Choppies auditors deny duty to Ram, Farouk
Choppies’ former auditors, PricewaterhouseCoopers (PwC) have denied owing any legal duty to the outfit’s chief executive officer, Ramachandran Ottapathu and founder, Farouk Ismail.
The auditors who are facing a P450 million lawsuit from the Choppies’ bosses said they did not owe a legal duty or duty of care to the two shareholders in their individual capacities.
According to the duo’s Court documents they blame the auditors for alleged lapses that led to the regional grocer’s suspension from the stock exchange in 2018 and a collapse in value.
Ottapathu and Ismail claim PwC and its partner, Rudi Binedell breached the audit agreement they signed in 2018 and in the process made the shareholders lose millions.
However, PwC have filed an appearance to defend the lawsuit as they deny that they are indebted to the duo in the amount claimed or any part thereof.
“We don’t owe legal duty to individual shareholders, but only to the shareholders in general meeting and we do not owe the individuals the amount claimed in their lawsuit,” said the auditors.
The auditors in denying the allegations from Ottapathu and Farouk, said the alleged loss as a diminution of the price of their shares in the company constituted a loss that was merely reflective of that of the company.
They said accordingly the bosses suffered no legally cognisable loss, which may be claimed from them as the auditors.
Meanwhile, at the heart of the matter is that the two shareholders accuse the auditors of allegedly breaching their ethical, statutory and common law by “prioritising their own interest and entrenching their position in Choppies without regard to the best interest of the company and its shareholders”.
On another horizon, the duo alleged that PwC and Binedell changed the scope of the audit as contemplated in the Audit Agreement 2018 in that what they undertook amounted to a full investigation into various issues, which were raised by Binedell at a meeting of the Board held on September 17, 2018, rather than conducting an audit, as they were obliged to do.
In their papers, Ottapathu and Ismail explained that PwC and Binedell “bypass the Audit Committee and reported issues directly to the Board of directors off the basis under the pretext that the issues were material irregularities under the Companies Act and Financial Reporting Act”.
They pointed out that the auditors failed and refused to complete the audit for Choppies for 2018 financial year or issue their opinion, imposing impermissible and unlawful stipulations on the finalisation of the audit and the release of their opinion including the stipulation that PwC could not finalise the audit in Botswana, South Africa and Zimbabwe unless and until Choppies had commissioned a full forensic audit.