The FSCA also fined three other individuals for insider trading – they sold their Steinhoff shares in response to a warning received from Markus Jooste. This brings the total of the fines levied to R241-million.

If the three individuals – Dr Gerhardus Diedericks Burger, Marthinus Swiegelaar (who was Jooste’s driver), and Jooste’s old friend the late Ockie Oosthuizen – do not pay their fines, Jooste is liable for the additional amounts of R38-million plus R18-million, making the SMS he sent to them probably the world’s most expensive SMS.

This is the largest penalty imposed by the FSCA for insider trading – the next largest is the R24-million it fined Deutsche Bank in 2019.

This is the second penalty imposed by the FSCA on Steinhoff, or individuals related to Steinhoff. The first was the R1.5-billion imposed on Steinhoff for releasing false and misleading information into the marketplace. However, this sum was remitted to R56-million because the FSCA felt that Steinhoff shareholders would end up bearing the brunt of the fine.  

The third penalty is still pending, and if and when it comes, will be the mother of all penalties. 

“We are investigating the players behind the publication of the false and misleading information,” says Brandon Topham, director of Investigations at the FSCA. “We have fined the company itself, but not the perpetrators. That is the big one. We plan to hold people accountable in terms of the Financial Markets Act.”

The FSCA hopes to conclude its investigations by April 2021. 

Meantime, the authority found that on 30 November 2017, shortly before the much-publicised significant decrease in the market value of Steinhoff shares, Jooste sent a “warning SMS” to four people close to him to dispose of their Steinhoff shares prior to the publication of the company’s dire results, which included the now-infamous disclaimer from auditor Deloitte.

Three of the four acted on his disclosure and sold Steinhoff shares. They are now required to pay back these “ill-gotten” gains plus penalties and interest.

The FSCA noted that while Jooste himself had not benefitted from the information, as the person who provided the “tip” he will be held jointly and severally liable with those he tipped off. 

Additionally, he is liable to pay a penalty (not exceeding three times) the gains made by those he tipped. 

Thus the penalty of R161 568 068 imposed on Jooste includes a multiple of three times the losses avoided by the three individuals, plus the amounts accrued as a result of his joint and several liability with two recipients of the SMS. 

An additional penalty of R1-million was imposed on Jooste for disclosing inside information and encouraging Jaap du Toit to sell his Steinhoff shares. Du Toit did not act on the warning SMS. 

The authority found that on receiving the SMS, Dr Burger sold the entire Steinhoff holding held by two of his family trusts. The admin penalty imposed on him represents twice the loss avoided as a result of his offending transactions resulting in a penalty amount of R3,002,630. 

Marthinus Swiegelaar, Jooste’s driver, was fined R18,328. This amount is far smaller because he “provided the highest level of cooperation during the investigation” the FSCA says and he sold significantly fewer shares than the rest of the investigated parties. 

Swiegelaar is jointly and severally liable with Mr Jooste to pay the R18,328. 

In addition, a penalty of more than R115-million was imposed on Ocsan Investment Enterprises, controlled by Jooste’s friend, the late Ockie Oosthuizen.  Oosthuizen also acted on the warning SMS, selling off Ocsan’s shares after receiving the warning.

Of the R115,867,122 penalty, Ocsan is solely responsible for R77,244,748 and the remaining portion being R38,622,374 is payable by Ocsan based on joint and several liability with Jooste.

Effectively, Jooste is solely liable for R122,927,366 out of the R161,568,068. The difference consists of the R38,622,374 and R18,328 being Ocsan and Swiegelaar’s ill-gotten benefits.  

The authority may recover these two amounts from Jooste or from Ocsan or Swiegelaar for their respective liabilities. 

This is not the end of the line for Jooste. Insider trading is a criminal transgression and the FSCA is likely to open up a criminal charge against him in the next week, says Topham. “The NPA will then decide whether to prosecute for this or the other cases that have been opened up against him.” DM/BM