Two dramatic new facts emerged from the slew of Steinhoff Sens statements issued on Tuesday:
- The company is proposing to release former chair Christo Wiese from liability and the prospect of being sued by anyone else for any role he may have played in the alleged irregularities that led to the collapse of Steinhoff; and
- Dirk Schreiber, a German national who was head of finance in Europe, will also benefit from the proposed release.
According to the announcements, Steinhoff’s insurers have agreed to pay out €78.1 million to shareholder claimants “in exchange for certain waivers and releases”.
Read: Steinhoff insurers agree to pay $93m for legal claims (Mar 23)
The waivers and releases are intended to ensure shareholders would not pursue their rights to take legal action against the directors.
A senior lawyer told Moneyweb it is unclear whether South African law allows directors to be released in the manner proposed by Steinhoff.
In none of the statements does Steinhoff explain why it has done a U-turn on its original proposal and now intends to release both Wiese and Schreiber from the list of individuals who could be sued for their alleged role in the collapse of Steinhoff.
Section 2.83.2 of the original settlement proposal published last year refers to “released parties” and defines them as “… all directors, officers and other personnel of the Steinhoff Group companies who work or have in one way or another worked for or been associated with a Steinhoff Group company, excluding the excluded individuals and Christoffel Hendrik Wiese …”
The ‘excluded individuals’ at that stage were Markus Jooste, Ben la Grange, Stéhan Grobler, Siegmar Schmidt and Dirk Schreiber.
The proposal to release Schreiber is particularly puzzling given that he was very publicly named during a parliamentary hearing in March 2019.
During that hearing Steinhoff CEO Louis du Preez told MPs that eight people had been named in the PwC report into fraud at the company. Du Preez initially refused to disclose the names but under pressure from finance committee chair Yunus Carrim, and after taking legal advice, provided the list of names. That list included Schreiber.
Wiese ‘agreed’ to settlement proposal
A Steinhoff spokesperson told Moneyweb on Tuesday that Wiese had been included in the ‘release’ list of directors because he had agreed to the settlement proposal.
In addition, according to the spokesperson: “Schreiber has been included because he has been co-operating with the company, and he has acceded to the [settlement] agreement.”
In Tuesday’s announcement Steinhoff said it had reached agreement with the group’s insurers to pay €78.1 million to help settle potential claims against current and former top executives at the group. The payment will be made in terms of the group’s ‘directors and officers’ liability insurance policies, which protect the personal assets of corporate directors and officers in the event that they are personally sued for actual or alleged wrongful acts in managing the company.
The directors and officers who will be released in terms of the proposed agreement with the insurers include Stefan Booysen, Claus Daun, Len Konar, Heather Sonn, heirs of Teunie Lategan, Bruno Steinhoff, Danie van der Merwe, Johan van Zyl, Franklin Sonn and Jacob Wiese.
News that Christo Wiese has now been placed on the list of individuals to be released is likely to heighten concerns that the former chair and single largest shareholder is receiving favourable treatment from Steinhoff.
The $1 billion settlement proposal announced late last year will see Wiese, who is categorised as a contractual claimant, enjoy a recovery rate of around eight times more than ordinary Steinhoff investors who bought their shares on the market and are categorised as ‘market purchase claimants’.
Hamilton, which is managing a case being run in the Netherlands by Dutch law firm Barentskrans and is backed by more than 25% of the market purchase claimants, would not comment on the latest developments.
However, one analyst told Moneyweb on Tuesday that as nothing new had emerged about the actual terms of the settlement, Hamilton was likely to continue to oppose it.
“A payout from the insurers was always on the cards, the only surprise is that it’s about half of what would have been expected,” said the analyst.
In addition to that, the $30 million offer to cover expenses related to claims was contained in the original settlement proposal.
The $1 billion available for settlement compares with over $10 billion of claims.