The liquidator of Bluthorn Fund Managers (BFM), Kopanang Thekiso has accused BDO Botswana auditors of breach of contract, which he argues, resulted in the loss of millions.
BDO Botswana which is a partnership of auditors, was reportedly engaged by Bluthorn in 2016 and was subsequently reappointed from 2017 to 2019 to audit BFM . The embattled Bluthorn group was placed under liquidation in 2021 following a High Court judgment. Before that the regulatory authority, Non-Bank Financial Institutions Regulatory Authority (NBFIRA) discovered, during its supervisory activities in May 2019, that Bluthorn was not fully compliant with the relevant financial services laws. It was further discovered that Bluthorn had channeled the majority of investor funds into one of its related companies being Prime Employee Benefits. In a recently filed lawsuit by its liquidator, Thekiso is suing the auditing firm for BFM, which falls under Bluthorn Group. The auditors are accused of contractual breach by failing to follow audit agreement signed between the parties. "In purporting to perform the 2017, 2018 and 2019 audits, BDO willfully, alternatively grossly negligently, alternatively negligently, breached its obligations under each of the audit agreements," he said.
He alleged that among other things, BDO failed to conduct the audit in accordance with International Standards on Auditing. According to his affidavit, Thekiso said had they not breached contractual and statutory obligations in conducting the 2017, 2018 and 2019 audits of BFM, BDO would have uncovered the irregularities and statutory breaches. This he said, would have expressed an audit opinion that the 2017, 2018 and 2019 financial statements did not present fairly, in all material respects. "BDO could have reported the material irregularities and statutory breaches relating to the 2018 and 2019 audit to the relevant authorities," Thekiso argued.
He stated that as a result of BDO's breaches, BFM suffered damages in the sum of P182, 732 549.70 calculated as that had BDO complied with its contractual and statutory obligations and reported the material irregularities to the relevant authorities, the Regulator or the Registrar of Companies would have taken immediate steps to suspend the business of BFM with immediate effect. Thekiso further said the Regulator or the Registrar of Companies would have suspended BFM's license and appointed a statutory manager to take control of BFM to the exclusion of its board of directors, by no later than October 31, 2017. He also argued that had BDO complied with its contractual and statutory obligations, it would not have been able to solicit or accept any funds from investors after October 31, 2017, thereby precluding it from continuing to misappropriate and/or unlawfully loan out any funds after that date. Thekiso explained that between November 9, 2017 and December 17, 2019, BFM accepted funds from investors in the sum of P182 732 549.70 being the quantum of damages suffered by BFM as a result of it breaching its contractual and statutory obligations. "In the alternative to the above paragraph, as a result of BDO's breaches of its contractual and statutory obligations, BFM suffered damages arising from the ongoing solicitation of funds in the sum of P180 702 549.70. In the alternative to the above paragraphs as a result of BDO's breaches of its contractual and statutory obligations, BFM suffered damages arising from the ongoing solicitation of funds in the sum of P100 600 000," he said. He pointed out that the above mentioned damages were calculated as that had BDO complied with its contractual and statutory obligations and reported the material irregularities to the relevant authorities, the Regulator and/or the Registrar of Companies would have taken immediate steps.
Thekiso also said had BDO complied with its contractual and statutory obligations, it would not have been able to solicit or accept any funds from investors after October 31, 2018, thereby precluding it from continuing to misappropriate and/or unlawfully loan out any funds after that date. "Between November 1, 2018 and December 17, 2019, BFM accepted funds from investors in the sum of P180 702 549.70 being the quantum of damages suffered by BFM as a result of the breaching its contractual and statutory obligations," states his affidavit. He pointed out that in the alternative to above paragraphs as a result of BDO's breaches of its contractual and statutory obligations, BFM suffered damages arising from the ongoing solicitation of funds in the sum of P100 600 000 calculated as the others. He noted that between September 6, 2019 and December 17, 2019, BFM accepted funds from investors to the sum of P100 600 000 being the quantum of damages suffered by BFM as a result of its breaching its contractual and statutory obligations. In conclusion, Thekiso said as a result, BDO is liable to BFM for payment of BWP182 732 549.70 alternatively, the sum of P180 702 549.70 or further alternatively, the sum of P100 600 000 which sum is due. The lawsuit was filed on June 25, 2024 before Justice Omphemetse Motumise of High Court and BDO is due to respond through its attorneys Desai Law Group. Thekiso is represented by Armstrong Attorneys.
