Shareholders win right to sue Steinhoff in Netherlands over accounting
A shareholder group got a green light to sue Steinhoff International Holdings NV in the Netherlands, kicking off a legal fight to recover some of the billions of dollars investors lost after the South African retailerâs accounting scandal.
In a procedural hearing last month, Netherlands-incorporated Steinhoff had argued against going ahead with the court case filed in Amsterdam by Dutch investor group VEB, saying a legal claim was first filed in Germany. The company moved its primary listing to Frankfurt from Johannesburg in 2015.
The court rejected Steinhoffâs argument Wednesday, saying it âignores the rule that the jurisdiction of a court is in principle governed by the re sidence of the defendant.â Steinhoff has to reply to the allegations by Nov. 7.
âA Dutch NV must simply be able to be sued in the Netherlands,â said Geert Koster, a lawyer for VEB, which says it represents some 3 percent of the retailerâs shareholders. Steinhoff has said only 0.25 percent of its shareholders are based in the Netherlands, downplaying the need for a Dutch judge to rule on the case.
Steinhoff is studying the Dutch courtâs decision, including whether it provides grounds for appeal, according to a statement W ednesday. It added that the Amsterdam court has granted its request to summons former Chief Executive Officer Markus Jooste in proceedings to weigh his personal liability, within three months.
Since the accounting scandal erupted Dec. 5, Steinhoff has written off the value of its assets by at least 12.4 billion euros ($14.3 billion) and said restatements of its financials may have to go back to at least 2015. The stock has plunged 94 percent. Jooste stepped down, followed by Chief Financial Officer Ben La Grange. Chairman Christo Wiese, who told South African lawmakers in January that the news came as a âbolt from the blue,â also resigned.
Steinhoff shares fell as much as 4.4 percent to 14.2 euro cents in Frankfurt trading.
In Germany, law firm TILP filed a claim against Steinhoff on behalf of an investor and is working to expand it into the German version of a class-action suit. Steinhoff has also sought to have German courts declared unautho rized to rule on the case, said Daniella Strik, a lawyer for Steinhoff, during the Dutch court session.
A German ruling would have no legal authority for shareholders who hadnât opted in to the German collective action, VEBâs Koster said.
Shareholders havenât had any lost money returned yet. VEB argues that Steinhoff issued inaccurate and misleading information in at least two annual reports and various news releases, and didnât immediately disclose the informationâs inaccuracy.
The Dutch shareholder group, which represents retail and institutional investors, also has a separate claim outstanding against the Dutch office of Deloitte LLP for the damage suffered by the Steinhoff shareholders. VEB said Deloitte failed in its statutory task as auditor when approving the Stellenbosch, South Africa-based companyâs annual report in 2016.
VEB has successfully sued Dutch-based companies before. The group got supermarket company Royal Ahold Delhaize NVâs predecessor Ahold to return almost a billion euros to shareholders after an accounting scandal emerged in 2003. This summer, after 15 years of legal fighting, VEB settled with Aholdâs auditor, Deloitte, which brought the retailerâs accounting fraud to light after discovering irregularities.
Steinhoff has appointed PricewaterhouseCoopers to probe its finances, with the final results expected to be published by the end of the year.
â" With assistance from Loni Prinsloo
Bloomberg NewsSource: Google News Netherlands | Netizen 24 Netherlands