A Thai court will allow a class-action lawsuit against the local office of the accounting firm Deloitte over its audit of scandal-hit Stark Corporation, it said in a document on Wednesday.
The case was brought by retail bondholders of Stark, who accuse Deloitte Touche Tohmatsu Jaiyos and another individual of “acting intentionally, negligently, or in gross negligence resulting in damages”, according to a complaint seen by Reuters.
The accounting and embezzlement scandal at SET-listed Stark was one of the country’s largest corporate frauds in recent years, causing an estimated at 14.7 billion baht in damages.
The court document said a class action, still a rare legal procedure in Thailand, would be allowed and that Deloitte would have a week to appeal the decision.
The class action alleges that Deloitte, as auditors, certified a clean financial statement without auditors’ notes or remarks to caution that it may not be up to accounting standards, according to the complaint.
Deloitte and Stark did not respond to Reuters requests for comment.
“We will be seeking damages based on the value of the bonds plus interest,” said lawyer Jinna Yamoaum who represents about 1,000 retail investors.
The two tranches of bonds were valued at 2.24 billion baht.
The case against Deloitte is part of a larger legal tussle involving Stark, a wire and cable manufacturer that is currently under criminal investigation for allegedly falsifying statements and collusion among senior executives.
So far, seven individuals are in custody on various charges, with five companies also named in criminal complaints.
Stark has defaulted on debentures worth 9.2 billion baht so far, affecting more than 4,200 retail investors, banks and financial institutions that have filed separate suits against the firm.
The revelations about Stark, which first came to light in early 2023, dealt a major blow to confidence in the Stock Exchange of Thailand. It is Asia’s worst-performing market this year, with the main SET Index down 15.2% since the start of 2024.
The court allowing the class action is a positive signal because the case involves retail investors who may not have the capacity to file individual cases, said Jirapong Sriwat, a partner at the law firm Nishimura & Asahi in Bangkok.
“The justice system has to protect investors because it impacts confidence in the markets,” he said.
- Special Report: Scandal stalks Thai stocks