He alleged that among other things, BDO failed to conduct the audit in accordance with International Standards on Auditing. According to his affidavit, Thekiso said had they not breached contractual and statutory obligations in conducting the 2017, 2018 and 2019 audits of BFM, BDO would have uncovered the irregularities and statutory breaches. This he said, would have expressed an audit opinion that the 2017, 2018 and 2019 financial statements did not present fairly, in all material respects. "BDO could have reported the material irregularities and statutory breaches relating to the 2018 and 2019 audit to the relevant authorities," Thekiso argued.
He stated that as a result of BDO's breaches, BFM suffered damages in the sum of P182, 732 549.70 calculated as that had BDO complied with its contractual and statutory obligations and reported the material irregularities to the relevant authorities, the Regulator or the Registrar of Companies would have taken immediate steps to suspend the business of BFM with immediate effect. Thekiso further said the Regulator or the Registrar of Companies would have suspended BFM's license and appointed a statutory manager to take control of BFM to the exclusion of its board of directors, by no later than October 31, 2017. He also argued that had BDO complied with its contractual and statutory obligations, it would not have been able to solicit or accept any funds from investors after October 31, 2017, thereby precluding it from continuing to misappropriate and/or unlawfully loan out any funds after that date. Thekiso explained that between November 9, 2017 and December 17, 2019, BFM accepted funds from investors in the sum of P182 732 549.70 being the quantum of damages suffered by BFM as a result of it breaching its contractual and statutory obligations. "In the alternative to the above paragraph, as a result of BDO's breaches of its contractual and statutory obligations, BFM suffered damages arising from the ongoing solicitation of funds in the sum of P180 702 549.70. In the alternative to the above paragraphs as a result of BDO's breaches of its contractual and statutory obligations, BFM suffered damages arising from the ongoing solicitation of funds in the sum of P100 600 000," he said. He pointed out that the above mentioned damages were calculated as that had BDO complied with its contractual and statutory obligations and reported the material irregularities to the relevant authorities, the Regulator and/or the Registrar of Companies would have taken immediate steps.
Thekiso also said had BDO complied with its contractual and statutory obligations, it would not have been able to solicit or accept any funds from investors after October 31, 2018, thereby precluding it from continuing to misappropriate and/or unlawfully loan out any funds after that date. "Between November 1, 2018 and December 17, 2019, BFM accepted funds from investors in the sum of P180 702 549.70 being the quantum of damages suffered by BFM as a result of the breaching its contractual and statutory obligations," states his affidavit. He pointed out that in the alternative to above paragraphs as a result of BDO's breaches of its contractual and statutory obligations, BFM suffered damages arising from the ongoing solicitation of funds in the sum of P100 600 000 calculated as the others. He noted that between September 6, 2019 and December 17, 2019, BFM accepted funds from investors to the sum of P100 600 000 being the quantum of damages suffered by BFM as a result of its breaching its contractual and statutory obligations. In conclusion, Thekiso said as a result, BDO is liable to BFM for payment of BWP182 732 549.70 alternatively, the sum of P180 702 549.70 or further alternatively, the sum of P100 600 000 which sum is due. The lawsuit was filed on June 25, 2024 before Justice Omphemetse Motumise of High Court and BDO is due to respond through its attorneys Desai Law Group. Thekiso is represented by Armstrong Attorneys.