Lancaster launches legal bid to recover funds invested in Steinhoff

Lancaster 101 says it has launched legal proceedings against Steinhoff to reclaim the R12bn it invested in the disgraced retail giant.

The empowerment company said the claim stems from "misrepresentations" by Steinhoff which it relied upon when it made the investment in 2016, in a deal largely funded by the Public Investment Corporation (PIC).

"Lancaster claims repayment of a total of approximately R12bn, which includes accrued interest," said the company.

The investment has featured prominently in the ongoing inquiry into the PIC, with ex-board member Claudia Manning admitting during her evidence that, in hingsight, the state-owned fund manager made a mistake when it decided to back the deal.

"There are many parties who, similarly to ourselves, have been injured by what has happened at Steinhoff and who have suffered significant loss," said Lancaster Chairperson Jayendra Naidoo.

"Our goal is to ensure that the investments made by our stakeholders, in particular, the Government Employees Pension Fund (GEPF), are recovered and secured. This is our highest priority," he said.

The deal to acquire a 3% shareholding in Steinhoff was aimed at advancing the participation of black groups in the retail sector.

Lancaster is 50% owned by the GEPF, through the PIC; 25% owned by the Lancaster Group and 25% owned by the Lancaster Foundation.

"In the best interests of all concerned, we will continue to work positively and constructively with the current leadership of Steinhoff and other affected stakeholders.

"We are strongly committed to ensuring a meaningful outcome on this matter," said Naidoo.

A former head of risk and compliance at the PIC, Paul Magula testified that R9.3bn was approved without considering risk opinion, resulting in a R5bn impairment by GEPF.

Steinhoff’s share price plunged in December 2017 when its CEO Markus Jooste abruptly stepped down after auditors flagged accounting irregularities in its books.

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