The two largest shareholders in JSE-listed supermarket chain Choppies are persisting in their R650m lawsuit against professional services firm PwC.
The matter concerns a plunge in the group’s value that followed the delay of the retailer’s 2018 results that caused it to be suspended from the local bourse and sent its shares into free fall.
Choppies alleges PwC and its audit partner Rudi Binedell acted negligently and in bad faith — causing the suspension of the company’s shares and eroding shareholder value.
PwC on Tuesday suffered another legal setback in its multiyear legal brawl with retail group Choppies over the auditing of the company’s books.
This after the Botswana high court dismissed the bid by PwC and Binedell to have an interlocutory order issued by judge Boipuso Makhwe set aside.
Makhwe last year ruled in favour of an application brought by Choppies’ two largest shareholders, including its CEO Ramachandran Ottapathu and Farouk Ismail, for a separation of certain issues from the main application, in which the merits of the R650m lawsuit will be heard and decided on.
PwC and Binedell in the latest case in the protracted saga made serious allegations against Makhwe and judge Zein Kebonang, accusing them of showing bias towards Choppies in previous interlocutory applications.
The court on Tuesday found the case brought by PwC against the judges to be wanting in law.
“I am in total agreement with the respondent’s argument that there is no provision in the judicial code of conduct which provides that, where there are ongoing proceedings before a judge, the complaints process may be bypassed and rather a party may ‘litigate’ their complaint in the manner in which the defendants have done in this matter,” reads the judgment.
“On the contrary, the legislative prohibition against the citation of judges is nothing extraordinary and is based on sound principles of public policy, including discouraging litigants from making unsubstantiated allegations concerning judges [of] a high court, which is then not capable of investigating complaints (such as this) on affidavit.”
In the main case, which is still to be adjudicated five years since the lawsuit was launched, Choppies alleges PwC and Binedell acted negligently and in bad faith — causing the suspension of the company’s shares and thus eroding shareholder value.
Choppies, founded in Botswana 1986 and operational in Namibia, Zambia and Zimbabwe, was suspended from the JSE and Botswana stock exchanges for not publishing its 2018 financial statements within the required time frames — a decision that caused its stock to plunge more than 75%.
It is this suspension that the company blames PwC for and is suing the audit firm and Binedell for — accusing them of intentionally delaying the audit.
The basis of Choppies’ allegation is that Binedell purposely delayed the audit by demanding a forensic investigation — claiming he was offered a job by the board, which was later reneged on by Ottapathu.
PwC has always insisted that it will lead evidence in court that will demonstrate that Binedell’s conduct complied with requirements of the International Ethics Standards Board for Accountants.
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