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In a blow for Steinhoff shareholders, a judge dismissed a class action suit against the retailer, which plunged in value in late 2017 after it emerged that there were accounting irregularities. Former Steinhoff CEO Markus Jooste, who presided over an astonishing network of questionable deals, has not yet been held to account, nor have other directors. Judge David Unterhalter says Steinhoff can go after Steinhoff directors and the auditors, Deloitte, who should have rung the alarm bells to put a stop to deals. Steinhoff International Holdings paid for forensic auditors at PwC to help South African anti-corruption police investigate alleged financial wrongdoing that brought the retailer to the brink of collapse, says Bloomberg, noting that PwC uncovered €6.5bn of irregular transactions between Steinhoff and eight firms between 2009 and 2017. South Africa’s law enforcement authorities have shown no sign of progress in taking a criminal case through the courts. – Editor
Steinhoff gets reprieve as Johannesburg class suit dismissed
By Janice Kew
(Bloomberg) — Steinhoff International Holdings NV got some respite on Friday as a Johannesburg high court dismissed a local class action suit brought against the global retailer after an accounting crisis in late 2017 caused its share price to collapse.
The application, by a retired pensioner who had bought shares for 80,000 rand ($4,625) between 2013 and 2016, is one of various mass action suits planned against the company. In 2018, several South African businesses representing clients that held about 20% of Steinhoff’s stock before the uncovering of accounting irregularities, joined a class action by Dutch law firm BarentsKrans NV.
“I am aware that this conclusion will disappoint the expectations of Steinhoff shareholders that the law must be able to compensate them for their losses,” Judge David Unterhalter said.
“This does not mean that the shareholders are without remedy. It is for the Steinhoff companies to hold the Steinhoff directors and Deloitte liable for any breach of duty.
”Earlier this month, Steinhoff said it’s paying for forensic auditors at PwC to help South African anti-corruption police investigate the alleged financial wrongdoing.
Lawsuits replaced debt as Steinhoff’s most pressing concern after the retailer struck a deal with creditors to skip principal and interest payments on about 9 billion euros ($10 billion) of debt through 2021.Last month, a plan by Steinhoff to reduce legal costs by combining some of its biggest individual claimants into one case was rejected.
Steinhoff is “studying” Friday’s judgment and will “comment in due course,” it said in an emailed response to questions. The company plans to release 2019 annual earnings on June 30.
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