Shareholders to sue Steinhoff for R185bn
Consortium of law firms applies to high court for what will be SA’s largest legal action to date
Steinhoff, which has had nearly R190bn wiped off its market valuation since December when accounting irregularities came to light, is facing mounting legal woes with the launch of a classaction lawsuit in Johannesburg.
On Wednesday, a consortium of law firms, acting on behalf of Steinhoff shareholders, applied to the High Court in Johannesburg to launch what will be the biggest class-action lawsuit in SA’s history.
If the application is successful, investors could be seeking damages of more than R185bn, nearly 20 times Steinhoff’s current market capitalisation.
The suit adds to a number of legal actions that have been brought against Steinhoff and related parties in recent months.
Former chairman and major shareholder Christo Wiese is suing the group for damages of R59bn, while class-action suits have also been brought on behalf of shareholders in Germany and the Netherlands.
In June, Dutch shareholder group VEB filed a lawsuit against Steinhoff auditor Deloitte in Rotterdam.
The Johannesburg application names as defendants the Dutch incorporated Steinhoff International Holdings NV; its South African predecessor, Steinhoff International Holdings; as well as parties that assisted with its Frankfurt listing — these are PSG Capital, Absa, Germany’s Commerzbank and UK-based Standard Chartered Bank, as well as auditors Deloitte and Rödl & Partner.
More than 30 current and former directors of Steinhoff and its subsidiaries have been named as respondents, including Wiese, former CEO Markus Jooste, former CFO Ben la Grange as well as Steinhoff’s current CEO, Danie van der Merwe.
The lawsuit brings claims on behalf of all investors who bought Steinhoff shares in the period from at least June 26 2013 up to the date Jooste resigned, on December 5 2017, when the accounting irregularities were first disclosed.
The 2013 date relates to the initial purchase of European furniture retailer Kika-Leiner by Genesis Investment Holding,
a Steinhoff off-balance sheet entity. Steinhoff, which initially bought Kika-Leiner’s property assets, later acquired the retail operations too.
The lawsuit, which will be the first class-action suit in SA on behalf of investors, was brought by Johannesburg-based law firm LHL Attorneys, Dutch firm Bynkershoek Dispute Resolution and German firm TILP Litigation.
The suit dwarfs the record class-action settlement reached in May when mining companies agreed to pay R1.4bn in compensation to mine workers who contracted silicosis and tuberculosis on gold mines from 1965.
Zain Lundell, a member of LHL Attorneys, said there was a specific reason why SA had been chosen for the class action.
“SA has a well-established and reliable legal system with favourable legislation that we believe will allow aggrieved investors to be fairly compensated for their losses. Moreover, SA’s true opt-out class-action procedure is superior to the proceedings available in the Nether- lands and Germany and, thus, will contribute to the protection of all shareholders, large and small alike.”
As opposed to Germany and the Netherlands, which require investors to opt in, all investors in SA are automatically a part of the class-action unless they choose to opt out.
Lundell said the effort to recover damages warranted the cross-jurisdictional effort by the three law firms.
“Steinhoff was originally incorporated in SA, then the Netherlands, and is listed on the Frankfurt Stock Exchange as well as the JSE.
“So, we are seeking to provide a seamless solution to investors regarding claiming damages,” he said.
LHL Attorneys was the first law firm to seek damages on behalf of people who contracted listeriosis from Tiger Brands’ processed meat products and is now jointly prosecuting the listeriosis class-action suit with Richard Spoor Attorneys, who represented mine employees in the silicosis case.