Stock exchange suspension led to 75% drop in market value.
Botswana’s Accounting Oversight Authority has launched an investigation into PwC for its role in the delayed publication of the 2018 audit of Choppies Enterprises that resulted in the company being suspended on the JSE and Botswana Stock Exchange, resulting in a 75% drop in market value.
The Botswana regulator received a complaint from Choppies’s legal team and Justice Zein Kebonang, citing two serious allegations of professional misconduct and ethical breaches by PwC and its former lead auditor Rudi Binedell.
“Central to the complaint is the claim that PwC weaponised confidential internal company data – obtained during its audit engagement – to litigate and defend its own interests in a manner that Choppies’ legal representatives argue amounts to abuse of trust and professional overreach,” says Choppies in a statement.
The regulator will launch a probe to determine whether PwC and Binedell violated their statutory, professional, and ethical obligations.
If found culpable, the fallout could lead to penalties and reputational damage for PwC.
Moneyweb reached out to PwC for a response but had not received a reply by the time of publication.
The case is currently before the court in Botswana, where Choppies’s largest shareholders – Ramachandran Ottapathu and Farouk Ismail – are seeking over R653 million (Pula 610 million) in damages, alleging PwC’s delay in signing off on the retailer’s 2018 financial statements, ostensibly due to audit concerns, caused the company’s share price to collapse.
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Sour grapes?
Choppies alleges that PwC’s then lead auditor Binedell delayed the 2018 audit report because a job he had been offered at Choppies had not materialised.
Earlier this year, the Botswana High Court dismissed a counter-application by PwC alleging improper conduct by two judges in previous rulings.
Choppies has also challenged the legitimacy of a 2023 high court ruling by Justice Boipuso Makhwe, arguing that it was tainted by judicial misconduct. There were claims that the judgment was secretly authored by Makhwe’s colleague, Justice Kebonang, who had previously ruled in favour of Choppies in 2021, awarding the retailer over P500 million (R668 million) in damages.
“In a striking counteroffensive, Justice Kebonang has since filed an affidavit accusing PwC of orchestrating a smear campaign, fabricating claims, and manipulating legal proceedings to escape liability,” says Choppies.
“He maintains he had no involvement in drafting the disputed judgment and has demanded that the judiciary investigate the matter further.”
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Vindication in sight?
The Botswana regulator previously fined Choppies P100 000 (R133 000) for late disclosure of its 2018 financials.
The regulator’s attention now appears to have shifted to PwC’s conduct in the matter.
Choppies says the investigation by the regulator is a step toward reputational redemption, while for PwC it poses a threat to its credibility in the region, given its previous citations in scandals involving Eskom, Steinhoff and SAA.
PwC sent the following response Moneyweb:
“PwC Botswana takes client confidentiality seriously. However, there are certain circumstances where we are required to disclose confidential information to legal or regulatory authorities. We have complied with our legal and professional obligations in this regard, and we are cooperating with the regulator in its investigation.”
This article was republished from Moneyweb. Read the original here.
