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€¨
Botswana Democratic Party (BDP) leadership has indicated that the party is not worried about the Memorandum of Understanding (MoU) signed by opposition parties to support each other in the upcoming bye-elections.
Umbrella for Democratic Change (UDC), which comprise three opposition parties; Botswana National Front (BNF), Botswana People’s Party (BPP) and Botswana Congress Party (BCP), recently agreed terms with other opposition entities; Botswana Patriotic Front (BPF) and the Alliance for Progressives (AP).
The duo of AP — a splinter part of Botswana Movement for Democracy (BMD) — and BPF — a splinter of the BDP— did not contest under the ambit of UDC in the 2019 general election. The two parties have a combined four seats in parliament and a combined popular vote of 74 000 from the 2019 general election.
The signing of the MoU on bye-election is seen as a giant step by the opposition to consolidate their efforts against the BDP in the 2024 general election.
Unveiling the 11 candidates that will represent the party in the bye-elections billed for 18 December 2021, BDP Chairman Slumber Tsogwane stated that the cooperation of opposition parties to gang against the ruling party is not a new development in Botswana and that BDP has always emerged top in the face of such collaboration.
Tsogwane indicated that, as per reports, opposition parties had challenges relating to the allocation of wards, which were only resolved after the intervention of the leader of UDC, Advocate Duma Boko.
“We are not frightened by opposition cooperation. It is not happening for the first time. We have tasted it before. They tried in 2019, and it did not work,” Tsogwane said buoyantly. “We still want to face them as a united block in 2024 because BDP is a giant that can only be tried by a united opposition.”
Tsogwane’s sentiments were shared by party secretary-general Mpho Balopi, who also believe that opposition cooperation is a non-starter. He said, in 2019, BDP increased its popular vote, despite BCP having joined the ranks after not partaking in the 2014 general elections. “They believed that based on 2014 numbers, the BCP joining UDC will give them power, but that was not the case,” Balopi said.
BDP increased its popular vote from 46.4 percent in the 2014 general elections to 52.6 percent in the 2019 general election. The 2014 general election was BDP’sBDP’s worst in history, with the party garnering a popular vote below 50 percent for the first time since independence. BDP also increased its seat by one in the last general elections. Meanwhile, the opposition garnered 19 seats in 2019 compared to 20 in the 2014 general election.
“They [opposition parties] have been doing so since 2011 after the formation of Botswana Movement for Democracy in 2010. It is not a question of what are we going to do as the BDP. It is about what we have done in the past,” said Balopi. Balopi, who first became party secretary-general in 2011, led the BDP to the 2014 and 2019 general elections.
Last weekend, BDP held primaries in seven wards to choose candidates to represent the party in the 18 December bye-election. Meanwhile, four wards agreed to settle for compromise candidates.
The wards are going for elections on 18 December are the following; Nkgange North Ward (Nkange), Tamasane Ward (Mmadinare), Khwee Ward (Boteti East), Tumasera-Seleka Ward (Sefhare-Ramokgonami), Ga-Molopo Ward (Goodhope-Mabule), Lorolwane Ward (Mmathethe-Molapowabojang), Moshupa East Ward, (Moshupa-Manyana), Boseja South Ward (Mochudi East), Metsimotlhabe Ward (Gabane-Mmankgodi), MotokweTsetseng Ward (Takatokwane), Lentsweletau West (Lentsweletau-Mmopane).
Following the conclusion of the MoU agreement, BNF has been allocated six wards to contest. The wards are Boseja South, Khwee, Lorolwane, Moshupa East, Motokwe and Ga-Molopo. The BNF will, however, hold primary elections in Khwee while other wards settle for compromise candidates.
BCP will contest in Tumasera-Seleka Ward, Nkange North Ward and Metsimotlhabe Ward. An agreement has been reached that Metsimotlhabe Ward, despite being allocated to BCP, will field an AP candidate to warm up opposition unity talks for the 2024 general election. AP has also been awarded Lentsweletau East Ward.
Meanwhile, the new kid in the bloc, BPF, has managed to get Tamasane Ward in Mmadinare. It was also given Lorolwane Ward on paper, but it has decided to field a BNF candidate at the ward.
A proposal by the private security companies operating in the cash business for firearm licensing, sent to government for consideration, has called on government to speedily consider licensing private security companies operating in the cash business as a panacea to the prevailing cash heists.
The companies say they do not seen why they cannot be armed because all the countries surrounding Botswana within the SADC region have a provision for armed private security. This, they say, has been the case for many years with South Africa, Namibia, Lesotho, Zambia, and Angola all having this security measure in place and in many cases, for the last three decades.
