Shareholders seeking to recover billions of rands lost in the wake of Steinhoff International’s collapse in one of SA’s biggest corporate frauds to date won a significant victory on Wednesday.
Dutch courts dismissed Steinhoff’s attempts to delay claims by VEB and ordered the company to provide a response to allegations by the Dutch association of shareholders by November 7.
"The court ruling is a real boost for Steinhoff investors as the Dutch legal system is pre-eminently suitable to obtain clarity on events at Steinhoff," said Armand Kersten, head of international relations at VEB.
The Hague-based not-for-profit organisation is hoping to get a ruling that Steinhoff is responsible for the damages suffered by shareholders. Once it has secured that, it can pursue the company for compensation.
Steinhoff has argued against a Dutch court ruling on the case since only 0.25% of its shareholders are based in the Netherlands. VEB, which has successfully sued Dutch-based companies before, said it represented about 3% of Steinhoff’s stockholders.
Steinhoff also argued that the VEB case should be postponed until the investigation by audit firm PwC was completed and the group’s annual accounts finalised.
The court also dismissed Steinhoff’s argument that the VEB case should not proceed until after a case lodged by a former business partner in Germany was completed.
Kersten said that Steinhoff’s reply would have to be comprehensive. "It will have to thoroughly address each specific element of our claim and it must make explicit where and how Steinhoff will assume its obligation to administer proof."
He said Steinhoff would have to prove that the 2015 and 2016 accounts that had been withdrawn were not misleading.
VEB launched its class actions against Steinhoff in February after signalling its intent days after the Steinhoff share price began collapsing.
The company said in December that "accounting irregularities" were behind a delay in finalising its annual results. Within weeks more than R200bn was wiped off the value of the company’s shares.
The accounting irregularities and the collapse in the share price led to a wide-ranging restructuring, including the write-off of almost R200bn of asset value as it attempted to reach agreement with funders and secure ongoing finance for day-to-day operations.
In a move unrelated to VEB’s action, a consortium of law firms announced in August that it had applied to launch a class-action lawsuit in the high court in Johannesburg on behalf of Steinhoff investors.
The Amsterdam court did agree to a request from Steinhoff that former CEO Markus Jooste could be subpoenaed in a bid to indemnify the company if it was found responsible for damage suffered by shareholders.
The request to subpoena Jooste indicates that the Steinhoff board believes Jooste holds some responsibility for events that led up to the collapse of the company’s share price.
In his first and so far only public appearance since the collapse of Europe’s second biggest furniture retailer after Ikea, Jooste told MPs in August that he was not aware of any financial irregularities.
He said that he had left the group he had built up over 29 years because of a disagreement with the board relating to a dispute with the group’s auditors Deloitte.
In a Sens announcement issued on Wednesday, Steinhoff said it was studying the Dutch court’s decision, "including whether it provides grounds for appeal".
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