SA investors want to join Dutch class action against Steinhoff - report

Jan 12 2018 11:57
Lameez Omarjee

Cape Town - South African investors are looking to join a Dutch class action against retailer Steinhoff, according to a report.

Business Day on Friday reported that the Dutch Investors Association (VEB) had been approached by SA shareholders to join its class action launched on December 7.

This after Steinhoff's CEO Markus Jooste abruptly stepped down towards the end of last year, and the firm hired PwC to investigate "accounting irregularities". The PwC investigation is still ongoing. 

The VEB is yet to respond to Fin24's queries on the matter.

Jooste's resignation was followed by the exodus of a number of top executives, including chair of the board Christo Wiese and the group's chief financial officer Ben le Grange.

The firm's share price has dropped by more than 80% in five week, from about R46.24 a share ahead of the announcement of Jooste's exit, to single digit levels.

As of Friday, January 12, Steinhoff shares were trading at R6.75 by 08:30 on the JSE, having opened at R7.55.

The Dutch class action suit is one of a number being considered by various European law firms and investment bodies. 

German law firm TILP in December filed a investor lawsuit against the embattled retailer, saying in its legal opinion Steinhoff made itself liable for damages after providing its shareholders with incomplete market information.

"Aggrieved investors, shareholders as well as bondholders, have the opportunity to extensively recover damages sustained due to these revelations,” said TILP litigation attorney Maximilian Weiss.

On its website the German lawfirm is calling - in German and English - for affected investors to sign up for the class action suit, saying that billions of euros in value were lost in a matter of days as Steinhoff's share price nosedived. 

It has also criticised Steinhoff for denying previous allegations of wrongdoing and discrepancies. 

“For example, the second largest European furniture company was said to have left its shareholders in the dark regarding rather large shifts among affiliates. Steinhoff, however, has persistently denied these allegations,” the TILP website states.

“Due to this history of denying accounting irregularity allegations, the news of the company’s irregularities in its balance sheets was met with even greater surprise by the capital market.”

UK-based litigation firm Innsworth, meanwhile, has said that it is "contemplating funding proceedings against Steinhoff International" on the grounds that it allegedly overstated its assets, issued misleading statements and kept investors in the dark about its true financial situation.

South African investigations 

In Cape Town, parliamentary hearings into Steinhoff are set to start in late January, Yunus Carrim, chair of parliament’s finance oversight committee, said on Thursday.  

Carrim said the hearings into what happened at the global furniture conglomerate to cause its stock price to decline by over 80% would be held jointly with parliament's watchdog committee Scopa (the Standing Committee on Public Accounts), starting on January 30 or 31. 

Meanwhile, rumours that another SA company is the next target of Viceroy Research, the organisation which had published a critical report on Steinhoff shortly after Jooste resigned, has been driving volatile trade on the JSE over the past week.

Companies affected include Aspen, which saw its share value drop as much as 8% before recovering after it told shareholders it had not been in contact with Viceroy.

On Thursday property stocks experienced a sell off, with Resilient Reit losing as much as 19% of its value, before recovering, also, in part based on speculation that Viceroy may be investigating one of them. 

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