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How Mphoko helped us circumvent indigenisation law: Choppies CEO

CHOPPIES Enterprises CEO Ramachandran Ottapathu (pictured) reveals details of a boardroom scrap with former Vice President Phelekezela Mphoko and his son, Siqokoqela, for the ownership of Choppies supermarkets.

Ottapathu insists that the Mphokos did not invest a cent in the operation, and were only given 7 percent shares for “facilitating” the Botswana-headquartered retailer’s entry into Zimbabwe.

Controversially, Ottapathu opens himself up to potential criminal charges – along with the Mphokos – by admitting that they had given the Mphokos a further 44 percent shareholding “on paper” to circumvent the country’s indigenisation laws which require locals to maintain majority shareholding in businesses with an annual turnover of over US$500,000.

Mphoko has maintained that as Vice President, he swore to uphold the laws of the country and would not have participated in a patently illegal transaction. He maintains that he and his son own 51 percent of the Zimbabwean operation. The matter is now before the High Court.

Here is Ottapathu’s letter in full:

Editor, my name is Ramachandran Ottapathu. I am the CEO of Choppies, a Botswana-based retail enterprise whose tentacles spread across parts of the African continent.

This message comes on the back of media reports that have sought to play up a narrative that we are trying to wrestle Choppies from the family of the former Vice President of Zimbabwe, Phelekezela Mphoko.

I write to you to lodge my comments regarding these stories and hope that you will allow me some space on your website to explain the situation as it is.

It is a fact that we have had a stake in the Zimbabwean retail industry where we have opened 34 shops in our effort to bring shopping convenience to the people of Zimbabwe.

We are hoping that the situation remains favourable, and should this happen, we endeavour to spread the shops to other parts of Zimbabwe to a point that we will run, in the end, 60 shops in the country.

For the record, dear editor, Choppies Zimbabwe has employed in excess of 2,000 employees countrywide. These employees are also looking forward to a brighter future whose existence will see them being able to cater for their families.

Let me hasten to say that we have, as a business, had a situation where there have been boardroom challenges which do not in any way affect the running of the business.

The matters at boardroom level are matters that are now in the public domain and are also matters that are in the courts of law in Zimbabwe.

In terms of the law, it is called sub judicaire or subjudice for us to delve into issues that are still before the courts.

As a matter of fact, Dear Editor, we would like to state again, for your understanding that Choppies operations in Zimbabwe are owned, in the main, by Choppies Enterprises Limited, a company registered in Botswana.

The reference of the 51 percent being owned by the Mphokos was done so as to comply with legislation which was put in place by the government which precluded foreigners from owning big stakes in businesses in preference to locals. That legislation is being looked at as we write to you because of the vision that the government has to open up the business sector and promote investment.

What we did as Choppies is nothing else than answer the Zimbabwean government’s call to come and invest in Zimbabwe.

We have the family of the former Vice President of the Republic of Zimbabwe, Phelekezela Mphoko, whom we entered into partnership with, now refuting that we are the owners of the business because they are using paperwork that was done in order to comply with the legislation that was in place.

We have documentation to prove that we are the ones who brought in $25 million from Barclays Bank of Botswana, the underwriters of the funding, for the setting up of Choppies operations in Zimbabwe.

We also reiterate that the Mphokos were given the 51 percent shares in an agreement which allows us to buy back the shares as and whenever we want as part of efforts to comply with the law. The Mphokos never invested any cent in the business. We gave them the shares on paper.  Their 7 percent free carry shares was a way of thanking them for facilitating that we set up business in Zimbabwe.

The other 44 percent shares were allotted to them (the Mphokos) to add to the 7 percent free carry shares to make it 51 percent. But that is merely on paper.

According to the shareholder agreement that was signed to facilitate the setting up of the business under Zimbabwean law at the time, the 44 percent shares can be called back at any minute at no cost to Choppies Enterprises, thus leaving the Mphokos with their 7 percent share.

The 7 percent free carry shares can be bought back by Choppies Enterprises at US$1 per share in the event that we want the Mphokos out of the business altogether. We have not yet reached that stage yet.

For the record, Siqokoqela Mphoko and his father, who are shareholders of Nanavac, have all along been getting dividends through their bank accounts for the 7 percent shares they hold and not the 51 percent.

We have proof of transfer and we can furnish you if you so wish.

We are, however, aware of machinations by those that seek to portray themselves as victims and saints to wrestle Choppies Enterprises from its owners – the people of Botswana. They have tried to re-write the Choppies story and we will not be party to that attempt.

The partners know the truth although some are now trying to take advantage of the situation to twist facts in their favour.

All the important and crucial stakeholders know who holds what percentage in the company. They also know who invested what. They also have documents that talk to these issues.

We are, however, disturbed when mature people now want to change facts and maintain they own the enterprise.

There are also claims that I have dispatched people to Zimbabwe to hold talks for the smoking of a peace pipe following the arrest of Siqokoqela Mphoko.

Let me state that I am unaware of those visitors to Zimbabwe.

With regards to Siqokoqela Mphoko’s arrest, this is not a new arrest. His bail was revoked after court officials raised a complaint in court that he was threatening court witnesses, which is illegal.

As part of his bail conditions, he was ordered not to interfere with state witnesses and one would have expected Mphoko’s lawyers to leash him during this period of the court process and stop him from communicating with the witnesses.

We wonder why the lawyers for Mphoko decided to let him loose and do whatever he did to the witnesses.

Dear Editor, let me re-state that we are committed to keeping the Choppies brand in Zimbabwe. We remain committed to ensuring that we continue to serve the people of Zimbabwe. All this will go away if our esteemed  partners remember the initial agreement that we had with them when we first discussed the deal to have Choppies in Zimbabwe.

We firmly believe that our partners should desist from greed and respect the tenets of the agreement that we made and committed ourselves to at the initial stages.

All this drama is not worth the energy that they have put into it. We would rather have the energy being devoted to the growth of the business.

I would believe that what I have addressed above aptly sums up our story and we would appreciate if you would give us space on your website, as you have dedicated space to write about us, to also explain our side of things so that readers would have a balanced view of the situation that is prevailing.

We remain committed, as Choppies, to Zimbabwe and we are here to stay.

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