The High Court of Botswana this week delivered a damning judgment against PwC and auditor Rudi Binedell over delays in the release of group audit results which seriously impacted the Choppies share price.
The judge criticised Binedell who was found to have delayed the Choppies Enterprises audit report because a job he had been offered at Choppies had not materialised.
Choppies, a supermarket chain based in Botswana with stores across the region, is listed on both the Botswana and Johannesburg stock exchanges.
Its two largest shareholders – Ram Ottapathu and Farouk Ismail – are suing PwC and Binedell for a combined R621.8 million for losses on the Botswana Stock Exchange as a result of the delayed publication of Choppies financial results on that exchange, as well as another R416 680 for the similar delay on the Johannesburg Stock Exchange (JSE).
They allege that PwC’s actions caused the loss of over 75% of Choppies market value.
Trading in Choppies shares was suspended on both bourses in November 2018 due to the delayed release of its financial results.
Trading on the JSE resumed in November 2020 after a two-year suspension.
The judgment handed down by Justice Boipuso Tshweneyagae in the Botswana High Court this week, said of Binedell: “…[his] alleged conduct is also an issue”.
“The allegation is that he was not arm’s length in his auditing of the Choppies books as he had been offered a job with significant shareholding as incentive.
“When this did not materialise, he used his position as the key lead auditor to compromise the publication of the audit report beyond the publication deadline of 30th September 2018.
Choppies appointed PwC as auditor in 2018, with Binedell as the lead auditor. “However, he was in discussion with independent board members about his possible employment as CFO of Choppies with a large financial inducement in shares if he joined. This was a conflict of interest which I did not support,” says Ottapathu.
PwC issued the following response to the judgment: “PwC Botswana confirms that it has received a court order to produce information in relation to its defence early in the court proceedings. The order asks only that PwC Botswana produces information and is not a judgment or decision on the merits of the claim.-moneyweb