Botswana investors sue PwC for R650m

The Botswana branch of PwC and a leading partner are being sued for more than R650m by two shareholders of retailer Choppies who blame the firm’s refusal to release its 2018 audit report for a collapse in the value of their shares. A Business Day report says Choppies CEO Ramachandran Ottapathu and founding member Ismail Farouk filed papers in that country’s High Court asking for R653m. They accuse PwC of breach of independence, usurping the role of the management and not acting in the best interest of shareholders. Ottapathu reportedly told Business Day that the auditing firm has until next week to file a response. A month after PwC delayed releasing its audit of financial results in September 2018, the retailer was suspended from trading on the Botswana Stock Exchange and the JSE. PwC said it could not release an opinion due to difficulties in obtaining sufficient and appropriate audit evidence and raised concerns that the retailer’s Zimbabwe operations were being used for money laundering. Ottapathu and Farouk accuse the company in legal papers of a conflict of interest over an offer made by former Choppies board members to hire PwC’s Rudi Binedell as group financial director. Ottapathu said that he was put under pressure by former directors to offer Binedell 50m shares and his refusal to employ the head auditor caused PwC to retaliate by delaying and refusing to finalise the audit report. Ottapathu believes that PwC was used by former board members to force a management change at the company instead of auditing it.