German Court Issues Arrest Warrant Against Former Steinhoff CEO Markus Jooste!

Arrest Warrant against former Steinhoff CEO Markus Jooste
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The Oldenburg Regional Court in Germany has issued an arrest warrant in the trial of the South African national Markus Jooste, the former head of the Steinhoff furniture group, formerly the parent company of the now insolvent Kika and Leiner furniture chains in Austria. South Africa Minister in the Presidency Khumbudzo Ntshavheni said the government had not received an extradition request from German authorities for the disgraced former CEO.

In late November 2015, German law authorities raided the offices of Steinhoff Europe Group Services in Westerstede. This was followed by an investigation initiated by German tax authorities in December 2015, focusing on suspected accounting fraud at Steinhoff. The investigation initially revolved around the proper disclosure of revenues and taxable profits. By December 2017, it had expanded to include four current and former managers who were believed to have exaggerated revenues at Steinhoff subsidiaries.

Background: In 2015, German law authorities raided the offices of Steinhoff Europe Group Services in Westerstede as German tax authorities suspected accounting fraud at Steinhoff. On December 5, 2017, Steinhoff’s CEO, Markus Jooste, resigned in connection with the accounting irregularities. The auditing firm Deloitte, which was Steinhoff’s auditor then, later revealed that it had discovered these irregularities during its 2017 audit and urged Steinhoff to conduct further investigations. Jooste confirmed this information. The value of Steinhoff plummeted, with its stocks experiencing significant declines. Within two weeks, the stocks had lost nearly 95% of their value. In 2020, German prosecutors indicted Jooste and three others on charges arising from the initial German investigation. In 2018, Steinhoff announced a $12 billion writedown, attributed to the correction of overstated revenues, profits, and asset values. Aggrieved shareholders were able to reach an overall global settlement with Steinhoff in the amount of €1.43 billion.

Markus Jooste had stayed away from the start of the trial in April. His lawyer had explained that his client could not leave the country due to criminal investigations into the accounting scandal against him in South Africa. He said there had been an agreement between Jooste and the South African judiciary since 2017. However, South African authorities denied the arrangement had any bearing in the matter and said that the arrangement with Jooste does not prevent and preclude him from attending to his case in Germany.

The German prosecutors accuse the former group CEO of instigating balance sheet manipulation amounting to billions of euros. The accounting scandal had severely shaken the retail group, which has its roots in Westerstede in Lower Saxony. The disclosure of manipulations at the end of 2017 almost completely wiped out the company’s stock market value. Steinhoff International Holdings, which operates globally, is now headquartered in Amsterdam and managed from South Africa. Jooste denies the allegations, according to earlier reports.

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