Deloitte asks for say in Steinhoff
• Auditor says winding up global retailer could sabotage ongoing settlement process
Auditor Deloitte and 128 other parties have applied to intervene in the Steinhoff liquidation case. Deloitte was the auditor for the global retailer when its share price collapsed in December 2017 as a large hole in the Steinhoff accounts was discovered.
Auditor Deloitte and 128 other parties have applied to intervene in the Steinhoff liquidation case that threatens its survival, further delaying the legal case that is yet to get off the ground.
Deloitte was the auditor for the global retailer when its share price collapsed in December 2017 as a large hole in the Steinhoff accounts was discovered.
As Steinhoff’s auditor for years, Deloitte has faced lawsuits by investors who lost money and says it has an interest in getting involved in the liquidation matter.
Steinhoff has faced more than 100 lawsuits topping R136bn by claimants who argue they were duped into buying worthless shares. It has spent years trying to work out a settlement to end the litigation, which would benefit Deloitte and reduce its legal risks too.
Steinhoff’s R24bn settlement received overwhelming support from all four sets of claimants last week who had to vote to approve it. These included its former biggest shareholder, Christo Wiese, and will soon go before Dutch and SA courts to ensure it is “just and equitable”.
But the settlement could be thwarted by a liquidation attempt by Bernard Mostert and Braam van Huyssteen in the Cape Town high court. They say their shoe business Tekkie Town was stolen from them when they sold it for R1.8bn in Steinhoff shares that were later deemed to be almost worthless.
On Tuesday, Deloitte and Hamilton, a firm that funds legal action and represents SA funds such as Allan Gray, applied to join the Tekkie Town liquidation case to oppose it. The Municipal Workers Pension Fund (MWPF), which claims to represent 127 other institutional investors, also applied to get involved. They all lost money when the Steinhoff fraud was revealed.
Deloitte says it must be permitted to join the matter, arguing if the liquidation goes ahead it will create “tension for the settlement process at best or sabotage it at worst”.
If the settlement does not go ahead, Deloitte says Steinhoff, which has a complex global structure, will be embroiled in “endless litigation” that could span multiple jurisdictions with conflicting laws.
Deloitte has said in legal papers in its defence that it was misled by former CEO and CFO Markus Jooste and Ben la Grange. However, Deloitte does not want to suffer protracted litigation against it and has contributed R1.2bn to the Steinhoff settlement. The settlement will end all legal claims against Deloitte and Steinhoff.
Deloitte also questions Mostert ’ s claim that the liquidation of Steinhoff would be best for SA creditors. Deloitte says it would be costly as liquidators get a percentage of what is received.
Last week, 78 foreign financial creditors who own Steinhoff debt they bought after the fraud was revealed attempted to intervene in the case as did the two people running the Dutch settlement process. They were refused access by judge Hayley Slingers and are now both appealing this decision.
Advocate for Mostert and Van Huyssteen, Deon Irish, said the various efforts to intervene, appeal and apply for postponements were “an attempt to make a simple matter complicated”. Lengthy litigation would only lead to “endless delays and a paper war”, referring to hundreds of court documents.
He said Steinhoff was delaying the actual liquidation being heard, while the matter could be dealt with in a month.
At stake is the settlement that is close to finalisation and could be wrapped up before the liquidation matter gets off to a proper start.
Steinhoff advocate Arnold Subel said it had no intention of obstructing proceedings. He said Steinhoff had nothing to do with all the parties seeking to be involved in the matter.
The matter will resume on Thursday for Mostert’s legal team and Deloitte, Hamilton and the MWPF to discuss how they intend to proceed.
“Despite another set of delay tactics and attempted gaslighting we inch forward,” said Mostert.