Auditors Pricewatercoopers (Pwc) have entered a plea to defend a P450 million lawsuit by founders of Choppies Enterprises.Choppies chief executive officer (CEO), Ramachandran Ottapathu and executive director Ismael Farouk, jointly blame the auditing firm for alleged lapses which resulted in the regional grocer’s suspension from the Botswana Stock Exchange (BSE) and the Johannesburg Stock Exchange (JSE) among other things – a charge denied by Pricewatercoopers.The two Choppies shareholders claim Rudi Binedell and Pwc breached the audit agreement they signed in 2018 which in the process cost them millions of Pula.In papers filed before the High Court Pwc, through their lawyers Minchin & Kelly Botswana, denied that they were indebted to Ottapathu and Farouk in the amount claimed.“The Plaintiffs’ (Ottapathu and Farouk) alleged loss, quantified as a diminution of the price of their shares in the company, constitutes a loss that is merely reflective on the loss of the company.”
Accordingly, Pwc auditors say, Ottapathu and Farouk suffered no legally cognizable loss which may be claimed from the auditing firm.The firm said it does not owe a legal duty or duty of care to the two businessmen in their capacity as individual shareholders, but only to shareholders.“Accordingly, even if the facts the plaintiffs allege are true, which the defendants (Pwc) deny, then the defendants’ actions did not constitute the wrongful infringement of any legally cognizable interest of the plaintiffs,” the auditing firm states in part.Pwc argued that the two businessmen, especially Ottapathu “through negligent alternatively intentional actions or omissions vis-à-vis the company, caused the alleged loss of the company in that, when such actions or omissions came to light, the audits forming the subject-matter of the plaintiffs’ claims could not be completed in tine and without disclaimers of opinion.”
Accordingly, Pwc says, the diminution in the price of their shares was caused by such actions.“Alternatively, part of their alleged losses was caused by such actions or omissions and the defendants’ alleged liability to the plaintiffs is reduced by such amount,” the auditors said. Pwc, said in performing the audits and in delaying the issuance of their audit opinion(s) which were ultimately disclaimed, acted reasonably and appropriately and in accordance with all applicable legislation, audit standards and ethical rules.“Such reasonable and appropriate conduct was not wrongful vis-à-vis the plaintiffs; alternatively serves to excuse Pwc wholly or partly from liability to the plaintiffs,” the auditors stated. Ottapathu known in business circles as Ram together with Farouk state:
“PwC and Binedell did not hold the honest and bona fide belief that the alleged issues were material irregularities, nor could they have been reasonably satisfied that they were material irregularities as each of the issues was explicable and arose from transactions that were legitimate, lawful and in the best interest of Choppies, its subsidiaries and shareholders.”
They further accused the auditing firm and Binedell of usurping “the functions of management by insisting on full forensic investigation prior to conclusion of the audit and by preventing alternatively delaying the conclusion of 2018 audit, they did so in circumstances when they knew or ought reasonably to have known that the exercise of commissioning such audit would be time consuming and would substantially delay the audit and have dire consequences for the shareholders and specially Ottapathu and Ismail.”
They also accused the auditors of acting together with or under the directors of Robert Matthews and Sydney Muller for purposes of discrediting them as the then management of Choppies. The duo said it was done with the purposes of procuring either the suspension or resignation of Ottapathu and in order to put in place alternative management of Choppies.“This was done with the purpose of securing the position and future employment of Binedell as the financial director of Choppies and or its subsidiaries and the entrenchment of PwC as auditors of Choppies and its subsidiaries,” they argued.
