The founding shareholders of Choppies stores, Messrs. Ramachandran Ottapathu and Farouk Ismail are threatening legal action against auditors, PwC Botswana. This follows the renowned auditors’ refusal to complete an audit of some of the Choppies subsidiaries for the financial year 2017/2018, which the two directors ascribe to eventual suspension of the retailer from the Botswana Stock Exchange (BSE) bourse.
The virulent threat of potential court action simmers in Choppies’ latest circular whose purpose is to update Shareholders on issues pertaining to the Group. Reports emanating from the Choppies Distribution Centre (CDC) suggest that the two supermarket gurus want possible compensation of P850 million from PwC. At the time of abandoning site, PwC was citing threatened litigation in an action for damages by the significant shareholders of the Company, Messrs. Ramachandran Ottapathu and Farouk Ismail, who are also directors of the Botswana subsidiaries.
Ottapathu and Ismail’s gripe with PwC is on account of alleged failure by PwC Botswana to act on an actual or perceived threat to its independence; breach by PwC Botswana and/or Mr. Rudi Binedell, audit partner, of rules of the relevant code of ethics in respect of independence; and a unjustifiable delay in the completion of auditor’s report of the Company in respect of the financial year ended June 2018.
These, the two founding shareholders of Choppies posit that – it allegedly resulted in the suspension of and a prolonged period of suspension of the shares of the Company trading on the BSEL and Johannesburg Stock Exchange (JSE). “It should be noted that by virtue of the fact that PwC signed the auditor’s report in respect of the financial statements of the Company and consolidated group financial statements for the financial year ended 2018 on 13 December 2019 PwC must have considered the financial statements of the subsidiaries of the Company,” reads Choppies circular to shareholders.
The circular points out that “PwC Botswana resigned as auditors of the Company in respect of all financial periods after 30 June 2018, thereby creating a casual vacancy, in the office of the auditor to the Company, as envisaged in Section 191 of the Companies Act.”The further states that PwC Botswana, certified public accountants in Botswana, (PWC Botswana), signed off the audit report for the Group and holding company annual financial statements for the year ended 30 June 2018 without signing off the audit reports of the Botswana and South African subsidiary companies for the same period.
“The Company has advised the Botswana Accounting Oversight Authority, the Companies and Intellectual Property Authority and Botswana Unified Revenue Services and the South African regulatory and tax authorities of the situation,” reads the circular. Meanwhile on 16 March 2020 PwC Botswana gave notice of termination of their role as auditors of the Botswana Subsidiaries of the Company, in respect of the Botswana subsidiaries of the Company, on the basis of regulations published by the Independent Ethics Standards Board for Accountants (IESBA) as adopted by the Botswana Institute of Chartered Accountants (BICA) in respect of actual or threatened litigation by an audit client or shareholders or management of an audit client which may constitute a threat to independence.
After PwC declined to complete the audits on Botswana subsidiaries, Choppies promoters had to race against time to find a replacement for PwC: “Immediately, upon receipt of such resignation, the Audit Committee of the Board set about achieving the appointment of a replacement, of PwC Botswana as auditor to the Company, in an effort to comply with the provisions of Section 191 of the Companies Act, and communicated with the firms of certified public accountants in Botswana, BDO, Deloitte, Ernst & Young and KPMG. Each of those firms, for various reasons, declined the appointment.”
After the rejections, Choppies found refuge with international audit firm, Mazars, who indicated willingness to be appointed auditors of the Group for the period commencing 1 July 2018 albeit with conditions. Acceptance by Mazaars of the appointment of auditors was subject to:
the on boarding and risk assessments required by Mazars at country, regional and group level, in respect of the Group being satisfactorily completed; examination by Mazars of the financial statements of the Group as of 30 June 2018, and the auditor’s report in respect thereof;
and consultation by Mazars with PwC in respect of various issues identified on the auditor’s report, and the boarding of financial and accounting information for the year ended 30 June 2018. According to the circular as of 17 February 2020, all the formalities were concluded, and the Board appointed Mazars as auditors to the Group, for the period commencing 1 July 2018 and ending 30 June 2019.