“In all of these countries, the law provides that private security companies are entitled to use firearms subject to conditions under the law. For instance, in Angola private security personnel may only use firearms provided they have undergone competency training and are also required by law to keep registry and tracking of the licenced firearms. In many of these countries, armed private security does not only include for cash operations (including cash in transit) but extends to both the alarm response and to man-guarding services (a case in point being Namibia and South Africa),” reads the proposal.
The proposal further says this situation is further exacerbated by the fact that the Botswana currency is generally stronger than all other currencies in the region making it an attraction to would-be criminals. “Additionally the fact that this currency can be exchanged in any of the countries bordering it with relative ease, makes it an even more attractive avenue,” reads the proposal.
The estimated size of the cash in transit business, according to the companies, is estimated at over BWP 120m annually with over 160 daily delivery and collections between clients, the Central bank and the security company’s cash centres and automated teller machines (ATM’s).
There are currently five security companies providing the CIT services in Botswana.Despite operating in the same security threat environment, and in many instances transporting high value consignments as the Government transfers, private security companies say they do not have the same armed escorts accorded to government consignments like cash and diamonds, as they are not licenced to carry firearms by law.
“With the advent of increased security threats (as evidenced by the number of attempted and successful heists), these businesses require the same level of security in the form of having licenced firearms in order to provide their own armed escorts to ensure that there is sufficient cover and provide a deterrent to would-be criminals. The current arrangement of using Police escorts for private security, while effective as the Police are armed and acts as a deterrent, is not sustainable both in terms of resourcing and cost,”
Explaining how government handles own cash transfers, the companies says the government enlists armed Police escorts when moving high value consignments, in particular when transferring cash from and to the Central Bank due to the high risk associated with this movement.
“This acts as a deterrent to ensure that there are no attacks on these consignments. This has proven to be an effective deterrent as criminals, knowing that the Police are armed, do not attempt to attack these transfers and to date there has not been a case reported on these despite the number of years this service has been in place,” stressed the companies in the proposal.
The companies dismissed claims that the licensing may in some ways be misused saying the government through the Arms and ammunition board has always conducted raffle draws for both shotgun and rifles for members of the public in order to access firearms licences. This, they say, has been ongoing for many years but there have not been serious incidents of misuse.
“This provides a view that where there are proper control mechanisms in the issuance of firearm licences, public safety can still be guaranteed,” they observed.
Recommendations by Private Security Companies
Private security companies with Cash businesses request to be allowed to have licenced firearms in order to establish and run their own escort services. This is the only service to access firearms to mitigate the current risk. This will be subject to, amongst other requirements.
Strict criteria to be formulated in relation to the training of the officers who will use the firearms including continuous retraining at specified intervals. Firearms register to be developed with tracking capability and auditable by the authorities at all times. Firearms are retired by the officers at the end of duty on a daily basis and issued the following working day.
There will be a requirement for psychological evaluation for officers to be issued with firearms including ongoing evaluations at various intervals. The cash businesses will need to demonstrate the number of firearm licences required in line with the size of their cash businesses; approval to be based on proportionality to the required escort service and satisfaction
The need for firearm licencing is further demonstrated by the nature of the business in that private clients invest in security companies for safe custody and transfer of their cash assets hence the security companies require to be effectively prepared to match these requirements and expectations that comes with this.
The companies proposed two models to be adopted, the first being for the provision for arming tactical teams that will provide escorts for the cash businesses. These teams will be in-house and the company is the one being licenced. The second is the provision for arming CIT crews (driver and crew man) across the cash business
The companies further warned that this has to be taken seriously because the Cash In Transit service is critical to the daily functioning of the money economy by ensuring that cash circulation is optimally maintained.
Major clients such as banks and retailers, they said, depend on this service for successfully running their businesses. “For these clients, same day value in money transfers is crucial as customer demands are increasingly high to be able to withdraw and deposit money at ATM’s without disruption and in the case of retailers deposits made are required for working capital on a daily basis. Disruption in the provision of the service, as is the case where the security of the service is affected due to armed robberies, results in the disruption to the functioning of these sectors and the associated losses incurred,” they concluded.
The Auditor General’s report for 2019/2020 shows how hundreds of orphans could not benefit from an account holding billions of Pula because officials at the Department of Social Protection under the Ministry of Local Government and Rural Development slept on the job.
Also robbed of the opportunity to benefit from the programme were vulnerable children.
The report reveals that the Department had outsourced beneficiary payments to Botswana Post, Sandulela Telecom Botswana and Smartswitch Botswana (Pty Ltd). Each service provider was engaged to effect payments for specific elements of the beneficiary packages. The Department disbursed a total of P3.3 billion from 2016/2017 to 2019/2020.
