Choppies Enterprises Chief Executive Officer (CEO), Ramachandran Ottapathu has this week suffered another setback in the continued battle between him and the former President Festus Mogae.
Ramachandran was suspended a fortnight ago by the board reportedly based on recommendations by a certain law firm in South Africa, owing to the recent troubles facing the retail giant. To fight back his suspension, Ottapathu embarked on a mission to lobby Choppies shareholders in a bid to overturn the board’s decision.
However, on Monday this week, Choppies Board in an internal shareholder statement seen by this publication, announced that Ottapathu has no right to call an Extra Ordinary Meeting (EGM) as the requirements of the Companies Act, formal and proper notice of such an EGM must come from the Board.
This publication has learnt that the board has not taken kindly statements by Ottapathu that his suspension was as a result of disagreements with certain board members and/or because he had presented a report that calls for changes in governance at Board and company level. The board indicated that the decision by the board to suspend Ottapathu was as a result of an aggregation of activities and conduct by the suspended CEO which its investigations are still ongoing.
In the board stated in the announcement that the CEO’s suspension was and is valid and proper. They further stated that Ottapathu’s rights and entitlements under the Botswana law have not been infringed and remain protected as would those of any employee of the company. “As the suspended CEO remains an employee of the company during the period of his suspension, such rights and entitlements do not extended to unauthorized disclosures by him of information relating to the Board and the company which may form basis of disciplinary proceedings against him.”
The order of the board highlighted that they were made aware of a document purporting to be a draft notice of an extraordinary general meeting (EGM) of shareholders of the company sent by Ramachandran in his capacity as a shareholder to select shareholders. However, the Choppies supremo believes what triggered suspension was a proposal he had submitted to the company board to have Mogae removed as Board chairman, and also have new faces with relevant retail experience in the board.â€¨â€¨“At his age, he need to know the impact on his productivity level. He was sick also. He has been missing a lot of board meeting until last year September,” Ottapathu said of Mogae in an interviewa fortnight ago.
The suggestion reportedly irked Mogae and the rest of the board, save for Farouk Ismail, who then moved swiftly to have Ottapathu suspended. Choppies board, which is constituted of seven member, including Ottapathu himself had majority to effect the decision, as only Ismail opposed the resolution.â€¨“I came up with suggestions to the board at the request of the shareholders to have restructuring of the board; issues around chairman’s independence. This was not started by me, but when I suggested changes, some people in the board got annoyed,” narrated Ottapathu.
â€¨“They gave me an option, you resign now or we are going to suspend you. I was not prepared to do that. This is the company I started, and they did not even have a replacement. Before I received my suspension letter it was on the social media.”â€¨â€¨The Choppies chief said if it all the decision to suspend him has anything to do with personal vendetta, the decision to suspend him was not in the interest of the company.
“They have been reckless. They do not have the interest of the company at heart that one is for sure, because someone reasonably thinking cannot do this.” Ottapathu said one of the key reasons he wanted the board restructured was the verity that the company was growing, therefore creating necessity for change.â€¨â€¨â€¨“This is one of the fastest growing company in the region. We needed retail or relevant experience in governance, and in the audit committee and in other areas,” said Ottapathu. “I did discuss with the chairman two years ago about relinquishing the power. He said give me time, I will think about it, and I will make the right decision. But he did not do that.”
Choppies was founded by Ismail in the 1980s and was joined by Ottapathu in 1992. Ever since then, the duo built the company into a dominant player in the country and the South African Development Committee (SADC) region. â€¨Ottapathu, Ismail and Choppies employees collectively owns 46 percent of the company stock. Institutional investors owns about 26 percent, while the rest is owned by the public.â€¨â€¨â€¨Ottapathu is of the opinion that the Choppies board, which he said played no role in building the business, are behaving they way they do because they have nothing to lose.
“For them they have nothing to lose. They lose this position of board, they can sit in another board. I do not have any other thing to do in my life. I do not want another entrepreneur to have the same experience that is why I am going to fight it until the last end. I want to set it as an example to make sure it does not happen in another board room.” â€¨
Government is currently sitting on 4 400 vacant posts that remain unfilled in the civil service. This is notwithstanding the high unemployment rate in Botswana which has been exacerbated by the recent outbreak of the deadly COVID-19 pandemic.
Just before the burst of COVID-19, official data released by Statistics Botswana in January 2020, indicate that unemployment in Botswana has increased from 17.6 percent three years ago to 20.7 percent. “Unemployment rate went up by 3.1 percentage between the two periods, from 17.6 to 20.7 percent,” statistics point out.
