PwC suffers third court defeat against Choppies over delayed audit report
Another loss
Botswana High Court dismisses audit firm's application to have the case against it declared a nullity based on allegations of improper conduct by two judges.
PwC has suffered yet another defeat in the Botswana High Court, which dismissed a counter-application by the audit firm seeking to have previous rulings against it declared a nullity following allegations of improper conduct against two judges of the court.
This is the latest development in a case originally brought in 2020 by retailer Choppies’ largest shareholders, Ramachandran Ottapathu and Farouk Ismail, against PwC Botswana and its audit partner Rudi Binedell.
The two shareholders are seeking over R653 million (Pula 610 million) 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.
This resulted in trade in Choppies shares being suspended on the Botswana Stock Exchange and the JSE in late 2018.
The suspensions resulted in Choppies losing 75% of its market value before trading resumed in late 2020.
Binedell is claimed to have delayed the audit report because a job he had been offered at Choppies had not materialised.
“Prima facie ... [Binedell’s] independence as a dispassionate and professional auditor was impaired once he engaged in potential employment discussions with Choppies. He should have recused himself from leading the audit,” reads a previous ruling by Justice Boipuso Tshweneyagae in the Botswana High Court in 2021.
Previous court rulings in Botswana by Tshweneyagae in 2021 and Justice Makhwe in 2023 have favoured Choppies on procedural points, finding PwC owed shareholders a duty of care and dismissed counterclaims brought by the audit firm.
In 2024, PwC filed a counter-application, alleging Justice Makhwe’s 2023 ruling in favour of Choppies was tainted – claiming it was authored by Justice Zein Kebonang, a former Choppies consultant, implying judicial corruption. Kebonang has denied the allegations.
Justice Makhwe, via her lawyers at Serole and Partners, called these allegations “blatantly untrue, defamatory, contemptuous, and disrespectful”, demanding an apology from PwC’s legal team and threatening a defamation suit if unmet.
The latest court ruling delivered on 1 April 2025 found that the two judges accused of improper conduct enjoyed “absolute immunity” and 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 [PwC] have done in this matter.”
There are legislative prohibitions against making unsubstantiated allegations concerning judges before a high court which is then not capable of investigating complaints on affidavit.
The main damages case for R653 million has yet to be heard.
“We will continue this legal battle till the end. This is the third time they are losing in a row,” Ottapathu told Moneyweb.
PwC previously defended its audit of Choppies, arguing that the delay in finalising the financials was due to “accounting and governance matters within Choppies that came to light during the audit, causing – amongst others – two independent investigations to be commissioned by the Choppies board of directors”.
“PwC Botswana stands by the work it did and will continue to defend the claim.”
This is the latest development in a case originally brought in 2020 by retailer Choppies’ largest shareholders, Ramachandran Ottapathu and Farouk Ismail, against PwC Botswana and its audit partner Rudi Binedell.
The two shareholders are seeking over R653 million (Pula 610 million) 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.
This resulted in trade in Choppies shares being suspended on the Botswana Stock Exchange and the JSE in late 2018.
The suspensions resulted in Choppies losing 75% of its market value before trading resumed in late 2020.
Binedell is claimed to have delayed the audit report because a job he had been offered at Choppies had not materialised.
“Prima facie ... [Binedell’s] independence as a dispassionate and professional auditor was impaired once he engaged in potential employment discussions with Choppies. He should have recused himself from leading the audit,” reads a previous ruling by Justice Boipuso Tshweneyagae in the Botswana High Court in 2021.
Previous court rulings in Botswana by Tshweneyagae in 2021 and Justice Makhwe in 2023 have favoured Choppies on procedural points, finding PwC owed shareholders a duty of care and dismissed counterclaims brought by the audit firm.
In 2024, PwC filed a counter-application, alleging Justice Makhwe’s 2023 ruling in favour of Choppies was tainted – claiming it was authored by Justice Zein Kebonang, a former Choppies consultant, implying judicial corruption. Kebonang has denied the allegations.
Justice Makhwe, via her lawyers at Serole and Partners, called these allegations “blatantly untrue, defamatory, contemptuous, and disrespectful”, demanding an apology from PwC’s legal team and threatening a defamation suit if unmet.
The latest court ruling delivered on 1 April 2025 found that the two judges accused of improper conduct enjoyed “absolute immunity” and 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 [PwC] have done in this matter.”
There are legislative prohibitions against making unsubstantiated allegations concerning judges before a high court which is then not capable of investigating complaints on affidavit.
The main damages case for R653 million has yet to be heard.
“We will continue this legal battle till the end. This is the third time they are losing in a row,” Ottapathu told Moneyweb.
PwC previously defended its audit of Choppies, arguing that the delay in finalising the financials was due to “accounting and governance matters within Choppies that came to light during the audit, causing – amongst others – two independent investigations to be commissioned by the Choppies board of directors”.
“PwC Botswana stands by the work it did and will continue to defend the claim.”
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