Choppies supremoes slap Pwc with P450 million lawsuit
Choppies Enterprises Chief Executive Officer (CEO), Ramachandran Ottapathu and his deputy, Farouk Ismail are demanding a compensation of P450 million from accounting firm, PricewaterhouseCoopers (Pwc) following a 75 percent decline in market value of Choppies shares traded on the Botswana Stock Exchange (BSE) and Johannesburg Stock Exchange (JSE).
Ottapathu and Ismail, who are the two largest shareholders at Choppies, demand P254 million and P197 million respectively. Ottapathu further demands R417 000 (about P290 000).
PwC which ranks as the second-largest professional services network in the world and is considered one of the Big Four accounting firms, along with Deloitte, EY and KPMG was at the helm as auditor of Choppies when the retail giant suffered turbulence.
According to court papers, Ottapathu and Ismail, who are represented by Ramalepa Attorneys, in January 2018 when Choppies began discussions with Pwc regarding engagement of Pwc as external auditors of Choppies and its subsidiaries.
From that time, Pwc was given the opportunity to obtain insight into the business of Choppies and on or about 25th January 2018, Pwc presented to Ottapathu in his capacity as CEO, its fee proposal.
In the fee proposal, according to court papers, Rudi Binedell a partner at Pwc confirmed that he had assessed Choppies engagement risk in order to ensure that Pwc had a complete understanding of the business of Choppies as it is only possible before presenting the fee proposal. Binedell had completed process that confirmed that Pwc were independent of Choppies within the meaning of appropriate regulatory and professional requirements, and that the objectivity of the proposed audit team was not impaired.
Agreement was reached on 9 March 2018. According to the court documents, Choppies engaged Pwc on the basis of Pwc and Binedells representations and assurances contained in the Audit Agreement 2018, and also on the basis that Pwc and Binedell were independent and that Pwc and Binedell would remain independent throughout the course of audit.
In terms of the Audit Agreement 2018 and the ISA, specifically ISA 260 (Communication with Those Charged with Governance), Pwc was required to plan their audit and communicate their plan to Choppies and specifically those charged with corporate governance, namely the audit committee.
Ismail and Ottapathu contend that from at least 19 March 2018, Pwc and Binedell were aware, or ought reasonably to have been aware that, they were required to; finalise the audit and report key findings to the Audit Committee by no later than the end of September 2018 and issue the final statements and their audit report by no later than the end of September 2018.
On the 6 July 2018, Binedell, on behalf Pwc, presented on behalf of Pwc, an audit plan for Choppies and its subsidiaries to the Audit Committee for their consideration and approval. The presentation set out how Pwc would discharge their responsibilities under the audit among them confirming their independence and compliance with ISA 20; understanding of stakeholders expectations and analysis of risks.
The audit timetable reveal that, about May or June 2018, Pwc would attend the stock counts and finalise the audits strategy and communicate the audit approach to the committee; by June 2018, Pwc would set out its planned audit approach and response to the risk they have identified for the audit to date.
By September 2018, Pwc would produce a report that summarises the key issues arising from the audit and present to the audit committee; produce a draft key audit matter and obtain clearance; approve the financial statements; and sign off on the statutory report. Pwc proposed a fee of approximately P8 480 00.
BINEDELLS COMPROMISED INDEPENDENCE
In court documents, Ottapathu and Ismail allege that on March 2018, the date which Pwc made its preliminary presentation to the Audit Committee, Binedell attended a dinner with Robert Matthews and Allan Muller, members of Choppies Audit Committee.
During the dinner, the court documents say, Binedell discussed with Matthews and Muller various issues relating to Choppies and Pwcs audit of Choppies for the 2018 financial year.
Muller requested that Binedell joins Choppies as the Group Finance Director and hereby solicited his employment by Choppies. Subsequent to the meeting, Ottapathu and Ismail, allege that Muller and/or Matthews repeated this request to Binedell and indeed other of Choppies management on several occasions.
Matthews had suggested that the Choppies Board should consider Binedell be given 60 million shares in Choppies under the employee share option scheme, as an incentive, says the court documents.
Ottapathu was requested by Muller and/or Matthews to formalise an offer to Binedell in writing.
