinhoff executives used "fictitious and/or irregular transactions" to inflate the group's profits and assets by about €6.5 billion between the 2009 and 2017 financial years.
South Africa's financial market regulator is questioning former Steinhoff CEO Markus Jooste, and others, as part of a probe into whether anyone at the company knowingly published false or misleading financial information prior to 2017 - an offence under the Financial Markets Act.
The investigation is currently taking place behind closed doors and is expected to be completed by the end of August, said Brandon Topham, the Financial Sector Conduct Authority's (FSCA) head of enforcement.
The authority's ruling will be made public. This ruling can be appealed to the Financial Sector Tribunal.
The current probe follows on from an investigation completed in September 2019 which found the Steinhoff Group guilty of contravening key provisions of the Financial Markets Act in the period before December 2017. The Stellenbosch-headquartered furniture and household goods group was fined a record R1.5 billion, which was immediately remitted to R53 million in light of the group's precarious financial position.
'Actual perpetrators'
Topham said on Thursday that while the market abuse probe into Steinhoff as an entity had finished, the FCSA was still looking for the "actual perpetrators of the offence".
Section 81 of the Financial Markets Act prohibits the publication of financial statements or forecasts which someone "knows, or ought reasonably to know" are false, misleading, or deceptive.
"In short, we are investigating a number of persons closely involved in the management and or accounting functions of the Steinhoff group to find out who was responsible for knowingly - or who ought reasonably to have known - that the financial statements and other public announcements for the group were false, misleading or deceptive in fact in a material manner," said Topham.
PwC completed a forensic probe into Steinhoff in March 2019.
While the retailer views the full 3 000-page report as confidential, it has published an 11-page overview, which stated that a "small group" of former Steinhoff executives inflated the profit and asset values of the group for years.
The probe found that an unnamed "senior management executive" instructed a small number of other executives to execute instructions, often with the assistance of a "small number of persons not employed by the Steinhoff Group".
According to the overview, the clique of executives used "fictitious and/or irregular transactions" to inflate the group's profits and assets by about €6.5 billion between the 2009 and 2017 financial years.
Steinhoff later confirmed that one of the executives named in the report was Jooste.
A legal representative for Jooste previously told Fin24 that his client does not intend to comment "at all".
But while he has refused requests for interviews since resigning as Steinhoff's CEO in December 2017, Jooste did deny any wrongdoing related to his tenure as Steinhoff CEO when he appeared before a Parliamentary committee in September 2018.
"I am satisfied in my personal opinion that the audit processes were professional," he said at the time.
Insider trading appeal still to be heard
The current probe is separate from the FSCA's insider trading investigation into Jooste and others, which was completed in October last year.
The FSCA found Jooste guilty of insider trading and fined him R122 million. The former Steinhoff CEO is appealing the fine. Arguments will be heard in early November before the Financial Sector Tribunal.