The latest in a very long list of Steinhoff-related court challenges places audit firm Deloitte at the heart of the “accounting irregularities” that triggered the collapse of the Steinhoff share price in December 2017.
According to the court papers neither Steinhoff nor PwC has looked into Deloitte’s role in what was the biggest ever destruction of shareholder value in South Africa. PwC was appointed in 2018 by Steinhoff to investigate the events surrounding the accounting irregularities.
Although Steinhoff had promised the parliamentary portfolio committee it would investigate Deloitte’s role in the destruction of R200 billion of shareholders’ funds, the court papers reveal that PwC said it was given no mandate to investigate Deloitte.
The man behind the latest action, Cape-based lawyer and Steinhoff shareholder Jan Lamprecht, says in court papers lodged last week: “The conclusion is almost inescapable that Deloitte was never investigated at all.”
Audit firm ‘would not cooperate’ if investigated
He adds that in early 2018 when he started investigating Deloitte’s role, Steinhoff’s lawyers Werksmans Attorneys asked him to stop, on the grounds that Deloitte would not cooperate with the restatement of the 2014 and 2015 financial statements if it was being investigated.
Neither Steinhoff nor Deloitte responded to Moneyweb’s request for comment on the latest court action. Deloitte has previously indicated it only became aware of the accounting irregularities in late 2017.
Lamprecht lodged his intervention application in support of the bid by the founders of Tekkie Town to have the global retail group liquidated and the proposed settlement scrapped.
In his court papers Lamprecht states that implementing the settlement agreement proposed by Steinhoff would prejudice efforts to pursue claims against Deloitte for breaching its duties in terms of the Audit Profession Act.
No-liability clause at issue
The proposed settlement agreement – a Contingent Payment Undertaking (CPU) – brought in terms of Section 155 of the South African Companies Act, includes a ‘no-liability clause’ that would protect Deloitte from subsequent claims by shareholders.
In addition the CPU provides shelter from legal claims for Steinhoff’s former directors, including Steven Booysen, David Brink, Danie van der Merwe, Heather Sonn, Christo Wiese, Len Konar and Johan van Zyl.
Lamprecht claims that the requested waivers suggest that the findings contained in the PwC report implicate the directors and related parties.
‘Admission of guilt’?
He also suggests that Deloitte’s offer, disclosed in February this year, to contribute R1.2 billion to the settlement sum, “can be interpreted in no other way than an admission of guilt”.
The R1.2 billion contribution was made on the basis that Deloitte does not admit any liability for losses incurred.
All in all, Lamprecht believes the Section 155 compromise is not intended “to secure the interests of creditors but rather the interests of directors, officers and entities related to Steinhoff”.
He adds that for this reason the current management of Steinhoff cannot be trusted and that the rights and interests of all “interested parties” would be best served if Steinhoff was placed under the control of independent liquidators who would be accountable to court.
Lamprecht, who has already instituted a damages claim against Deloitte in the Gauteng High Court, says Deloitte was appointed to perform the company audit for 2014 and 2015. The financial statements made for those years “were made pursuant to a negligent performance by Deloitte of its duties”.
Lamprecht says he had relied on these financial statements when he purchased over R11 million worth of Steinhoff shares in November 2015.
As the registered auditor responsible for the financial statements, Lamprecht says, Deloitte is responsible for the financial loss he suffered when the price of the Steinhoff shares collapsed.
“Deloitte did not identify, record nor refer to any of the irregularities in the statements nor were the financial statements qualified in any respect with reference to the irregularities,” says Lamprecht.