A PricewaterhouseCoopers (PwC) report found that the valuation underpinning the award appears to have counted third-party rental income twice â once in valuing the airportâs operating business and again in valuing its property. Other airport income may also have been duplicated.

The dispute dates back to June 2013, when the PIC lent Acapulco Trade and Invest 164 R333.25-million to help it acquire 25% of Lanseria Holdings. The loan fell due on 1 July 2023 but was not repaid.

Acapulcoâs shares had been pledged as security. After the default, the PIC was registered as their holder in November 2024. Any fair value above Acapulcoâs outstanding debt was payable to the company.

Public accounting firm BDO initially valued the stake at about R238-million in a draft report, but after Acapulco objected, both parties terminated its mandate.

Accounting firm Crowe JHB was then appointed to value the shareholding, supported by Mills Fitchet, which valued the airport property. Croweâs engagement letter expressly required it to incorporate the property valuation without double counting.

Croweâs draft report, issued on 3 December 2024, valued Acapulcoâs stake at R550-million. Its final report six weeks later increased this to R1.04-billion after changing the treatment of the property valuation. PwC said no revised draft appears to have been circulated before the final certificate was issued.

âNo double countingâ

Crowe maintained that there was no double counting because the operating cash flows and property value related to different group companies. However, Mills Fitchet later confirmed to PwC that third-party leases had been included in its property valuation.

PwC found that the Crowe and Mills Fitchet reports appeared to use the same rental income. Recoveries, parking, fuel and oil sales, aviation revenue, ticket parking, fibre income and utility recoveries may also have appeared in both calculations.

In plain terms, Crowe valued income generated by the airport operations and then added the full value of property that was itself valued partly on the income it generated. PwC said only the vacant land should have been added to the operating valuation.

Crowe did not give PwC access to its underlying valuation model, or participate without the consent of both the PIC and Acapulco. Acapulco withheld permission. PwC therefore qualified its finding, saying the duplication was apparent from the available reports and correspondence but it could not independently recalculate Croweâs model.

The PIC rejected Croweâs valuation in January 2025, describing the duplication as a fundamental or patent material error. The dispute proceeded to expedited arbitration.

PwC found that the PICâs PSG expert did not address whether Croweâs calculation contained a âmanifest errorâ in his written report and acknowledged during testimony that he did not know what the term meant. Crowe was not called and its calculations were not placed before the panel.

âNot invalidated by manifest errorâ

The panel nevertheless found that the Crowe valuation was not invalidated by manifest error. In discussing double counting, its award cited a Wikipedia article for the proposition that âthere is no consistent system of accounting rules that can eliminate double countingâ.

PwC said this contradicted accounting and valuation guidance. IAS 40 requires fair-value measurements of investment property to avoid counting assets, liabilities or economic benefits more than once. Croweâs engagement letter also required the risk to be corrected through reconciliation rather than accepted as unavoidable.

Both expert witnesses acknowledged during the arbitration that Croweâs valuation included third-party rental cash flows twice, the report said. PwC could not establish how the panel reconciled that evidence with Croweâs insistence that no duplication had occurred.

After receiving legal advice that its prospects of setting aside the award were poor, the PIC paid Acapulco R411.28-million on 15 October 2025 and a further R21-million on 3 November. DM