The lawyers representing Ottapathu and Ismail contended that Muller and/or Matthews made these requests and thereby solicited the employment of Binedell when they ought to have known that this was in contravention of the Audit Agreement 2018 and that it would compromise Binedells independence and the independence of Pwc throughout the audit.
As a result of these facts, Pwc bore an obligation, contractually and in terms of their ethical obligation to immediately; take action in accordance with ISA 260 and IESBA Code of Ethics, and report such threats to those charged with governance and then either (1) to resign as auditors of Choppies; and alternatively and at the very least, to remove Binedell from the audit team, Ramalepa Attorneys argues.
Pwc and Binedell, lawyers argue, failed to do so and Pwc proceeded to conduct that audits of Choppies and its subsidiaries, with the audit team as it was then constituted, led by Binedell.
AUDIT DELAYS AND SUSPENSION OF OTTAPATHU
On or about 17th September 2018, and at a Boarding meeting, Binedell advised the Board of Directors of Choppies that he would not be able to finalise audit in Botswana, South Africa and Zimbabwe due to a number of audit issues, some of which affect all regions and of which were specific to certain regions only.
Binedell identified a number of issues of concern in which he implicated Ottapathus management of Choppies, and specifically the following a) related party transactions, particularly Fours Cash and Carry; Purchase Price Allocations on assets acquired; allegedly suspicious cash flows between Choppies and Devland Cash and Carry; issues with ZIA and concerns on money laundering accusations in Zimbabwe; latest provisional set of consolidated financials provided on the morning of 17 September 2018- showing a material deviation from both last years results and the budgeted figures for the 2018 financial and reportable irregularities identified by the auditors during the audit process.
Binedell noted his concerns about lack of transparency as well pressure from Pwc Africa Chief Operation on his association with Choppies due to Zimbabwe press issues.
Other issues he raised advising Choppies to obtain legal advice in South Africa and Botswana arising from transactions and advice on how the Board should as well as on the Board potential exposure.
Owing to the concerns raised by Binedell, Pwc felt exposed and would not sign off on the financials until various matters were resolved, therefore Choppies would not meet the deadline to publish audited annual financial results by 30 September 2018.
Consequent to Binedells report Ottapathu was suspended as Choppies CEO, trading of Choppies shares be suspended and a forensic audit was commissioned.
Ottapathu responded to Binedells concerns by proving information and documentation but Pwc insisted on an independent forensic auditor.
Failure to meet the audited financial results on time led to the suspension on BSE and later on JSE.
Other mitigation efforts, including impairing 50 percent of the assets on Choppies balance sheet also did not bear fruits.
Ottapathu, Ismail conclude that Pwc disregarded the statutory deadlines and that as dully appointed auditors of Choppies, Pwc and Binedell occupied stator office and they were obliged to among others, comply with Companies Act and Financial Reporting Act .
The duo conclude that by virtue of the role performed by Binedell and Pwc as the statutory auditor of Choppies and its subsidiaries and in implementing the Audit Agreement 2018; and by the virtue of their knowledge, Binedell and Pwc owed a legal duty to Ottapathu and Ismail as shareholders of Choppies.
Ottapathu and Ismail, through their lawyers, insist that Binedell and Pwc breached their duty to shareholders, when Binedell accepted a dinner invitation on 19 March 2018, from Matthews and Muller and then Pwc and Binedell then failed to eliminate the threatens to their independence arising therefrom or to apply appropriate safeguards to reduce such threats to an acceptable level.
News
19 Bokamoso Private Hospital nurses graduate at Lenmed Nursing College
The graduation of 19 nurses from Bokamoso Private Hospital at Lenmed Nursing College marks a significant milestone in their careers. These nurses have successfully completed various short learning programs, including Adult Intensive Care Unit, Emergency Nursing Care, Anaesthetic & Recovery Room Nursing, Anaesthetic Nursing, and Recovery Room Nursing. The ceremony, held in Gaborone, was a testament to their hard work and dedication.
Lenmed Nursing College, a renowned healthcare group with a presence in South Africa, Botswana, Mozambique, and Ghana, has been instrumental in providing quality education and training to healthcare professionals. The Group Head of Operations, Jayesh Parshotam, emphasized the importance of upskilling nurses, who are at the forefront of healthcare systems. He also expressed his appreciation for the partnerships with Bokamoso Private Hospital, the Ministry of Health, and various health training institutes in Botswana.