“However, the Department had lost control of the key financial operations to the service providers, who had breached the terms of the Memorandum of Agreement (MoA) on numerous occasions,” the report says.
The report says that a Memorandum of Understanding between the department and service providers requires engaged companies to ‘consolidate, verify and return all unclaimed payments to Client, together with a list of beneficiaries who did not claim such payments’. Such information must be submitted after every three (3) months for reconciliation.
“However, the service providers on numerous occasions contravened the terms of the agreement, as they took a substantial amount of time beyond the stipulated period to return unclaimed monies. Instances were noted where Sandulela took unduly long, even up to 21 months to submit returns to the Government,” the report says,
The report states that Sandulela held an average of P6.2 million in unclaimed cash allowances during this period, thereby denying the Government the opportunity to invest the monies elsewhere and earn interest.
Regarding the MoA, the report says that Botswana Post and Sandulela Telecom were required to open separate bank accounts to be used ‘solely for the social benefits cash allowances in the Agreement and the interest accrued in that account shall be reimbursed to the Client’. The agreement also provided that the service provider may keep the monthly unclaimed cash component for a period not exceeding three months with interest accrued thereon.
In line with their obligations, says the report, the Department credited Botswana Post and Sandulela Telecom with P2.3 billion and P371 million, respectively, for social welfare grants payroll for 2016/2017 to 2019/2020. Some of the beneficiaries did not collect their cash allowances monthly, and these had accumulated to P66 million for Botswana Post and P9 million for Sandulela Telecommunication Botswana.
“Based on the above observations, the Government could have earned interest on the unclaimed cash allowances if they had been returned as prescribed. As such, the service providers did not fully abide by the terms of the agreement,” the report says.
The report found that the agency fees for each invoice were based on the number of beneficiaries paid in a period multiplied by the rate prevailing at a specific location. It was observed that the Client did not receive reconciliation reports showing paid and unpaid allowances in time to update the Social Benefit and Reconciliation System (SOBERS) application system.
“Therefore, the credibility of the amount as calculated in the invoice could not be reasonably assured. The P47 million and P142 million agency fees paid to Sandulela and Botswana Post respectively for a period of 4 years may not be reflective of the number of beneficiaries paid,” the report says.
Retarding the Beneficiary Management Process, the report shows that the beneficiary registration system had some deficiencies, which resulted in delays in updating the monthly payroll with newly approved beneficiaries. Some beneficiaries had to wait for up to 5 years before they could receive the cash allowance, consequently defeating the programme’s key objectives.
“A total of 2 270 social grant beneficiaries who passed on from as far back as 1997/1998 were removed from the payroll in 2017/2018 and 2018/2019, which meant that some of them had remained active in the payroll for more than 20 years after their death. The Department had deposited their share of cash allowances amounting to over P17 million with the service providers, and there was no evidence of interest paid to the Client on this amount,” the report says.
In addition, the report says, cash allowance for 50 beneficiaries was claimed even though they were deceased. The audit could not rule out the misappropriation of P185 545 in payments to non-existent beneficiaries.
In terms of the Child in Need of Care (CNC) and the Community Home Based Care (CHBC) programmes, the report says, children require a special diet prescribed by a paediatrician to be enrolled. For that reason, the food parcels should include the prescribed food items only. According to the report, this proved to be easy to manipulate since the Smartswitch card did not have any restrictions established specifically for CNC.
“The Department of Social Protection (DSP) is in partnership with 9 NGOs, whose main aim is to protect the orphans and vulnerable children. The implementation of the programme includes key activities assigned to the District Councils,” says the report.
Therefore, the report says that the exchange of crucial information reports between the two parties is vital for the Client to be up-to-date with the operations to execute their mandate. The oversight role was therefore considered ineffective due to the following:
The NGOs did not provide quarterly narrative reports, financial reports and annual audited financial statements to account for transactions on their operations, which was in breach of the MoA. The Botswana National Plan of Action for Orphans and Vulnerable Children for 2010-2016 requires DSP to establish an independent body to provide oversight comprising development partners; however, this had not been done.
The DSP did not establish the Monitoring and Evaluation Committee as required by the National Monitoring & Evaluation Framework, whose mandate was inter-alia to ensure that Local Authorities effectively account for funds disbursed to them and establish whether they had been utilized for the intended purposes.
As a result, the report says the “Department had lost control of and had abdicated their responsibility and accountability for funds approximating P806 million disbursed between 2016/2017 and 2019/2020 to the NGOs and Local Authorities.”
It says that while the objectives of different classes of social grants may have been met, it is nevertheless of paramount importance that all the prescribed criteria in all the authorities are complied with for sound management of the programme.