The Financial Sector Conduct Authority on Friday said it would fine former Steinhoff CEO Markus Jooste and others for insider trading.

After three years since the Steinhoff share price fallout, action is finally being taken, says former board chairperson Christo Wiese.

Labour federation Cosatu, however, believes that government has been silent on the matter and should be doing more to hold those implicated to account.

News that former Steinhoff chief executive Markus Jooste is to be fined for insider trading, ahead of the share price fallout of the JSE-listed retailer back in 2017, is a sign that some form of consequence management is taking place. 

"After three years, at last, something is beginning to happen," former board chairperson Christo Wiese told Fin24 by phone on Friday. 

Wiese's company, Titan Group, which held Steinhoff shares, was one of many shareholders in South Africa and Europe suing the retailer. Steinhoff was looking to settle 90 claims against it.

In December 2017, Jooste abruptly resigned from the company at the start of an accounting fraud scandal. The share price fell by more than 90% as a consequence. A week later, Wiese stepped down as board chairperson.

Wiese, in 2018, during a Parliamentary inquiry into Steinhoff, described the problems at the retailer "like a bolt out of the blue". On multiple occasions, Steinhoff's supervisory board and former executives including Jooste and former chief financial officer Ben la Grange, appeared before Parliament to provide an account of what had happened. Other investigating authorities such as the Hawks and the FSCA and auditing firm PwC also provided updates to Parliament on their respective investigations.

South African authorities, however, had been criticised for not acting against some executives, this despite a forensic report from PwC's investigation showing evidence implicating executives in fraud, which resulted in losses to shareholders, some of which included pension funds. 

"I am sure that thousands of people will be really grateful that, at last, action is being taken," Wiese said of the news from the FSCA that it would fine Jooste R122-million, particularly for insider trading.

Jooste had sent a message to three other shareholders, warning of the possible fallout. They include Jaap du Toit - who never acted on the contents of the message - Jooste's acquaintance Dr Gerhardus Burger, Jooste's former driver Marthinus Swiegelaar, and Ocsan Investment Enterprises controlled by Ockie Oosthuizen, now deceased. 

Jooste did not make any money from the insider trading, according to the FSCA. Swiegelaar, Burger and Ocsan, on the instruction of Oosthuizen, acted on the SMS warning and sold off shares. 

The FSCA's divisional head for executive investigation Brandon Topham, however, explained that Jooste could appeal the fine. He and Ocsan denied any wrongdoing. The matter could even go to the Constitutional Court, said Topham. 

Fin24 tried to call Jooste for comment.

Commenting on the matter possibly dragging out for a number of years if Jooste challenged it, Wiese said that it was likely Jooste would "try and postpone it for as long as he possibly can".

"These rumours have been going around since 2017," he said. "I do not know what his defence will be, I can't speculate on that. I think he has a problem. He has many problems," he said. 

As per the Financial Markets Act (FMA), the FSCA would have first charge against the costs - the balance would then be distributed to claimants or those who lost money during the insider trading period. "We look at all the trades and apply formulas then arrange a refund - Section 82 of the FMA stipulates how this was done," the FSCA clarified in an emailed response to Fin24.

Earlier in October, the FSCA also fined Steinhoff R13.5-million for breaching its listing requirements by publishing misleading and incorrect information on its financial statements. 

Labour federation Cosatu, which also participated in the Parliamentary inquiry into Steinhoff, said the fines were welcome, but these fines were still not enough to compensate the value stolen and lost from workers' pension funds. "They are a drop in the ocean of what was reported to have been looted," said Parliamentary coordinator Matthew Parks. 

"Markus Jooste and his co-accused must be arrested and brought to court, their assets must be attached and returned to the PIC (Public Investment Corporation) where they belong." The PIC invested in Steinhoff on behalf of the Government Employees Pension Fund. 

"The Hawks, courts and law enforcement agencies must do their work and bring Jooste and his accomplices to book," Parks added. 

Cosatu said the work done by the Fifth Parliament in investigating the matter should be revived so that the Hawks and other government organs could account for the progress they were making to prosecute the accused, seize their assets and bring justice to workers who lost billions in Steinhoff. "Government's silence has been deafening." 

In an emailed response to Fin24 about the progress made in its invetsigation into Steinhoff, NPA national spokesperson Sipho Ngwema said that the prosecution and investigating team have made "good progress" particularly with the appointment of the forensic auditors. "This has helped a deal in advancing the investigation," said Ngwema. 

Topham said there was potential for criminal charges to be pursued. "We probably will raise criminal charges as a matter of standard practice. Whenever we come across a criminal transgression, we do so," he said. Topham said that charges were more than likely to be brought against Jooste, who was the insider who shared information while knowing his responsibilities in terms of the Financial Markets Act.

But Topham pointed out that it was up to prosecuting authorities to choose which criminal transgressions to proceed with. "What they decide to prosecute in the end, will be the decision made by the police and the prosecuting authority."

The FSCA was not mandated to prosecute and would likely hand over the matter to prosecuting authorities. The FSCA was also able to assist prosecuting authorities with specialist knowledge required on complex matters pertaining to financial markets and the implications of insider trading.

Chairperson of the Standing Committee on Finance Joe Maswanganyi said the fine would go a long way in "trying to nail the culprit", and that the findings of insider trading should warrant acton by the police. 

"Now that there is information that there has been insider trading, which is a very strong finding by the Financial Sector Conduct Authority... insider trading is a criminal offence.

"We hope and believe that the police, through the Hawks will take appropriate action against those who have been fined and found guilty of sharing insider information in regard to Steinhoff," said Maswanganyi. He said there was no reason now, why the police could not charge people.

"We also call upon the Hawks and relevant law enforcement authorities to recover the money Steinhoff has not repaid to the PIC. This is money that belongs to the employees, to pension contributors. The money should be recovered," said Maswanganyi. There was no basis for the Hawks not to already act on the findings of the PwC report either, he added.

The parliamentary committee intended to invite law enforcement agencies and regulatory bodies to provide an update on the latest developments on Steinhoff as well as to respond to outstanding issues.

Maswanganyi said the state capture commission should be looking into Steinhoff too. "Here is a lot of money that has been lost, that has been administered by a state organ called the PIC and GEPF. The state capture commission should have interest on this matter. The police should now act on the basis of the findings of the FSCA. The billions that have been lost should be recovered."

GOVERNMENT AND MEDIA MUST ACT
Political analyst Somadoda Fikeni noted that while the private sector was imposing its own penalties, government had to show its own "appetite" for dealing with corruption in the private sector as it has shown in the public sector.

"We have not seen the same determination when it comes to the private sector," he said. There was still a perception that government was "in the pockets of the big businesses, because they fund parties or fund some individuals within parties", Fikeni said. There was also a view that certain individuals in government may want to join the boards of private companies once they retired, or were fired.

Until there was action from the NPA, the perception that government had been weak on the private sector would persist, he said.

Fikeni said that even the media had been "weak" on reporting on "white involvement" in private sector corruption. "I mean, [Angelo ] Agrizzi, [Markus] Jooste and Gavin Watson - who has gone to check what their kids are wearing and what cars they are driving and which schools are they going to and how many properties they have?" said Fikeni.

He recalled how media reported on upgrades to former president Thabo Mbeki's house, while upgrades to former presidents FW De Klerk and PW Botha were ignored.