Steinhoff class-action lawsuit begins in Joburg
A consortium of law firms say damages could run to R185bn, with more than 30 current and former directors named as respondents
A consortium of law firms has applied to launch a class-action lawsuit in the South Gauteng high court on behalf of investors in Steinhoff, seeking damages that could potentially run to as much as R185bn.
The lawsuit brings claims on behalf of all investors who purchased Steinhoff shares in the period from at least June 26 2013 up to the date former CEO Markus Jooste resigned, on December 5 2017. The 2013 date relates to the initial purchase of European furniture retailer Kika-Leiner by Genesis Investment Holdings, a Steinhoff off-balance sheet entity. Steinhoff, which initially bought Kika-Leiner’s property assets, later acquired the retail operations too.
The application names as defendants the Dutch incorporated Steinhoff International Holdings NV; its South African predecessor, Steinhoff International Holdings; as well as three banks and the auditors that assisted Steinhoff with its Frankfurt listing. These are 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 former Jooste, former CFO Ben la Grange, former chair Christo Wiese, as well as Steinhoff’s current CEO, Danie van der Merwe.
The application is brought by Johannesburg-based class-action law firm LHL Attorneys, Dutch firm Bynkershoek Dispute Resolution, and German firm TILP Litigation.
The case adds to a number legal actions that have been brought against Steinhoff and related parties in recent months, including a class action in Germany brought by TILP, and a Dutch investor rights group suing Deloitte for damages in the Netherlands on behalf of Steinhoff shareholders.
At least R187bn was wiped off the value of Steinhoff after accounting irregularities came to light in December 2017, making it one of the biggest corporate meltdowns in SA’s history.
Zain Lundell, a member of LHL Attorneys, says there is a specific reason why SA has 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 Netherlands and Germany and, thus, will contribute to the protection of all shareholders, large and small alike.”
As opposed to Germany and the Netherlands that require investors to opt in, all investors in SA are automatically a part of the class-action unless they choose to opt out.
The effort to recover damages warrants the cross-jurisdictional effort by the three law firms, Lundell says. “Steinhoff was originally incorporated in SA, then the Netherlands, and was 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.”
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.