Dr. Morrison Sinvula, a consultant from the Ministry of Health, commended Lenmed Health and Lenmed Nursing College for their commitment to the education and training of these exceptional nurses. He acknowledged their guidance, mentorship, and support in shaping the nurses’ careers and ensuring their success. Dr. Sinvula also reminded the graduates that education does not end here, as the field of healthcare is constantly evolving. He encouraged them to remain committed to lifelong learning and professional development, embracing new technologies and staying updated with the latest medical advancements.
Dr. Gontle Moleele, the Superintendent of Bokamoso Private Hospital, expressed her excitement and pride in the graduating class of 2023. She acknowledged the sacrifices made by these individuals, who have families and responsibilities, to ensure their graduation. Dr. Moleele also thanked Lenmed Nursing College for providing this opportunity to the hospital’s nurses, as it will contribute to the growth of the hospital.
The certificate recipients from Bokamoso Private Hospital were recognized for their outstanding achievements in their respective programs. Those who received the Cum Laude distinction in the Adult Intensive Care Unit program were Elton Keatlholwetse, Lebogang Kgokgonyane, Galaletsang Melamu, Pinkie Mokgosi, Ofentse Seboletswe, Gorata Basupi, Bareng Mosala, and Justice Senyarelo. In the Emergency Nursing Care program, Atlanang Moilwa, Bakwena Moilwa, Nathan Nhiwathiwa, Mogakolodi Lesarwe, Modisaotsile Thomas, and Lorato Matenje received the Cum Laude distinction. Kelebogile Dubula and Gaolatlhe Sentshwaraganye achieved Cum Laude in the Anaesthetic & Recovery Room Nursing program, while Keletso Basele excelled in the Anaesthetic Nursing program. Mompoloki Mokwaledi received recognition for completing the Recovery Room Nursing program.
In conclusion, the graduation of these 19 nurses from Bokamoso Private Hospital at Lenmed Nursing College is a testament to their dedication and commitment to their profession. They have successfully completed various short learning programs, equipping them with the necessary skills and knowledge to excel in their respective fields. The collaboration between Lenmed Nursing College, Bokamoso Private Hospital, and the Ministry of Health has played a crucial role in their success. As they embark on their careers, these nurses are encouraged to continue their professional development and embrace new advancements in healthcare.
News
BNF secures 15 constituencies in UDC coalition, wants more
The Botswana National Front (BNF) has recently announced that they have already secured 15 constituencies in the Umbrella for Democratic Change (UDC) coalition, despite ongoing negotiations. This revelation comes as the BNF expresses its dissatisfaction with the current government and its leadership.
The UDC, which is comprised of the BNF, Botswana Peoples Party (BPP), Alliance for Progressives (AP), and Botswana Patriotic Front (BPF), is preparing for the upcoming General Elections. However, the negotiations to allocate constituencies among the involved parties are still underway. Despite this, the BNF Chairman, Patrick Molotsi, confidently stated that they have already acquired 15 constituencies and are expecting to add more to their tally.
Molotsi’s statement reflects the BNF’s long-standing presence in many constituencies across Botswana. With a strong foothold in these areas, it is only natural for the BNF to seek an increase in the number of constituencies they represent. This move not only strengthens their position within the UDC coalition but also demonstrates their commitment to serving the interests of the people.
In a press conference, BNF Secretary General, Ketlhafile Motshegwa, expressed his discontent with the current government leadership. He criticized the ruling Botswana Democratic Party (BDP) for what he perceives as a disregard for the well-being of the Batswana people. Motshegwa highlighted issues such as high unemployment rates and shortages of essential medicines as evidence of the government’s failure to address the needs of its citizens.
The BNF’s dissatisfaction with the current government is a reflection of the growing discontent among the population. The Batswana people are increasingly frustrated with the lack of progress and the failure to address pressing issues. The BNF’s assertion that the government is playing with the lives of its citizens resonates with many who feel neglected and unheard.
