Business Maverick

ACCOUNTING SCANDAL

Steinhoff claimants could start receiving cash settlements from 10 May

Steinhoff claimants could start receiving cash settlements from 10 May
The headquarters of Steinhoff International in Stellenbosch on 26 January 2017. (Photo: Waldo Swiegers / Bloomberg via Getty Images)

Retail investors who saw the value of their investments obliterated in the wake of the Steinhoff accounting scandal are expected to start receiving cash settlements from Wednesday, 10 May. What they stand to recover will vary, depending on individual circumstances, when they bought their shares, and other factors.

Once fully distributed, the eligible claimants would have received a portion of the €55.34-million (about R1.2-billion) that had been ring-fenced for the settlements.

The day before news broke that Steinhoff auditor Deloitte would not sign off on the group’s accounts, the share price was worth R46.50.

The Stichting Steinhoff Recovery Foundation (SRF), established by institutional investors seeking to recover their losses, has provided an update in relation to Steinhoff’s global settlement of litigation, after a year-long process during which in more than 43,000 claims worth €3.2-billion needed to be verified.

On 15 February 2022, the global settlement agreement reached between the Stichting Steinhoff International Compensation Claims, several other claimant groups, the Steinhoff Group, as well as its auditors Deloitte and insurers became effective.

The foundation has now informed Steinhoff that it will begin distributing cash recoveries to individual and institutional claimants holding valid and accepted claims on a rolling basis from 10 May 2023.

The foundation’s chairperson, Marcel Windt, said: “We are extremely pleased to have reached the stage in this process where we are able to distribute payments to eligible claimants. The SRF has overseen a thorough process and I’d like to thank the many parties involved for their contributions along the way, as well as the claimants for their cooperation and patience.”

Steinhoff has a primary listing on the Frankfurt Stock Exchange and a secondary listing on the JSE.

Scandal

Until December 2015, Steinhoff International was the South African holding company for more than 40 retail brands in more than 30 countries, including MatressFirm in the US, Poundland in England and Poco in Germany. The group transferred its primary listing from the JSE to the Frankfurt Stock Exchange as Steinhoff International Holdings (the Dutch holding company for the Steinhoff retail empire). 

Since at least 26 June 2013, Steinhoff and its management – helped by Deloitte South Africa, had been misleading investors and inflating the values of their assets. 

On 5 December 2017, its CEO, Markus Jooste, suddenly resigned amid an investigation into accounting irregularities at the firm. The fallout of Jooste’s resignation, plus revelations about insider trading and accounting irregularities, caused the share price to tumble by at least 85%, wiping out more than €10-billion of Steinhoff’s market value. 

On 2 January 2018, Steinhoff announced that its 2017 accounts would be accompanied by restated financials for 2015 and 2016, and that its previous figures for those years can “no longer be relied upon”.

On 8 August 2018, LHL Attorneys instituted class action proceedings against Steinhoff in Johannesburg, which was complemented by a Dutch foundation complaint filed in Amsterdam on 29 October 2018 and a complaint filed in Frankfurt on 19 December 2017.

As part of the global settlement, these actions will now be dismissed.

Court no-show

Jooste was due to appear in court in Oldenburg, Germany, on 18 April but failed to do so. His attorney, Bernd Gross, told the court that he was unable to travel because his South African attorney held his passport, as part of an agreement with the police. 

Jooste faces criminal charges in Germany and much more in South Africa, said Gross.

German prosecutors believe Jooste to have masterminded a scheme to falsely boost the assets of a Steinhoff subsidiary by about €820-million. 

Two former Steinhoff executives, Dirk Schreiber and Siegmar Schmidt, have also gone on trial in Germany, charged with the same five accounting fraud charges that Jooste faces.

Schreiber and Schmidt appeared in the Oldenburg Regional Court on 3 May, before the case was adjourned, reported News24.

The Directorate for Priority Crime Investigation (the Hawks) says its investigation into Jooste is “ongoing”.

So far, only the Financial Sector Conduct Authority (FSCA) has acted against Steinhoff and Jooste in South Africa. It imposed a penalty of R1.5-billion on Steinhoff, which was later reduced to an administrative penalty of R53-million, and fined Jooste R161.6-million for breaches of section 78(4)(a) and 78(5) of the Financial Markets Act, which he took on appeal and won. The FSCA then revised the penalty to R20-million, in line with the Financial Sector Tribunal’s decision on insider trading.

Jooste’s attorney in South Africa, Callie Albertyn from De Klerk & Van Gend Attorneys, failed to respond to a request for comment. BM/DM

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