EDITORIAL: Jooste’s death deprives SA of the chance to learn Steinhoff’s lessons

When the house of cards that Markus Jooste built collapsed catastrophically in 2017, it took a lot down with it.  

It wiped billions of rand off the value of the shares held by pension funds and other institutional investors, as well by individual investors, some of whom lost life savings. It not only did irreparable financial damage to Steinhoff and its associated companies, but also eroded trust in SA’s corporate sector and its regulatory bodies.

It raised questions about the exercise of oversight by boards of directors, whose purpose is to restrain excesses by maverick CEOs such as Jooste and to push back against any hint of fraud or malfeasance. It raised concerns about auditors who were supposed to follow the money through Jooste’s complex network of transactions and structures, prompting questions about why they didn’t sound the alarm much earlier than they did.

It raised questions about regulators, which should have asked more questions than they did about so implausibly high-flying a company. It raised questions too about the integrity of the chartered accounting profession of which Jooste was a member. 

All of those questions reflected on SA itself. It had been highly rated on global surveys of auditing and governance, especially compared with other emerging markets. After Steinhoff, SA lost some of that lustre, eroding its attraction as an investment destination. SA’s reputation has been further damaged  by the debacle that has unfolded over more than six years since December 2017, when Deloitte refused to sign off the Steinhoff accounts and Jooste resigned.  

The Reserve Bank attached more than R100m of his assets in 2022, and, very recently, the Financial Services Conduct Authority finally fined him almost R500m. But from the law enforcement authorities there had until very recently been little or no sign of any will or ability to push ahead with prosecuting Jooste and his accomplices.  

That’s part of a pattern of failures by the National Prosecuting Authority (NPA) to hold people to account for high-level financial crime and corruption, which was one of the key reasons the Financial Action Task Force greylisted SA. 

Own hand

The cross-border transactions through which Jooste built the Steinhoff empire and inflated its value by many billions were highly complex. Possibly only Jooste ever fully understood what he did. And surely only he knew why he did it. But while it is true that prosecuting such cases requires high-level financial skill and data analysis and can take many years, the NPA — which was offered plenty of private sector help — still has no excuse for its tardiness. 

Finally it moved to charge Jooste and his colleague Stephan Grobler. And then Jooste died on that Hermanus cliff path, apparently by his own hand. 

His death has cheated the investor community and SA of the opportunity to make him answer for his alleged crimes. It has cheated us of the opportunity to find out what really happened at Steinhoff — and to learn the lessons of the debacle. For boards, auditors, regulators and the investor community those could be important lessons. 

And Jooste’s death itself should hold lessons for the authorities, who surely should have been a lot more proactive, not only in prosecuting the case but also in keeping an eye on a man who reportedly had threatened suicide before.