The District Court of Amsterdam has declared itself competent to handle the mass claim of investor association VEB against South African Steinhoff. Last year, the parent company of the French home improvement chain Conforama was compromised by an accounting scandal.
14 billion euro up in thin air
The Dutch Association of Stockholders (VEB) has won an important battle against Steinhoff, as a Dutch court decided that a class action lawsuit against the retail giant could take place in the Netherlands as Steinhoff works with a fiscal holding company in the Netherlands and the annual accounts were audited (and approved) by an auditor of Deloitte Netherlands. The stockholders went to court after a large-scale accounting fraud came to light in December. The actual value of more than 8 billion euros of assets has become very uncertain, and the results for 2016 and 2015 are also believed to be unreliable.
When this news came to light, the shares of the company – listed in Frankfurt and Johannesburg – crashed and more than 14 billion euro in market capitalisation went up in thin air. CEO Markus Jooste had to resign and Steinhoff has already filed a case against him on suspicion of corruption.
No German safehaven
Steinhoff had hoped to transfer the Dutch complaints to a similar claim in Germany, but the judge in Amsterdam dismissed that argument and ruled that it was not yet certain whether a lawsuit would be brought in Germany and that the Dutch shareholders are entitled to a swift legal process. According to the VEB, a decision may already be made by the end of next year.
Since the outbreak of the accounting scandal, Steinhoff has found itself in serious financial trouble: for a short while the threat of bankruptcy was real, but the sale of some subsidiaries and a new three-year deal with its creditors at the end of August have temporarily averted this disaster scenario. South African regulators are still waiting for Steinhoff’s revised figures before imposing any penalties. According to the South-African retail giant with 12,000 shops, nine million square metres of retail space and 130,000 employees worldwide, the investigation into the problems and the guilty parties will “almost completely” be completed in the course of this year.