Another standoff with KPMG
In respect of the years ended 30 June 2016, 2017 and 2018, the Choppies Group has a logjam with KPMG, certified public accountants in Botswana, (KPMG). “KPMG signed off on the Auditor’s Report in respect of the Company and consolidated Group financial statements for the 2017 financial year and the Annual Report and such financial statements were approved by shareholders at the annual meeting of shareholders in November 2017 and KPMG was replaced as Group Auditors by shareholders at an extraordinary meeting in February 2018, audit reports for the annual financial statements of the Group’s Botswana and South African subsidiary companies were not signed off by KPMG for the 2017 and, in some cases, the 2016 financial year.”
The circular states that this situation came to light around November 2019 where after the Company engaged with KPMG to rectify the situation but without any success leading up to KPMG refusing to complete such audits and “terminating” all agreements with the Group and its subsidiaries in a letter dated 21 January 2020. “The Company responded to the letter, with particular reference to the so called “termination” of agreements, and reserved its position as against KPMG. However, the situation is that KPMG has refused to complete such audits,” reads the circular.
Sale of SA operations
The circular notes that on the 25 February 2020 the Competition Commission of South Africa issued a Merger Clearance Certificate in terms of which the Commission approved the merger brought about by the acquisition by Kind Investment (Pty) Limited of the shares and claims of the Company in its four South African subsidiaries, without conditions. “The conditions precedent to the agreement for the sale of shares and claims in the South African subsidiaries of the Company have thus been fulfilled. The effective date of the sale is, in terms of the agreement, the 1st of April 2020.
It is now for the parties to meet and undertake the stocktake and valuation of assets and liabilities as at the effective date, in order to calculate any residual liability of the Company to contribute funds to its South African subsidiaries in respect of the net equity value thereof, in order to close the transactions and the sale.” According to Choppies promoters, it is anticipated that this process will take place (as set forth in the agreement) at the end of March 2020 to complete by 1st of April 2020.
Discontinuation of Operations in loss-making markets
In order to stabilise the business and enhance Shareholders’ value, Choppies has exited all the lossmaking markets. In Mozambique, operations closed in September 2019 and majority of the equipment has been moved to Choppies Zambia.As for Tanzania, operations closed in November 2019 and all efforts are being made to sell the equipment and clear the outstanding liabilities. Meanwhile in Kenya operations have since been scaled down to only two stores and negotiations are on-going to sell equipment to local operators and/or existing landlords to clear some of the outstanding liabilities.
An international report complied in South Africa dubbed ‘Legal Gender Recognition in Botswana’ says that the transgender and gender non-conforming people in Botswana live a miserable life. The community experiences higher levels of discrimination, violence and ill health.
In this report, it has been indicated that this is because their gender identity, which does not conform to narrowly define societal norms, renders them more vulnerable. Gender identity is a social determinant of health, which means that it is a factor that influences people’s health via their social context, their communities and their experiences of social exclusion. The Ministry of Health and Wellness has recognized this, and transgender people are considered a vulnerable population under the Botswana Second National Strategic Framework for HIV and AIDS 2010-2017.
In a recent study that shed light on the lived experiences of transgender and gender non-conforming people in Botswana, transgender persons often experience discrimination because of their gender identity and expression. The study was conducted by the University of Cape Town, LEGABIBO, BONELA, as well as Rainbow Identity Association and approved by the Health Ministry as well as the University of Botswana.
Of the 77 transgender and gender non-conforming people who participated in the study, less than half were employed. Two thirds, which is approximately 67% said that they did not have sufficient funds to cover their everyday needs. Two in five had hidden health concerns from their healthcare provider because they were afraid to disclose their gender identity.
More than half said that because of their gender identity, they had been treated disrespectfully at a healthcare facility (55%), almost half (46%) said they had been insulted at a healthcare facility, and one quarter (25%) had been denied healthcare because of their gender identity.
At the same time, the ‘Are we doing right’ study suggests that transgender and non-conforming people might be at higher risks of experiencing violence and mental ill-health, compared to the general population. More than half had experienced verbal embarrassment because of their gender identity, 48% had experienced physical violence and more than one third (38%) had experienced sexual violence.
