PwC hit by R653m lawsuit from Botswana supermarket chain Choppies

GABORONE - Two senior executives at Botswana supermarket chain Choppies Enterprises are suing former auditors PwC for R653 million for not signing off on the company’s 2018 accounts, which led to a share price collapse.

Choppies Chief Executive Officer Ramachandran Ottapathu and Executive Director Ismail Farouk allege that PwC didn’t complete the audit in part to pressure the company to hire PwC director Rudi Binedell as head of finance, according to a statement issued on behalf of the directors. The duo filed the lawsuit at the High Court in Gaborone, Botswana’s capital.

Choppies said in September 2018 that it was working with PwC to assess a number of past accounting practices, including around previous acquisitions, that needed independent verification and legal analysis. That would delay the release of earnings, the retailer said.

“PwC confirms that it is currently embroiled in legal proceedings with two directors of our erstwhile client, Choppies Enterprises, which action is defended by PwC,” Gaborone-based director Binedell said in an emailed response to questions. “Out of respect for the court’s process we do not believe it appropriate to comment publicly.”

While the lawsuit criticises PwC for being too tough on a client, auditing firms around the world are more often being scrutinised for taking too long to uncover fraud, such as at German payments giant Wirecard AG.

In South Africa, the role of accountants was questioned amid the scandal that led to the near collapse of retailer Steinhoff International Holdings NV in late 2017, while KPMG’s work with a family found to be involved in state corruption was also heavily criticised.

PwC’s decision had far-reaching consequences for Choppies, which was suspended from Johannesburg’s stock exchange after the earnings delay. – BLOOMBERG NEWS.