The Dutch courts have jurisdiction to entertain proceedings concerning fraud at retail giant Steinhoff. Today the district court of Amsterdam ruled accordingly. This is a real boost for investors; they shall have speedier clarity on whether Steinhoff has acted unlawfully against them.
As a group, Steinhoff’s origin is in South Africa. From 2015, however, the group holding company is Dutch, with its statutory seat (registered office) in Amsterdam. The universal principle is that the courts of the defendant’s domicile have jurisdiction. Steinhoff asserted, however, that the Dutch court should deny jurisdiction on the grounds that an individual investor had earlier filed a lawsuit in Germany. The district court of Amsterdam refutes Steinhoff’s position.
Additionally, the court does not wish to await the outcome of the German proceedings. Steinhoff now has to submit its statement of reply on the substantive claims under the class action lawsuit on 7 November 2018.
Finally, the court has declared VEB admissible in its claim; VEB has adequate knowledge and capabilities to represent the shareholders’ interests and there is no question of improper commercial interests.
VEB – head of International Relations Armand Kersten:
‘VEB appreciatingly acknowledges this ruling. It enables Steinhoff investors promptly to obtain judgment by the Dutch court on Steinhoff’s acts. This serves the interests of the investors as much as it serves the company’s interests.’
The court ruling is a real boost for investors. The Dutch legal system is pre-eminently suitable to obtain clarity on Steinhoff’s acts on relatively short notice.
Bookkeeping irregularities
On 6 December 2017 large-scale bookkeeping irregularities at Steinhoff were identified. Steinhoff is, it appears, unsure on the true value of over eight billion euro in assets asserted in the annual accounts. Given the immediately ensuing drop in price of the Steinhoff share, meanwhile over 14 billion euro of stock exchange value has evaporated.
Immediately upon the news of the scandal breaking, CEO Markus Jooste resigned. Meanwhile Steinhoff has reported against Jooste on alleged corruption.
On 13 December 2017 Steinhoff and its statutory auditors Deloitte declared that the 2016 annual accounts shall have to be restated. Subsequently Steinhoff announced on 2 January 2018 that investors can no longer rely on the 2015 annual accounts.
Dutch class action
On 2 February 2018 VEB filed a lawsuit against Steinhoff on the grounds of deceit.
The lawsuit addresses misleading disclosures in the 2015 and 2016 annual accounts, the prospectuses published towards the listing in Frankfurt on 7 December 2015, and in various press releases. Investors have consequently incurred vast damages.
VEB has meanwhile also filed a lawsuit against Audit Firm Deloitte before the Dutch court. Deloitte is equally a company with Dutch statutory seat.
VEB’s action against Steinhoff is open yet for registration.