Choppies CEO spills the beans ‘Mphoko never invested a cent in the business’
FORMER Vice President Phelekezela Mphoko’s family did not invest a cent in the Choppies business whose majority ownership belongs to the Botswana-headquartered retail group, chief executive officer, Mr Ramachandran Ottapathu, has revealed.
Responding to recent squabbles over the control of Choppies Zimbabwe, pitting former VP Mphoko’s family and its Botswana business partners, Mr Ottapathu said Choppies Enterprises belongs to the Botswana firm, which invested $25 million to set up the business.
In a letter, issued through a consultancy to different media houses in Zimbabwe, he said the media narrative about Choppies boardroom fights has lacked appreciation of real substance around the controversy.
“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,” said Mr Ottapathu.
“As a matter of fact, we would like to state… 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 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.”
Choppies runs 34 branches in Zimbabwe and had indicated plans to increase its local network to 60. The company employs in excess of 2 000 workers. President Mnangagwa’s Government has since reviewed the Indigenisation and Economic Empowerment Act and clarified that the 51-49 percent requirement only applies to natural resource-based investments. As such, Mr Ottapathu said, as Choppies they did nothing else than answer the Zimbabwean government’s call to come and invest in Zimbabwe.
“We have had the family of the former VP of the Republic of Zimbabwe, Phelekezela Mphoko, whom we entered into a 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 legislation that was in place,” said Mr Ottapathu.
He said they have documentation to prove they invested $25 million, which was underwritten by Barclays Bank of Botswana, for the setting up of the Choppies Zimbabwe operation.
“We also reiterate that the Mphokos were given the 51 percent shares in an agreement which allows us to comply with the law. Mphoko never invested any cent in the business. We gave them the shares on paper,” said the Choppies CEO.
“Their seven 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 seven 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, Mr Ottapathu said the 44 percent shares “can be called back” at any minute at no cost to Choppies Enterprises, thus leaving Mphokos with their seven percent share.
“The seven percent free carry shares can be bought back by Choppies Enterprises at US$1 per share in the event that we want Mphokos out of the business altogether. We have not yet reached that stage yet,” he said.
“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 seven percent shares they hold and not the 51 percent. We have proof of transfer and we can furnish you if you so wish.”
Mr Ottapathu said there were machinations to seek to wrestle the Choppies Enterprises from its owners through peddling misleading narratives about the company. He said the business 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”.
Meanwhile, last week Siqokoqela was arrested and remanded in custody after he violated bail conditions by harassing State witnesses. He is facing 170 counts of fraud and theft. It is alleged that as country managing director, he hijacked the Choppies retail business and “looted” more than $50 000 worth of cash and goods from the outlets countrywide without board approval.
Despite these squabbles, Mr Ottapathu said Choppies remains committed to continue serving the Zimbabwean market.
“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,” he said.