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Ram, Farouk take aim at PwC with court action threat

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.

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Botswana still weighing in on Maseko’s assassination

27th January 2023

The Minister of Foreign Affairs, Dr. Lemogang Kwape says Botswana has not taken any position regarding the killing of a renowned human rights lawyer, Thulani Maseko, who was gunned down at his house in Mbabane, Eswatini.

In a brief interview with WeekendPost, Dr Kwape said Botswana has not yet taken any position regarding his death. He said the purported incident should be thoroughly probed before Botswana can form an opinion based on the findings of the inquiries.

“Botswana generally condemns any killing of human life by all means,” says Dr. Kwape. He wouldn’t want to be dragged on whether Botswana will support the suspension of Eswatini from SADC.

“We will be guided by SADC organ Troika if they can be an emergency meeting. I am not sure when the meeting will be called by Namibian president,“ he said.

However, the Namibian president Hage Geingob notes with deep concern reports coming out of Eswatini about the killing of Mr. Maseko. In a statement, he called upon the “Government of the Kingdom of Eswatini to ensure that the killing of Maseko is swiftly, transparently and comprehensively investigated, and that any or all persons suspected of committing this heinous crime are brought to justice.”

Maseko was chairperson of the Multi-Stakeholder Forum which was established as a coalition of non-State actors to advocate for a process of national political dialogue aimed at resolving the security and political challenges confronting the Kingdom.

“SADC expresses its deepest and heartfelt condolences to the family of Mr. Maseko, his friends, colleagues, and to the people of the Kingdom of Eswatini for the loss of Mr. Maseko. In this context, SADC further calls upon the people of the Kingdom of Eswatini to remain calm, exercise due care and consideration whilst the appropriate structures conduct the investigations and bring the matter to completion,” the statement says.

Geingob reiterated the need for peaceful resolution of the political and security challenges affecting the country.

Meanwhile political activists are calling on SADC to suspend Eswatini from the block including the African Union as well.

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Kopong Murder: Accused interferes with witnesses again!

27th January 2023

State prosecutor, Seeletso Ookeditse revealed before the Broadhurst Magistrate Jobbie Moilatshimo that the third accused involved in the murder of Barulaganye Aston, has interfered with the State witnesses again.

The second and third accused (Lefty Kosie and Outlwile Aston) were previously accused of interference when they were caught in possession of cellphones in prison. They were further accused of planning to kill the deceased’s brother, who is currently the guardian to the children of the deceased.

Ookeditse indicated that Outlwile had earlier went to challenge the magistrate’s decision of denying him bail at the High Court before Judge Michael Motlhabi.

“The third accused approached the High Court and made a bail application, which was dismissed on the same day,” Ookeditse said.

However, even after the High Court verdict on their bail application, the duo (Kosie and Aston) has once again applied for bail this week.

Ookeditse plead with the court to stop the accused from abusing the court process.

“Yesterday, Directorate of Public Prosecutions (DPP) received papers of his bail application filed before the Broadhurst Magistrates Court. However, the papers do not speak to changed circumstances, therefore this back and forth about bail must be put to a stop,” said the State prosecutor.

While giving evidence before court, the Investigations Officer, Detective Inspector Quite Zhalamonto, said his investigations have proved that there is interference continuing regarding the accused trio.

He told the court that on the 12th of January 2023, he received a report from Thato Aston, who is the son of the accused and the deceased. The son had alleged to the Investigation Officer that he received a call from one Phillip Molwantwa.

According to Zhalamonto, Thato revealed that Molwatwa indicated that he was from prison on a visit to the Outlwile Aston and went on to ask where he was staying and where his siblings (Aston’s children) are staying.

“Thato revealed that Phillip went on to ask if he or his siblings saw their father murdering their mother, and he was referring to the crime scene. Thato told me that he, however, refused to answer the questions as he was afraid especially because he was asked about where him and his siblings stay,” said Zhalamonto.

Zhalamonto alluded to the court that he then went to Orange to confirm the communication between Thato and Molwantwa where he found the case.

