AHL sues auditorsover K44bn loss
State controlled Auction Holdings Limited (AHL) Group plc has sued its former external auditors Deloitte, claiming over K44 billion lost due to alleged professional negligence when it was auditing its subsidiary Malawi Leaf Limited.
In a response to our questionnaire seeking to establish remedies it was undertaking following the loss, the public listed AHL confirmed dragging the firm to court.
AHL company secretary and legal counsel Martha Ngoma wrote: “Please be informed that the shareholders and the board of AHL Group Plc indeed approved and authorised management to commence a civil case for professional negligence against the AHL Group Plc’s then external auditors.”
Nation on Sunday has, however, established that the claim was filed at the Commercial Court Lilongwe Registry.
The AHL legal action comes after its shareholder Frank Harawa last year wrote Deloitte demanding K44 billion payout over its alleged misconduct.
“It is our client’s story that between 2014 to 2017, Deloitte did not give due diligence to the procedures in auditing the Malawi Leaf and assured that the financial statements of AHL Group had complied with the applicable international financial reporting standards,” reads the letter filed by Harawa’s lawyers, Whyte & Cross Law Consultants.
Dated 21 September, the letter further accuses Deloitte of failure to give due diligence to the procedures in auditing and assured financial statements for the years in question.
“The audit openly and deliberately failed to detect obvious errors and/or misstatements when the financial statements included fictitious sales made to a company known as Eastern Tobacco Company.
“As a result of the professional negligence and breach of the fiduciary duty of care that Deloitte had towards our client and his fellow shareholders of AHL Group, a huge loss of K44 billion which could have otherwise been avoided and/or mitigated was occasioned, to the serious detriment of our client and others,” the letter further claims.
Harawa’s lawyers back the claim with the Institute of Chartered Accountants in Malawi (Icam) investigation which allegedly also found Deloitte guilty on the matter.
“To cement our client’s legitimate demand, Ethics and Investigations Committee instituted investigations into the manner in which Deloitte conducted its audits of the financial statements of Malawi Leaf,” it says.
In an interview, Harawa said he stepped aside because AHL expressed interest to join the case. Meanwhile, Deloitte managing partner Nkondola Uka had not responded to our questionnaire as we went to press.
