Menu Close

Dirk Schreiber Gets 2 Years in Prison, Markus Jooste Missing

foremer steinhoff executive dirk schreiber jailed in germany.

Markus Jooste’s whereabouts unknown as Dirk Schreiber gets jailed for 2 years as Siegmar Schmidt escapes with a suspended sentence

In a seismic turn of events, the notorious Steinhoff (SHN) scandal has claimed its first prison sentence. Dirk Schreiber, once the financial mastermind of Steinhoff’s European operations, has been handed a three-and-a-half-year jail term for orchestrating false financial statements and aiding and abetting loan fraud. This landmark ruling marks the first time that someone has faced incarceration in connection to the colossal fraud that rocked the corporate world.

From Boardroom to Jail Cell: The Fall of Schreiber

The higher Oldenburg regional court in Germany delivered this resounding verdict, a culmination of painstaking legal proceedings. His sentence comes with a twist – one year of his punishment is considered served due to the prolonged legal process. This translates to two-and-a-half years of prison time ahead for him.

former steinhoff executive dirk schreiber who was jailed for 2 years.

Schreiber Exposes Jooste’s Deception at Steinhoff

Schreiber, formerly a managing director at Steinhoff Europe Group Services, had been indicted with charges related to falsification of balance sheets in Germany. Additionally, the public prosecutor’s office had alleged Schreiber’s involvement in two instances of credit fraud. In June, he openly admitted to the judges that he was aware of fake deals happening at the retail company. German authorities discovered proof that some parts of the company may have faked earnings by claiming they sold assets to other companies. However, those companies were actually part of the same group.

During the trial he was asked why he chose not to co-operate with authorities when the company was raided in 2015, he explained in court that when Jooste the CEO, resigned, he felt free that he could actively cooperate with tax authorities, police, and legal officers. He disagreed with Jooste’s claim that the company operated with a decentralized structure. He clarified that it was actually the opposite – all major decisions required Jooste’s approval.

READ MORE: PIC Cuts Losses: Sells Off Steinhoff Investment for R40Mln

According to Dirk, Jooste was the mastermind behind the business strategies in Europe. Even though each European company had its own management board, they followed Jooste’s instructions. He revealed that they manipulated Excel tables to show huge profits, regardless of the actual performance, all to match Jooste’s vision.

Because the company didn’t genuinely make these profits, they created fake transactions to achieve the results Jooste wanted. Dirk had to work backward to make the numbers seem better than they were. Dirk argued that the company’s European operations weren’t independent; they executed Jooste’s specific orders. He emphasized that Jooste’s decisions were crucial, and he implemented them.

Communication with Jooste usually happened in private conversations, either over the phone or through messages. There weren’t written memos exchanged, according to Dirk.

The Steinhoff Saga: A Trail of Deception

The multinational retail giant operating primarily out of Stellenbosch, unveiled a complex web of deception. Under the helm of South African CEO Markus Jooste, the company engaged in concealing debt in off-balance sheet entities and inflating profits through fictitious transactions. The unraveling began when auditing giant Deloitte refused to sign off on the group’s accounts in December 2017. The aftermath was catastrophic – the share price plummeted, leading to an astonishing R200 billion in losses for investors and South African pensioners.

Siegmar Schmidt who got off almost scotfree.

A Tale of Two Sentences

In a parallel course of justice, Siegmar Schmidt, a former European director at the company faced the courtroom as well. His sentencing resulted in a two-year suspended prison term, coupled with a €72,000 (approximately R1.4 million) fine to be paid in monthly installments of €2,000. Schmidt was held accountable for his involvement in falsifying financial records within the European arm of the company.

Unveiling the Scam: False Profits and Hidden Losses

His conviction underscores the intricate machinations that concealed losses through fabricated transactions and exaggerated assets. The fraudulent deals spanned an intricate network of companies, distorting the reality of the company’s financial health. Shockingly, the false profits were executed based on the explicit instruction of CEO Markus Jooste.

The Ongoing Battle for Transparency

The revelation of these financial maneuvers comes from a confidential report by PwC, which investigated irregular transactions totaling €6.5 billion with eight companies over eight years. Despite a court order for the company to disclose the report in 2022, the company is appealing the decision.

