Capitec says no to call for a second auditor

Johannesburg - Capitec has rejected a call to take on a second auditor amid a damning report, including queries about its loan book and level impairments.

The report by Viceroy, which specialises in investment research dedicated to identifying short opportunities, released a highly critical 33-page document about Capitec which knocked billions of rands off its market value. By the end of the week part of those losses had been recovered.

“We believe the SA Reserve Bank and minister of finance should immediately place Capitec into curatorship,” the report said.

But the report was discredited by a number of market participants, including the SA Reserve Bank and Treasury, which called for the Financial Services Board and the JSE to probe Viceroy’s conduct.

In the wake of Viceroy’s report, Deutsche Bank analyst Stefan Swanepoel said: “Our sense is that an independent investigation is probably the best manner to deal with the issues raised and to address any concerns ... Especially in light of the fact that Capitec has one set of auditors, while the other big banks have two. Although the auditors certainly haven’t covered themselves in glory in the past few months at least two sets of auditors bring independent benchmarks and a new set of eyes to the numbers.”

Swanepoel has a price target of R360 for Capitec, substantially below the price of R915 it was trading at on Friday afternoon.

In response, Andre du Plessis, Capitec chief financial officer, said: “We need only one auditor according to the Banks Act. Capitec uses PwC, which is a credible auditor. From previous experience I don’t believe dual auditors bring any more comfort or value.”

In response to a set of questions from City Press, Fulvio Tonelli, PwC Africa chief operating officer, said: “PwC is unable to comment on the questions as we are bound by the rules of confidentiality relating to our profession.”

Regarding the call for a probe, Du Plessis said: “We will refute and unpack the allegations which have already been disclosed in the financial statements and which have been audited.”

Paul Slot, a director at debt review company Octogen, said Viceroy’s report was “hot air”.

The Viceroy report was “alarmist to say the least” and the people that put the report together had jumped to conclusions, he said.

Viceroy criticised Capitec directors for selling their shares at an “alarming pace”.

In December Capitec chairperson Riaan Stassen sold shares worth at least R155m.

Capitec CEO Gerrie Fourie said in December he had sold Capitec shares worth R13m to diversify his investments. This week he bought R1.5m shares.