The war for Choppies
Zimbabwean shareholders in the Botswana-based multinational grocery and general merchandise retailer Choppies Enterprises have accused the company’s other shareholders of trying to “capture” them like the “Guptas did in South Africa”.
Choppies is in partnership with Zimbabwean company Nanavac Investments, which is owned by that country’s former second deputy president, Phelekezela Mphoko, and his son, Siqokoqela.
Nanavac is, according to a shareholder’s agreement that City Press has seen, a 51% shareholder in 32 outlets across Zimbabwe.
This arrangement is in line with Zimbabwe’s indigenisation law.
The shareholders’ agreement was apparently signed on July 24 2013 and thereafter, Zimbabwe’s ministry of youth development, indigenisation and empowerment gave the 51%:49% shareholding arrangement its stamp of approval.
However, Choppies Enterprises, which has Botswana’s former president Festus Mogae as its chairperson, claims Nanavac’s interest in the business is a mere 7%.
Choppies’ claims about the shareholding split has sparked a fracas since June 1, when Mogae wrote a letter to the Mphokos, claiming they were given the 7% shareholding free of charge.
Siqokoqela, however, denied the shares were free and showed City Press a loan agreement which shows that Nanavac borrowed $20 million (R297.4 million) from Choppies that would be paid on “revenue from the trading activity” for a period of six months.
Mogae’s missive reads: “We entered into this partnership with a clear understanding of the shareholding of 93% shares to Choppies Enterprises Ltd and 7% to the Mphoko family, free of charge. We signed agreements based on this, and even the former president’s office has got copies of these agreements.
“You are well aware that I had access to former president RG [Robert] Mugabe and I did clear this with him in the presence of former foreign minister, Honourable Simbarashe S Mumbengegwi.
“I have the same access to the current president as I had to the previous one.”
Mogae warns that Choppies did not intend taking the matter to the public domain.
“As a local partner, your family got the best deal from the whole group. Your family is actually getting much more salary than what the group chairman is earning. I paid 15 000 000 pula (R21 million) for my shares. I expect you to appreciate this and show respect to our agreement and long-lasting relationship,” he added.
Siqokoqela called Choppies’ chief executive officer (CEO), Ramachandran Ottapathu, “mafia in a CEO’s suit”.
“I mean, how can he claim he has 93% of a company, which is in a reserved sector?” he said.
Siqokoqela said that Ottapathu was taking him and his wife to court as part of a plan to oust the family from the company.
The legal action relates to Siqokoqela collecting cash from the tills – and for this, Choppies has laid 170 charges of theft and fraud amounting to $51 000.
“What’s the difference between these guys and the Guptas?” said Siqokoqela.
“He has threatened me with heavy politicians here, saying they are behind him. We would like him to name those politicians who have been captured by him,” he said.
Siqokoqela admitted to sending his wife to take some cash from the tills, and provided WhatsApp conversations he had with the accounts manager requesting cash.
“In Zimbabwe, we have a cash crisis. My wife and I were building our house and most businesses here require you to purchase materials using cash. Then I arranged with my accounts manager and asked him to arrange cash for my wife to the sum of $15 000 in bonds … this was agreed,” he said.
Siqokoqela added that “all hell broke loose” when he inquired about a large amount of money that came into the account, which was impossible from sales in Bulawayo.
These relate to daily cash sales which apparently shot up from $90 000 to $590 000, some of which he said happened long after pay day.
Siqokoqela said Choppies had not acceded to his requests for a forensic audit.
CHOPPIES ENTERPRISES RESPONDS
Ottapathu said he was unable to offer a “running commentary” on all of City Press’ questions because they were the subject of court proceedings in Zimbabwe.
A key question City Press had asked, but received no answer to, related to the shareholding and documents that Siqokoqela provided to prove that he and his father were 51% shareholders of Choppies in Zimbabwe.
Ottapathu, however, said that Siqokoqela had been taking money from the tills in various supermarkets since June last year.
“He misrepresented to Choppies employees that, as a director, he is entitled to take money from the company via the tills,” he said.
Ottapathu said Siqokolela was asked to stop doing so, but he persisted, resulting in the 170 counts of fraud and theft being laid against him.
“As far as Choppies management is concerned, Mr Mphoko has been taking money, goods and services not due to him. It is estimated that the overall financial cost to the company is in excess of $51 000,” Ottapathu said.
Choppies operates in eight countries:
Botswana, South Africa, Zimbabwe, Zambia, Kenya, Tanzania, Mozambique and Namibia.
The company is listed on the JSE and the Botswana Stock Exchange.
Its target is to invest $22.2 million in an expansion drive to increase its 217 stores to 250.
In South Africa, the company’s stores are mostly situated in North West, and it is aiming to expand to KwaZulu-Natal.
For the six months to December 2017, Choppies reported revenue of 5.8 billion pula, up 22% from the same six months in 2016, including 2.1 billion pula generated in South Africa.
During the six months to December 2017, Choppies generated a net profit of 73 million pula, up 5% from the same six months in 2016.
Choppies started with a single store in Botswana in 1986. The group employs 17 000 people. Choppies shares on the JSE on Friday were quoted at R1.80, which valued it at R2.2 billion.* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER