It’s taken five long years, but this week law enforcement finally moved in on former Steinhoff CEO Markus Jooste.
Raids by crack Reserve Bank investigators pricked the bubble of impunity that seemed to cushion Jooste from prosecution or civil action over about R200bn lost to investors, government employees and pensioners whose funds were invested in Steinhoff.
Once the darling of the JSE, Steinhoff collapsed spectacularly in 2017 when Jooste quit as CEO, setting off a chain of recriminations and initiating the most wide-ranging white-collar crime probe in South Africa’s history.
Reserve Bank investigators had since 2018 been quietly hunting down assets connected to Steinhoff and had already attached other properties, shares, cash, cars and “moveable assets”.
It was an “extensive asset hunt”, said a source close to the investigation, adding that it was “quite a struggle” as assets were hidden.
The Bank’s bold moves against Jooste, preserving assets on suspicion of contravention of exchange control laws, will not be the last. Hawks boss Godfrey Lebeya said law enforcement authorities were discussing how to proceed on Steinhoff and foreign countries had requested mutual legal assistance.
“The investigation in South Africa, everything that needed to be done has been done. It is just the external leg that has not been completed,” he said.
Jooste has denied any wrongdoing.
Lebeya said Hawks investigators and the NPA were “engaging their colleagues in the Reserve Bank, so that they can discuss how the process should unfold going forward. You will find out that some of the things happening in the civil part can assist in the criminal part.
“Remember there are other countries, so those external activities need to come into the docket,” said Lebeya.
Tuesday’s swoop on Jooste’s house and farms was kept under wraps until it happened — as “assets, books and/or documents could be easily removed”, said the Bank’s Lyndon Gysman in the application to the Western Cape High Court to attach the Steinhoff-related assets.
It was an 'extensive asset hunt, said a source close to the investigation, adding that it was 'quite a struggle' as assets were hidden
The Bank’s legal team asked that its application be heard in chambers and that the court file be kept under wraps until the order was executed to ensure against fears that Jooste would be forewarned.
“The fact that [Jooste] previously attended inquiries with investigators does not negate any of these fears,’’ said Gysman.
The assets attached this week were not seized and taken away — according to the court order. But they may ultimately be forfeited to the state if it is shown that exchange control laws had been breached.
The court ordered that the Bank’s investigators may access devices, including computers, flash drives, memory sticks, phones and servers, “in order to mirror all the data and recover any deleted files on the devices”.
The information recovered would be for enforcement of exchange control laws, according to the court order, but the same information might be also used by the Hawks for other criminal prosecutions.
The assets locked down this week were those of the Jooste family trust, Silveroak Trust, attaching art worth R98.7m, “other financial assets” worth R1.2bn and loans owed to it worth R131m.
Bank personnel entered Jooste’s Hermanus home to attach cars, and “personal effects” including jewellery, paintings and firearms valued at nearly R800,000. They also entered the Lanzerac wine estate to attach “all the movable goods of any nature” — except the clothing of those present on the property.
Finally, the Bank attached the Lanzerac farm itself, purchased in 2012 for just under R132m, and another four pieces of land, also in Stellenbosch, that are separately registered under a different title deed and were bought in 2012, for R50m.
The total value of all the assets attached this week is yet to be quantified.
Under the exchange control regulations these may be preserved for three years — or longer, if extended by a court order — because they are assets of people “reasonably suspected to have benefited, or been enriched” by a contravention of the regulations.
Assets attached earlier include a property owned by Steinhoff's former risk manager Chris Grové with a last known municipal value of R7m and three of his cars, including a 2019 Toyota Fortuner valued at more than R500,000. These were attached in October 2021.
Grové has challenged that order in court, saying the decision to attach was “arbitrary and capricious”, and unconstitutional. His attorney Graeme Polson said the Bank was still to file its answering affidavit and declined to comment further as the matter was still before court.
The Bank in June also attached former CFO Ben la Grange’s property, with a last known municipal value of R2m, his Jaguar F-Pace SUV valued at more than R500,000 and shares and cash worth R40.3m in 2019.
The value of loans due to him, including a R6.5m loan to his wife in 2018, and all the movable goods in a house in Craighall Park, Johannesburg, were also attached.
La Grange declined to comment. Gysman said in his affidavit that an attachment had also been made in respect of another of Jooste’s companies, Mayfair Speculators.
In the cases of Grové and La Grange, the Bank did not go to court for the attachment orders they obtained. Strictly speaking, it did not need a court order for last weeks’ asset freezes but these regulations are pre-constitutional and a similar provision in the Customs and Excise Act was found to be unconstitutional by the Constitutional Court as far as entering people’s homes without a warrant was concerned.
Gysman said the Bank had been advised that “warrantless entry and searches infringes or potentially infringes the privacy of individuals”.
If the assets frozen are forfeited to the state it would have to be after a full hearing and if it is shown that there were contraventions of exchange control regulations. This is an administrative process, not a criminal one, and in the past has resulted in huge recoveries for the fiscus.
For example, a freezing order by the Bank on R4.2bn in the bank accounts of the China Railway Rolling Stock Corporation, officially called CRRC E-Loco Supply (Pty) Ltd, was not ultimately forfeit under Exchange Control regulations, but R3.8bn was nonetheless recovered for the fiscus by Sars last year.
Exchange control regulations also create criminal sanctions when there have been contraventions, attracting a maximum penalty of five years’ imprisonment or R250,000 per contravention. These would be investigated by the Hawks and prosecuted by the National Prosecuting Authority, alongside its other criminal investigation into Steinhoff.
Regulation 19 allows Treasury officials or those authorised by the Treasury to order “any person” to furnish the Treasury with information “necessary for the purposes of these regulations” and “to enter the residential or business premises” to “inspect any books or documents”.
The total value of all the assets attached this week is yet to be quantified
From 2019, the Bank’s investigators had used Regulation 19 notices to interview dozens of people and obtain information from banks about the movements of money. It was a “tedious process” of “follow the money”.
But they have uncovered evidence of substantial breaches of exchange control laws, said sources close the investigation.
Gysman’s affidavit sets out allegations of how the Bank believes Silveroak Trust, Jooste and Lanzerac Farm have benefited from contraventions of exchange control regulations.
In his affidavit to court this week, Gysman said he was precluded by the Reserve Bank Act from “indiscriminately disclosing details of certain of the alleged contraventions”.
The detailed evidence so far uncovered by the investigators would have been seen only by Reserve Bank governor Lesetja Kganyago or those he has delegated by law to decide on attachment.
Also unclear is why the Bank approached the court on an urgent basis this week. The application only said that it was “by its very nature urgent”.
“The decision to issue the notices of attachment were taken recently and the second applicant did not waste time in approaching this honourable court,” said Gysman.
- Additional reporting by Thanduxolo Jika
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