© Reuters. People walk in front of a Lojas Americanas store in Brasilia, Brazil, January 12, 2023. REUTERS/Ueslei Marcelino
By Rodrigo Beam Gaier
RIO DE JANEIRO/SAO PAULO (Reuters) – A group representing minority shareholders filed a complaint with Brazil’s securities regulator on Friday against Americanas SA after the retailer discovered “accounting inconsistencies” totaling 20 billion reais (3.890 million dollars).
The Abradin association said it was suing Americanas for what it called a “billion-dollar fraud”, while asking regulator CVM to investigate the retailer’s auditor, PwC.
Americanas shares plunged more than 75% on Thursday, wiping out 8.4 billion reais in market value, after the company’s chief executive Sergio Rial resigned, citing the discovery of inconsistencies.
“Calling it ‘inconsistencies’ is nothing more than an attempt to use a euphemism for a multi-billion dollar fraud that not only destroyed shareholder assets but also undermined the credibility of Brazil’s capital markets,” Abradin said in a document seen by Reuters.
Shares of the company were up 9% in Friday morning trading after falling as much as 0.7% earlier in the day.
Americanas and PwC did not immediately respond to requests for comment.
CVM had already announced that it was opening three investigations into the retailer. Meanwhile, the company formed an independent committee to investigate the matter.
Rial, in a meeting with investors on Thursday, attributed the inconsistencies to differences in accounting for the financial cost of bank loans and debt with suppliers. Accountants, however, are still trying to figure out the details.
“What draws a lot of attention is the size of the problem. It’s not easy to hide 20 billion reais,” said Eric Barreto, a professor at Insper in Sao Paulo. “If the operations were on the balance sheet, it was a presentation issue. But I don’t know if they were fully on the balance sheet.”
Americanas has long been controlled by three Brazilian billionaires who founded 3G Capital. Its stores are ubiquitous in Brazilian malls and the company’s e-commerce unit is one of the country’s leading online retailers.
Analysts and fund managers are also hotly debating the so-called “inconsistencies.”
“The market (including us) still doesn’t fully understand what the implications are for Americanas,” JPMorgan (NYSE:) analysts said in a research note, citing the company’s consistent lack of communication.
Americanas said on Wednesday, when it disclosed the matter, that it believed the cash impact of the inconsistencies was not material, although internal investigations and the work of independent auditors were still needed.
Fabio Alperowitch, manager of FAMA Investimentos, said he sold his position in Americanas in 2019 due to the “opacity” of its financial statements.
“All the evidence of misconduct was there,” he tweeted.
“I think this is the biggest scandal I’ve ever seen on the Brazilian stock market,” NCH Capital’s chief investment officer for Latin America, James Gulbrandsen, said in an interview.
($1 = 5.1436 reais)