The company maintained its stance, contending that allowing media access to an extensive 3,000-page forensic investigation concerning fraud would likely have a detrimental impact on forthcoming legal battles involving implicated former executives, notably the ex-CEO Jooste.

A concerted effort by South African media entities sought legal intervention to mandate Steinhoff’s disclosure of the report. Nevertheless, the company firmly rebuffed the application brought forth by the two media groups, which aimed to leverage freedom of information regulations for report access.

In the Western Cape High Court, media representatives underscored an “overwhelming” public interest in unearthing the entire breadth of the investigation report. However, Steinhoff swiftly retorted, asserting that the release of the report could potentially compromise the ongoing legal endeavors to hold former executives accountable for reimbursing the misappropriated funds.

ex ceo steinhoff fraudster markus jooste whose whereabouts remain unknown.

Steinhoff’s New Chapter: Debt, Asset Sales, and Pensions

As the scandal-laden saga continues, the company has fallen under the stewardship of hedge funds, burdened by €10 billion in debt. Managed by a Dutch trust, the company plans to gradually divest its remaining assets, including a little over 40% of South African entity Pepkor. This transition will lead to the company’s delisting from both the JSE and Frankfurt stock exchange. Unfortunately, shareholders are unlikely to reap any benefits, given that the debt overshadows the asset value.

Justice Served, but Battle Continues

Although his conviction marks a pivotal moment, the curtain hasn’t fallen on the Steinhoff debacle. As the legal saga unfolds, questions remain about the accountability of key figures like Markus Jooste, who evaded his court appearance. Amidst the legal labyrinth, investors who endured the 2017 stock price crash have finally found a measure of resolution through a R24 billion cash and Pepkor share settlement.

Markus Jooste: The Man At The Centre Of it All

Jooste’s attempt to overturn an arrest warrant issued by a German court ended in failure, adding another layer of complexity to his legal situation. His challenge was decisively dismissed by the court after he had failed to appear for his trial on fraud charges back in April. The German prosecutors had originally requested the issuance of the arrest warrant when Jooste did not attend the scheduled trial at a German court.

READ MORE: Daring fraudster arrested in DBN for R18Mil scheme

The arrest warrant was officially granted back then, following Jooste’s conspicuous absence from the court proceedings. During that time, Jooste’s legal representative had informed the court that he couldn’t travel to Germany due to a missing passport, citing an arrangement with South African authorities who were also pursuing legal action against him.

Consequently, the legal proceedings came to a halt on foreign soil, prompting German prosecutors to pursue the arrest warrant as an alternative course of action. Jooste was facing charges related to five counts of fraud allegedly committed at various subsidiaries of the company between 2011 and 2014.

national prosecuting authority

Where is Markus Jooste Now?

As of now, Jooste’s whereabouts remain unknown, intensifying the mystery surrounding this legal saga. He remains a wanted man in Germany, where a warrant of arrest has been issued against him. German authorities are currently working on an extradition request to secure his appearance in a German court.

While both South Africa and Germany are part of the European Extradition Convention, they typically don’t extradite their citizens. Given that Germany’s constitution forbids extraditing its nationals to non-EU countries, a reciprocal request from South Africa wouldn’t be granted. Due to that the chances of Jooste being extradited are rather slim.

Crumbling Facades: The Steinhoff Case’s Ripple Effects

Amid the legal proceedings, questions have emerged about the financial connections between the National Prosecuting Authority (NPA) and Steinhoff. The NPA’s acceptance of more than R30 million from the company to fund the fraud investigation has sparked discussions about the NPA’s impartiality. While the NPA has defended itself, characterizing the funds as a ‘donation’ from the company, skeptics have labeled it as a possible attempt to influence and shield company executives from accountability.

Critics contend that this financial support could compromise the NPA’s autonomy and the credibility of its investigation. As the gears of justice continue to turn, Steinhoff’s impending delisting has sealed its fate. However, the shadow of mistrust cast by the financial ties between the NPA and the company will likely cast a long-lasting impact on the realm of finance.

Related Posts