May 28, 2003
By Ronnie Morris
Cape Town - Sekunjalo had received widespread support, including backing from one of the big four banks, for its intention to sue auditing firm Deloitte & Touche for R200 million in damages, chief executive Iqbal Surve said yesterday.
He was unable to name the bank but said other financial institutions backed the move. He would meet them next week.
"The only regret expressed was why are we not proceeding against [former joint chief executives] Peter Gardener and Rod Mitchell. At this stage nothing precludes us from acting against them."
At a press conference on Monday Sekunjalo chairman Wallace Mgoqi announced that the empowerment company would institute a damages action against Deloitte & Touche to recover losses of R160 million it incurred when LeisureNet, in which it had a 18 percent stake, was wound up in October 2000.
Surve also announced that Sekunjalo was seeking to institute action against Deloitte & Touche in the UK, US and Australia
.
He said significant similarities could be drawn between the roles of auditors and consultants in the demise of LeisureNet and those of Enron and WorldCom.
Tim Stone, Deloitte & Touche's South African chairman, said the firm would defend the action and was "fairly confident".
Mgoqi said an inquiry into the collapse of LeisureNet had shown how responsible Deloitte & Touche was for the losses.
In December 1999 LeisureNet reported a profit of R115 million while in September 2000, under a new accounting practice, the group showed a loss of R53 million.
The auditor also failed to disclose contingent liabilities of almost R900 million.
Sekunjalo closed unchanged at 36c yesterday.
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