Leading commercial bank, First National Bank Botswana (FNBB), expects the central bank to sharpen its monetary policy knife and cut the Bank Rate twice in the last quarter of 2020.
The bank expects a 25 basis point (bps) in the beginning of the last quarter, which is next month, and another shed by the same bps in December, making a total of 50 bps cut in the last quarter. According to the bank’s researchers, the central bank is now holding on to 4.25 percent for the time being pending for more informed data on the economic climate.
An audit of the accounts and records for the supply of food rations to the institutions in the Northern Region for the financial year-ended 31 March 2019 was carried out. According to Auditor General’s report and observations, there are weaknesses and shortcomings that were somehow addressed to the Accounting Officer for comments.
Auditor General, Pulane Letebele indicated on the report that, across all depots in the region that there had been instances where food items were short for periods ranging from 1 to 7 months in the institutions for a variety of reasons, including absence of regular contracts and supplier failures. The success of this programme is dependent on regular and reliable availability of the supplies to achieve its objective, the report said.
There would be instances where food items were returned from the feeding centers to the depots for reasons of spoilage or any other cause. In these cases, instances had been noted where these returns were not supported by any documentation, which could lead to these items being lost without trace.
The report further stressed that large quantities of various food items valued at over P772 thousand from different depots were damaged by rodents, and written off.Included in the write off were 13 538 (340ml) cartons of milk valued at P75 745. In this connection, the Auditor General says it is important that the warehouses be maintained to a standard where they would not be infested by rodents and other pests.
Still in the Northern region, the report noted that there is an outstanding matter relating to the supply of stewed steak (283×3.1kg cans) to the Maun depot which was allegedly defective. The steak had been supplied by Botswana Meat Commission to the depot in November 2016.
In March 2017 part of the consignment was reported to the supplier as defective, and was to be replaced. Even as there was no agreement reached between the parties regarding replacement, in 51 October 2018 the items in question were disposed of by destruction. This disposal represented a loss as the whole consignment had been paid for, according to the report.
“In my view, the loss resulted directly from failure by the depot managers to deal with the matter immediately upon receipt of the consignment and detection of the defects. Audit inspections during visits to Selibe Phikwe, Maun, Shakawe, Ghanzi and Francistown depots had raised a number of observations on points of detail related to the maintenance of records, reconciliations of stocks and related matters, which I drew to the attention of the Accounting Officer for comments,” Letebele said in her report.
In the Southern region, a scrutiny of the records for the control of stocks of food items in the Southern Region had indicated intermittent shortages of the various items, principally Tsabana, Malutu, Sunflower Oil and Milk which was mainly due to absence of subsisting contracts for the supply of these items.
“The contract for the supply of Tsabana to all depots expired in September 2018 and was not replaced by a substantive contract. The supplier contracts for these stocks should be so managed that the expiry of one contract is immediately followed by the commencement of the next.”
Suppliers who had been contracted to supply foodstuffs had failed to do so and no timely action had been taken to redress the situation to ensure continuity of supply of the food items, the report noted.
In one case, the report highlighted that the supplier was to manufacture and supply 1 136 metric tonnes of Malutu for a 4-months period from March 2019 to June 2019, but had been unable to honour the obligation. The situation was relieved by inter-depot transfers, at additional cost in transportation and subsistence expenses.
In another case, the contract was for the supply of Sunflower Oil to Mabutsane, where the supplier had also failed to deliver. Examination of the Molepolole depot Food Issues Register had indicated a number of instances where food items consigned to the various feeding centres had been returned for a variety of reasons, including food item available; no storage space; and in other cases the whole consignments were returned, and reasons not stated.
This is an indication of lack of proper management and monitoring of the affairs of the depot, which could result in losses from frequent movements of the food items concerned.The maintenance of accounting records in the region, typically in Letlhakeng, Tsabong, and Mabutsane was less than satisfactory, according to Auditor General’s report.
In these depots a number of instances had been noted where receipts and issues had not been recorded over long periods, resulting in incorrect balances reflected in the accounting records. This is a serious weakness which could lead to or result in losses without trace or detection, and is a contravention of Supplies Regulations and Procedures, Letebele said.
Similarly, consignments of a total of 892 bags of Malutu and 3 bags of beans from Tsabong depot to different feeding centres had not been received in those centres, and are considered lost. These are also not reflected in the Statement of Losses in the Annual Statements of Accounts for the same periods.