Stein­hoff class ac­tion is pay­back

The ma­jor bid lists as many as 42 de­fen­dants to get as much as pos­si­ble out for in­vestors

Mail & Guardian - - Business - Te­bogo Tsh­wane

Many Stein­hoff share­hold­ers who lost close to R200-bil­lion when the global fur­ni­ture em­pire was shown to be lit­tle more than smoke and mir­rors want their money back — but there may be noth­ing left.

Lawyers act­ing un­der the ban­ner of the In­ter­na­tional Stein­hoff Lit­i­ga­tion Group are lead­ing a class ac­tion cov­er­ing all three ju­ris­dic­tions Stein­hoff op­er­ated in, claim­ing €12-bil­lion, or more than R190­bil­lion, in in­vestor losses. Stein­hoff is now worth a mere R8-bil­lion.

The class ac­tion, which in­cludes 100 in­sti­tu­tional and 1 000 re­tail in­vestors, in­volves LHL At­tor­neys in South Africa, TILP Lit­i­ga­tion in Ger­many and Bynker­shoek Dis­pute Res­o­lu­tion in the Nether­lands, with sup­port from the global loss re­cov­ery law firm DRRT and lit­i­ga­tion fun­der Therium.

The class ac­tion throws its net wide: 42 par­ties — in­clud­ing all of Stein­hoff and its sub­sidiaries, au­di­tors Deloitte and Rödl & Part­ner and the banks Absa, Ger­many’s Com­merzbank and United King­dom­based Stan­dard Char­tered Bank — are named as re­spon­dents.

The re­spon­dents also in­clude more than 30 of Stein­hoff’s for­mer and cur­rent ex­ec­u­tives, among them for­mer chief fi­nan­cial of­fi­cer Ben le Grange, for­mer chair­per­son Christo Wiese, direc­tor An­gela Kruger-Stein­hoff and founder Bruno Stein­hoff.

Lawyer Zain Lun­dell, of LHL at­tor­neys, said they had man­aged to put to­gether a ve­hi­cle that would en­sure that in­vestors were prop­erly pro­tected.

Max­imil­lian Weiss, an at­tor­ney at TILP Lit­i­ga­tion, said, although they un­der­stood that they might not be able to re­coup all the losses suf­fered by in­vestors, “by pur­su­ing lit­i­ga­tion against the ap­prox­i­mately 40 de­fen­dants we are con­vinced were at fault, we dras­ti­cally in­crease the like­li­hood for a rea­son­able com­pen­sa­tion”.

Not sur­pris­ingly, the ar­chi­tect of the fi­nan­cial shenani­gans, Markus Jooste, is on the list. What is known of his cur­rent net worth is scant. He owns a com­pany that spe­cialises in horse rac­ing, May­fair Spec­u­la­tors, which is owned by May­fair Hold­ings, which in turn is held by a Jooste trust.

James Brent Steyn, the author of Stein­hof f: In­side SA’s Big­gest Cor­po­rate Crash, wrote that, in Au­gust 2017, Jooste al­legedly trans­ferred as­sets of about R1.5bil­lion from May­fair Spec­u­la­tors to May­fair Hold­ings, leav­ing May­fair Spec­u­la­tors with debt and Stein­hoff shares, which were not worth much af­ter the crash.

An is­sue will be the ex­tent to which the ill-got­ten gains have been spir­ited into trusts and hid­den ac­counts. The Fi­nan­cial Mail and in­ves­tiga­tive unit amaBhun­gane re­cently re­vealed how Jooste used se­cret front com­pa­nies through as­so­ci­ates to take po­si­tions that would ben­e­fit them to the detri­ment of other share­hold­ers. Lun­dell would not be drawn on whether the lit­i­ga­tors would be go­ing af­ter hid­den as­sets. He sim­ply stated that “there are means and ways” and law firms have the ca­pac­ity to carry out that work.

The group, which launched the South African class ac­tion in the high court in Jo­han­nes­burg in Au­gust, has man­aged serve no­tice to many of the re­spon­dents, in­clud­ing the Stein­hoff en­ti­ties, Le Grange, Weise, Deloitte and the banks. Lun­dell said they hoped to have served no­tices on all the re­spon­dents by early next year.

He said they had also re­ceived pos­i­tive feed­back from in­vestors to whom they spoke dur­ing their road­show this past week.

The group met var­i­ous in­sti­tu­tional and or­di­nary in­vestors and ex­plained the na­ture of the mul­ti­juris­dic­tional class ac­tion and why it was bet­ter to sup­port it rather than launch­ing sep­a­rate suits.

“Pur­su­ing a multi-ju­ris­dic­tional lit­i­ga­tion strat­egy in South Africa, Nether­lands and Ger­many means that the de­fen­dants have nowhere to hide and that ISLG can ne­go­ti­ate on be­half of all Stein­hoff share­hold­ers,” said Weiss.

If the re­spon­dents in the case de­cided to ne­go­ti­ate a set­tle­ment, the group would be able to set­tle all the claims “once and for all”, he said.

The lit­i­ga­tion group’s class ac­tion is a opt-out case, mean­ing it cov­ers all share­hold­ers who bought shares be­tween June 26 2013 and De­cem­ber 5 2017, un­less they in­di­cate that they want to opt out and pur­sue sep­a­rate lit­i­ga­tion.

Weiss said they did not ex­pect in­vestors to opt out be­cause the pos­si­bil­ity of re­cov­er­ing more money sep­a­rately was not re­al­is­tic un­der the cir­cum­stances.

“If ev­ery­body opted out, do you re­ally think Stein­hoff, di­rec­tors and au­di­tors would want to pay more? This case will only be re­solved when all share­hold­ers are treated equally,” Weiss said.

A Stein­hoff spokesper­son would not com­ment be­cause of share price sen­si­tiv­ity, other than to say the com­pany and its at­tor­neys were as­sess­ing the mer­its of all the le­gal pro­ceed­ings that had been ini­ti­ated against the com­pany and that it would be re­spond­ing to them.

The chief ex­ec­u­tive of­fi­cer of Deloitte Africa, Lwazi Bam, said it would de­fend the ap­pli­ca­tion.

A sep­a­rate class ac­tion for Dutch share­holder group VEB has been launched in the Nether­lands and an­other is planned by Dutch law firm Bar­entsKrans.

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