The BNF’s acquisition of 15 constituencies, even before the negotiations have concluded, is a testament to their popularity and support among the people. It is a clear indication that the Batswana people are ready for change and are looking to the BNF to provide the leadership they desire.
As the negotiations continue, it is crucial for all parties involved to prioritize the interests of the people. The allocation of constituencies should be done in a fair and transparent manner, ensuring that the voices of all citizens are represented. The BNF’s success in securing constituencies should serve as a reminder to the other parties of the need to listen to the concerns and aspirations of the people they aim to represent.
In conclusion, the BNF’s acquisition of 15 constituencies, despite ongoing negotiations, highlights their strong presence and support among the Batswana people. Their dissatisfaction with the current government leadership reflects the growing discontent in the country. As the UDC coalition prepares for the upcoming General Elections, it is crucial for all parties to prioritize the needs and aspirations of the people. The BNF’s success should serve as a reminder of the importance of listening to the voices of the citizens and working towards a better future for Botswana.
News
Children’s summit to discuss funding of NGOS
One of the key issues that will be discussed by the Childrens’ Summit, which will be hosted by Childline Botswana Trust on 28th – 30th November in Gaborone, will be the topical issue of financing and strengthening of civil society organizations.
A statement from Childline Botswana indicates that the summit will adopt a road map for resourcing the children’s agenda by funding organizations. It will also cover issues relating to child welfare and protection; aimed at mobilizing governments to further strengthen Child Helplines; as well as sharing of emerging technologies to enhance the protection of Children and promotion of their rights.
According to Gaone Chepete, Communications Officer at Childline Botswana, the overall objective of the summit is to provide a platform for dialogue and engagement towards promoting practices and policies that fulfil children’s rights and welfare.
“Child Helplines in the region meet on a bi-annual basis to reflect on the state of children; evaluate their contribution and share experiences and best practice in the provision of services for children,” said Chepete.
The financing of non-governmental organizations (NGOs) by the state or its functionaries has generated mixed reactions from within the civil society space, with many arguing that it threatened NGOs activism and operational independence.
In February 2019, University of Botswana academic Kenneth Dipholo released a paper titled “State philanthropy: The demise of charitable organizations in Botswana,” in which he faulted then President Lieutenant General Seretse Khama Ian Khama for using charity for political convenience and annexing the operational space of NGOs.
“Civil society is the domain in which individuals can exercise their rights as citizens and set limits to the power of the state. The state should be developing capable voluntary organizations rather than emaciating or colonizing them by usurping their space,” argued Dipholo.
He further argued that direct involvement of the state or state president in charity breeds unhealthy competition between the state itself and other organizations involved in charity. Under these circumstances, he added, the state will use charity work to remain relevant to the ordinary people and enhance its visibility at the expense of NGOs.
“A consequence of this arrangement is that charitable organizations will become affiliates of the state. This stifles innovation in the sense that it narrows the ability of charitable organizations to think outside the box. It also promotes mono-culturalism, as the state could support only charitable organizations that abide by its wishes,” said Dipholo.
In conclusion, Dipholo urged the state to focus on supporting NGOs so that they operate in a system that combines philanthropic work and state welfare programs.
He added that state philanthropy threatens to relegate and render charitable organizations virtually irrelevant and redundant unless they re-engineer themselves.
Another University of Botswana (UB) academic, Professor Zibani Maundeni, opined that politics vitally shape civil society interaction; as seen in the interactions between the two, where there is mutual criticism in each other’s presence.
Over the years, NGOs have found themselves grappling with dwindling financial resources as donors ran out of money in the face of increased competition for financing. Many NGOs have also been faulted for poorly managing their finances because of limited strategic planning and financial management expertise. This drove NGOs to look to government for funding; which fundamentally altered the relationships between the two. The end result was a complete change in the operational culture of NGOs, which diminished their social impact and made them even more fragile. Increased government control through contract clauses also reduced NGOs activism and autonomy.
However, others believe that NGOs and government need each other, especially in the provision of essential services like child welfare and protection. Speaking at the Civil Society Child Rights Convention in 2020, Assistant Minister of Local Government and Rural Development Setlhabelo Modukanele said government considers NGOs as critical partners in development.
“We recognize the role that NGOs play a critical role in the country’s development agenda,” said Modukanele.