The recent bungles in state capture cases by the National Prosecuting Authority show why Markus Jooste sleeps well at his Hermanus home.
Jooste, who served as Steinhoff International CEO for nearly two decades, is blamed for orchestrating the biggest corporate fraud in South Africa’s history.
Steinhoff was founded in 1964 by Bruno Steinhoff in Germany and moved its headquarters to South Africa in 1998 after merging with Gommagomma, run by Jooste.
The company went on an acquisition spree and became a retail powerhouse with prominent brands like Pepkor, JD Group, and the US-based Mattress Firm in its stable.
Steinhoff became a favourite among local investors as it appeared to perform well with growing revenue and turning every acquisition into a financial success.
Despite warnings from a few analysts about rising debt and accounting irregularities, investors kept piling in.
The share price peaked at R96.85, which made Steinhoff one of the largest companies in South Africa, with a market cap of R359.6 billion.
The house of cards crashed in 2017 after news broke of major accounting irregularities in Steinhoff’s financial statements. PwC revealed a $7 billion overstatement of group sales.
The share price plummeted to R1.26 per share, and shareholders lost billions. There were many casualties, including pension funds and private investors.
Steinhoff International Holdings was finally liquidated at the end of 2023. The company and its shares ceased to exist.
Many people have been asking for justice and for Jooste to be prosecuted for his involvement in Steinhoff’s collapse.
One of these is Rob Rose, Financial Mail editor and author of the book “Steinheist”, who has been reporting extensively on the fall of Steinhoff.
Rose said it is essential for South Africa to hold the people involved in this case accountable and that it is vital for the country’s corporate sector.
However, it has been six years since the collapse of Steinhoff and there are no signs that the NPA is ready to prosecute Jooste.
Rose said the chances of successfully prosecuting Jooste diminish proportionally to the time it takes to get Jooste in court.
This can be related to witnesses moving away, becoming unavailable for questioning, or their memories fading. Evidence can also be lost in the time it takes to get to trial.
The reality is that the NPA’s capacity has deteriorated to such an extent that it will be very challenging to build a successful case against Jooste.
Two cases illustrate the problems the prosecuting authority faces – the first state capture trial of Gupta-linked Nulane Investment and the case against former Eskom CEO Matshela Koko.
Legal reporter Karyn Maughan said the NPA’s first state capture trial ended in humiliation. The judge found that all the accused should be summarily acquitted because of the lack of evidence.
The NPA failed the most basic legal requirements for a successful prosecution. The judge referred to a “comedy of errors” regarding the quality of the police’s work.
She also slated the state for “the lackadaisical manner in which this case was investigated and approached”.
Another high-profile case, this time against former Eskom chief executive Matshela Koko, suffered a similar fate.
The Middelburg specialised commercial crimes court struck the case off the roll after numerous delays.
More than a year after the first arrests, the state was still not ready to progress with the trial against Koko and his co-accused.
Afriforum Private Prosecution Unit spokesperson Barry Bateman said this is a good example of the NPA enrolling cases for political expediency.
“People are arrested or summoned to court only to hear a prosecutor apply for a postponement for further investigation,” he said.
In this case, the investigating officer told the court the six-year-long investigation was not completed. “That’s all the state does – further investigating. It never finalises dockets,” Bateman said.
These cases were far simpler than the one against Jooste. In the case of Steinhoff, the NPA would need to rely on complex financial forensics to build a case.
Jooste will be armed with the best legal team money can buy. He has always maintained his innocence and will be ready to challenge any case against him.
If the NPA could not satisfy the most basic legal requirements in the relatively simple Nulane Investment and Koko cases, it stands no chance against Jooste.
It is, therefore, no surprise that Jooste is fighting against extradition to Germany where he is facing fraud charges.
In the German trial, people “in the greater Steinhoff architecture” have indicated their willingness to testify against Jooste. This includes his co-accused in the trial, British ex-banker George Alan Evans.
The chance of a successful prosecution is much higher in Germany than in South Africa. Their case is ready, and they want him to stand trial.
However, in South Africa, it is not clear where the investigation and trial stands. Even if the NPA is ready soon, it may well go the same route as the Nulane Investment and Koko cases.