Entering the fray?
Sanlam mulls legal action against Steinhoff
● Sanlam Investment Group is considering participation in a class-action lawsuit against Steinhoff in a bid to recover millions related to investment in the company and loans it extended.
The group is weighing up its options after making notable losses following the collapse of Steinhoff’s share price when news broke of suspected accounting irregularities at the retail group.
“Sanlam has suffered losses as a result of its exposure to the Steinhoff share price. Sanlam is investigating means to recover some of those losses,” the group told Business Times this week.
“The collective action will be against Steinhoff and various other defendants men- tioned in connection with the collective action,” the group added.
Earlier this month, a group of law firms applied to the South Gauteng High Court in Johannesburg to launch a class-action lawsuit on behalf of investors in Steinhoff to seek damages that could run to as much as R185bn.
The application names the defendants as Dutch-incorporated Steinhoff International Holdings NV, Steinhoff International Holdings, Absa, Germany’s Commerzbank and UK-based Standard Chartered Bank, and auditors such as Deloitte, which helped Steinhoff with its Frankfurt listing, among others.
Zain Lundell, a litigation lawyer at LHL Attorneys, one of the law firms that brought the application in Johannesburg, confirmed receiving expressions of interest and requests from both large institutional investors and retail investors since they announced the legal action last week.
Lundell added that the costs of litigation would be paid by those who were claiming compensation.
“We have a large team with deep pockets and are ready and willing to litigate.”
Steinhoff’s share price has collapsed more than 95% since December 2017.
Besides investing in Steinhoff shares, some directors at the retail group had loans with Sanlam. The loans were backed by the directors’ Steinhoff shares.
When asked which Steinhoff directors had taken out the loans, the group would not comment, citing client confidentiality.
Sanlam said its exposure to borrowers under loans granted on security of equity portfolios that included Steinhoff shares had been mitigated in certain instances by either repayment of the loans or additional security provided by the borrowers.
Sanlam added that further information would be provided in its results presentation on September 6.
Sanlam reported in March that because of the losses it suffered due to the collapse in Steinhoff’s share price it had trimmed bonuses of about 100 employees across different business units.
The incentives to the employees were cut by R50m.
Group CEO Ian Kirk took a 20% cut on his 2017 bonus, equivalent to a reduction of R2.5m.
But it seems that banks are now calling the shots at Steinhoff.
According to Bloomberg data, Clearstream, a post-trade services provider and who acts as a custodian for some banks, holds 2.16 billion Steinhoff shares on behalf of it clients, who combined are now the largest collective shareholders in the retail group, holding almost 50.22%. Clearstream is owned by Deutsche Börse AG.
When asked which banks had bought the shares, Clearstream would not provide details.
“Due to bank secrecy, Clearstream cannot provide any information on clients and their assets that are deposited with Clearstream,” it said.