Botswana regulator probes PwC over Choppies saga

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 Johannesburg Stock Exchange (JSE) and Botswana Stock Exchange, resulting in a 75% drop in market value. According to Moneyweb, 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,’ said Choppies. 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. PwC failed to respond by the time of publication.

The case is before the court in Botswana, where Choppies’s largest shareholders – Ramachandran Ottapathu and Farouk Ismail – are seeking over Pula 610m ($45 262 000) 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. The Botswana regulator previously fined Choppies P100 000 ($7 420) for late disclosure of its 2018 financials, reports Moneyweb. The regulator’s attention now appears to have shifted to PwC’s conduct in the matter. Choppies said 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 South African scandals involving Eskom, Steinhoff and South African Airways. PwC Botswana said it 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 co-operating with the regulator in its investigation.