The Financial Sector Conduct Authority (FSCA) of South Africa told OCCRP that investigators are focusing on potential violations by additional individuals in the Steinhoff scandal.
The FSCA highlighted that the alleged violations are related to issues reported in Steinhoff’s annual financial statements and reports for 2014, 2015, and 2016. The regulator has been investigating the multinational retail group for three types of market abuse, including insider trading, false and misleading statements, and price manipulation.
The FSCA also noted that it identified 194 suspicious trades in Steinhoff shares and examined 56 accounts.
Their three-pronged investigation into market abuse and fraud at the failed retailer revealed that several asset managers and banks were notably embarrassed by the recommendations they had made about the company.
Alex Pascoe, an FSCA investigator, remarked that the hype surrounding Steinhoff and its former CEO, Markus Jooste—who took his own life in March following the scandal—left many people completely blindsided by the unfolding events.
“Because of the group’s size, the company was subject to a fragmented audit, and minimal control aided the fraud,” Pascoe said.
The Steinhoff scandal is South Africa’s largest corporate fraud, resulting in over 250 billion rands (US$13.97 billion) in losses for investors who had entrusted their hard-earned savings to the company through various investment vehicles, including unit trusts, endowments, retirement annuities, and pension and provident funds.
The Public Investment Corporation (PIC), which manages public sector workers’ funds, is among those that lost up to 21 billion rands ($1.17 billion) when Steinhoff’s management misappropriated workers’ pension funds.
Fund’s spokesperson Matau Molapo stated in a written response to OCCRP that “PIC on behalf of Government Employee Pension Fund (GEPF) would continue with the ongoing litigation in order to maximise the recovery of funds.”
Steinhoff was also revealed to have engaged in misleading financial reporting and accounting irregularities. The FSCA found that Jooste and the company’s former European finance chief Dirk Schreiber deliberately omitted crucial facts in their reports and issued false, misleading, and deceptive statements about Steinhoff, fully aware of their falsity.
South Africa’s Financial Markets Act prohibits the publication of a company’s past performance or future earnings predictions if they are known, or should be known, to be “false, misleading and deceptive.”