The study showed that mental health concerns were high among transgender and gender non-conforming people in Botswana. Half of the transgender and gender non-conforming study participants (53%) showed signs of depression. Between one in four and one in six showed signs of moderate or severe anxiety (22% among transgender women, 24% among transgender men and 17% among gender non-conforming people).
Further, the study revealed that many had attempted suicide: one in three transgender women (32%), more than one in three transgender men (35%) and three in five gender non-conforming people (61%).
International research, as well as research from Botswana, suggests that not being able to change one’s gender marker has a negative impact on access to healthcare and mental health and wellbeing. The study further showed that one in four transgender people in Botswana (25%) had been denied access to healthcare. This is, at least in part, linked to not being able to change one’s gender marker in the identity documents, and thus not having an identity document that matches one’s gender identity and gender expression.
In its Assessment of Legal and Regulatory Framework for HIV, AIDS and Tuberculosis, the Health Ministry noted that “transgender persons in Botswana are unable to access identity documents that reflect their gender identity, which is a barrier to health services, including in the context of HIV. In one documented case, a transwoman’s identity card did not reflect her gender identity- her identity card photo indicated she was ‘male’. When she presented her identity card at a health facility, a health worker called the police who took her into custody.”
The necessity of a correct national identity document goes beyond healthcare. The High Court of Botswana explains that “the national identity document plays a pivotal role in every Motswana’s daily life, as it links him or her with any service they require from various institutions. Most activities in the country require every Motswana to produce their identity document, for identification purposes of receiving services.”
According to the Legal Gender Recognition in Botswana report, this effectively means that transgender, whose gender identity and expression is likely to be different from the sex assigned to them at birth and from what is recorded on their identity document, cannot access services without risk of denial or discrimination, or accusations of fraud.
In this context, gays and lesbians advocacy group LEGABIBO has called on government through the Department of Civil and National Registration to urgently implement the High Court rulings on gender marker changes. As stated by the High Court in the ND vs Attorney General of Botswana judgement, identity cards (Omang) play an important role in the life of every Motswana. Refusal and or delay to issue a Motswana with an Omang is denying them to live a complete and full-filing life with dignity and violates their privacy and freedom of expression.
The judgement clarified that persons can change their gender marker as per the National Registrations Act, so changing the gender marker is legally possible. There is no need for a court order. It further said the person’s gender is self-identified, there is no need to consult medical doctors.
LEGABIBO also called on government to develop regulations that specify administrative procedure to change one’s gender marker, and observing self-determination process. Further, the group looks out for government to ensure members of the transgender community are engaged in the development of regulations.
“We call on this Department of Civil and National Registration to ensure that the gender marker change under the National Registration Act is aligned to the Births and Deaths Registry Act to avoid court order.
Meanwhile, a gay man in Lobatse, Moabi Mokenke was recently viciously killed after being sexually violated in the streets of Peleng, shockingly by his neighbourhood folks. The youthful lad, likely to be 29-years old, met his fate on his way home, from the wearisome Di a Bowa taverns situated in the much populated township of Peleng Central.
CEO of Khato Civils Mongezi Mnyani has come out of the silence and is going all way guns blazing against the company’s adversaries who he said are hell-bent on tarnishing his company’s image and “hard-earned good name”
Speaking to WeekendPost from South Africa, Mnyani said it is now time for him to speak out or act against his detractors. Khato Civils has done several projects across Africa. Khato Civils, a construction company and its affiliate engineering company, South Zambezi have executed a number of world class projects in South Africa, Malawi and now recently here in Botswana.
About ten (10) Umbrella for Democratic Change (UDC) parliamentary candidates who lost the 2019 general election and petitioned results this week met with UDC Vice President, Dumelang Saleshando to discuss the way forward concerning the quandary that is the legal fees put before them by Botswana Democratic Party (BDP) lawyers.
For a while now, UDC petitioners who are facing the wrath of quizzical sheriffs have demanded audience with UDC National Executive Committee (NEC) but in vain. However after the long wait for a tete-a-tete with the UDC, the petitioners met with Saleshando accompanied by other NEC members including Dr. Kesitegile Gobotswang, Reverend Mpho Dibeela and Dennis Alexander.