Heat is on as Steinhoff faces legal action in The Netherlands
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JOHANNESBURG – Steinhoff is in more trouble after investors in The Netherlands got the green light to take legal action against the company for losses stemming from the accounting fraud that sent the global retailer's shares into a tailspin.
The ruling in favour of Dutch shareholder group VEB was made by a court in Amsterdam yesterday and sets the tone for the mounting legal proceedings that have been initiated against the group, which is battling to survive.
The Amsterdam court dismissed Steinhoff’s claim that a German court case started earlier this year should take precedence over the Dutch case. It also dismissed Steinhoff’s request to adjourn the proceedings.
Former Steinhoff chief executive, Markus Jooste, was summoned to appear before the court within three months of the ruling, the company said. Steinhoff has until November 7 to respond to the court decision.
“The company is in the process of studying the decision, including whether it provides grounds for appeal,” it said.
VEB approached the court to seek redress against Steinhoff, arguing that the company had duped them by stating false information in their 2015 and 2016 accounts.
It also took exception after Steinhoff reported growing profits year-upon-year and confirmed their optimistic outlook on a regular basis.
Dutch shareholders approached the court under the VEB banner in February as having the objections handled collectively by a Dutch court on behalf of all investors, reduces uncertainty about compensation for damage suffered will not last unnecessarily long for the shareholders and Steinhoff.
It also took action against Deloitte for allegedly misrepresenting Steinhoff’s books.
Since its listing in Frankfurt in 2015 Steinhoff has made some very large and expensive acquisitions, mostly financed through debt.
Since the fraud came to light in December, Steinhoff has written off the value of its assets by at least €12.4 billion (R209.5bn), and said restatements of its financials might have to go back to at least 2015. The stock has plunged 94 percent since the admission.
The court ruling comes as the disgraced company as well as some of its top brass, including former chairperson Christo Wiese, are the subject of one of the biggest corporate class action lawsuits ever filed in South Africa. Law firm LHL Attorneys filed papers in the South Gauteng High Court last month, citing that more than €12bn shareholder value was destroyed, resulting from the long-running accounting irregularities at Steinhoff.
Steinhoff shares closed 0.40 percent lower on the JSE at R2.51 yesterday.
– BUSINESS REPORT