Johannesburg- The Public Servants Association (PSA) said on Friday it is finalising a court application to declare some of Steinhoff’s current and past directors as delinquent for allegedly contravening the Companies Act.
The PSA represents 238 000 civil servants and has increasingly expressed frustration with the Public Investment Corporation (PIC), the fund manager for more than 1 million government employees, and the second largest shareholder of Steinhoff [JSE:SNH] stock.
Directors who resign cannot escape delinquent status, provided they held a directorship 24 months before the application was filed.
Once the application has been granted, a delinquent director is disqualified from being a director at any company for a period of time determined by the court.
Grounds for delinquency include acting in a manner that amounted to gross negligence, wilful misconduct or breach of trust.
This legal action is one of at least five separate lawsuits faced by the beleaguered international retailer. Its largest shareholder and former chairperson Christo Wiese is suing Steinhoff for R59bn, relating to investments made by Wiese’s companies in Steinhoff in 2015 and 2016.
Tekkie Town has also filed papers in the Western Cape High Court to have its R3.2bn 2016 buyout by Steinhoff reversed.
The PSA estimates its own legal costs amount to more than R2m and plans to claim this back from the PIC.
“The PSA will therefore approach the PIC to fund the court action, failing which the PSA will consider claiming damages against the PIC, which has failed to exercise its oversight role to Steinhoff, directly resulting in severe losses in pension monies for public servants.”
Nick Crail, senior fund manager at Ashburton Investments, said the legal claims are the “first shot across the bow” by investors and concerned participants hoping to be in line to be paid out once there is more clarity about what went wrong with the company.
“There’s no proof of anything yet,” Crail told Fin24 by phone.
PricewaterhouseCoopers is investigating Steinhoff’s financial statements from recent years, after CEO Markus Jooste resigned in December citing “accounting irregularities” and Deloitte refused to sign off on the 2016/2017 statements.
Share price slide
Steinhoff, which has fallen out of the Top100 to a mid-cap on the JSE and has been one of the most volatile stocks since December, fell to a record low of R1.56 a share on Thursday.
This followed a process update by Steinhoff, which said that the original impairment (permanent writing off of assets) of an estimated €6bn could be significantly higher.
“There is no visibility, there is no certainty…it’s red or black basically at the casino,” Crail said about Steinhoff shares which are dual-listed in Frankfurt, Germany and Johannesburg.
Crail said Steinhoff’s share price could get closer to zero but expects further clarity about the company in a process update in June.
Steinhoff traded at R1.60 on the JSE at 16:29, a slide of 8.05% since trade opened.