“I have arrested Philip yesterday and when I interviewed him, he did not deny that he knows Aston and that he has indeed called Thato and asked questions as to where him and his siblings resides even though he failed to give reasons for asking such questions,” Zhalamonto told the court.

He further revealed that Molwantwa indicated that he had received a call from an unknown man who refused to reveal himself.

“Phillip told me that the unknown man said he was sent by the accused (Aston), and that Aston had instructed him to tell me to check if there was still some money in his bank accounts, and he also wanted to know where the kids were residing, the unknown man even asked him to meet at Main Mall” the Investigation Officer told the court.

He further informed the court that he is working tirelessly to identify the “unknown caller” and the route of the cell number.

Furthermore, the fourth accused, Kebaleboge Ntsebe, has revealed to the court through a letter that she was abused and tortured by the Botswana Police Services. She wrote in her letter that she suffered miscarriage as a result of being beaten by the police.

Ntsebe is on bail, while a bail ruling for Aston and Kosie will be delivered on the 6th of next month

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Ngamiland Cattle Farmers Gain Green Zone Revenue

27th January 2023

Cattle farmers from Eretsha and Habu in the Ngamiland district, supported by the Community Based Trade (CBT) project, recently generated over P300 000.00 for sales of 42 cattle to the Botswana Meat Commission (BMC) in Maun. This milestone was achieved through support from various stakeholders in conservation, commodity-based trade and the government, in collaboration with farmers. Ordinarily, these farmers would not have made this direct sale since the area is a designated Foot and Mouth Disease (FMD) Red Zone.

Traditional livestock farming contributes toward livelihoods and formal employment in the North-West District (Ngamiland) of Botswana. However, primarily due to the increase in FMD outbreaks over the past two decades and predation by wildlife, the viability of livestock agriculture as a source of income has declined in the region. This has led to a greater risk of poverty and food insecurity. Access across the Okavango River (prior to the construction of a bridge) restricted access for farmers in Eretsha. This lack of access hampered sales of cattle beyond Shakawe, further discouraging farmers from investing in proper livestock management practices. This resulted in negative environmental impacts, poor livestock health and productivity.

To address this challenge, farmers are working with a consortium led by Conservation International (CI), with funding secured from the European Union (EU) to pilot a CBT beef project. The project focuses on supporting and enabling communal farmers to comply with standards and regulations that will improve their chances to access markets. An opportunity to earn higher income from cattle sales could incentivize the adoption of restorative rangelands management practices by farmers.

These collaborative efforts being piloted in Habu and Eretsha villages also include the Pro-Nature Enterprises Project for the People of Southern Africa, funded by Agence Française de Développement (AFD) and Le Fonds français pour l’environnement mondial (FFEM). This complementary funding from AFD and FFEM supports the implementation of the Herding4Health (H4H) model and Rangeland Stewardship Agreements across four rangeland sites in Southern Africa, including Habu and Eretsha, to incentivize best practices that could offer sustainability in the long term for livelihoods, conservation and human-wildlife coexistence.

“We spend a lot of money getting our cattle to Makalamabedi quarantine site, the herder spends on average two months taking care of the cattle before they are taken into quarantine – that needs money. All these costs lead to us getting less money from BMC,” said one of the farmers in the programme, Mr Monnaleso Mosanga.

Farmers that participate in the project agree for their cattle to be herded and kraaled communally by fulltime professional herders (eco-rangers). At the core of this pilot is the use of predator-proof bomas (cattle kraals), planned grazing systems and mobile quarantine bomas (electrified enclosures) for the cattle, facilitated in support with the Department of Veterinary Services. The first successful exit from the mobile quarantine bomas in the Habu and Eretsha villages, in December 2022, saw cattle quarantined on-site and directly transported to BMC in Maun. Farmers received almost double the average sales within this region, as costs including transportation to quarantine sites, herder’s fees and other associated costs incurred before qualifying for BMC sales were no longer included.

“This pilot mobile quarantine is leveraging the techniques and protocols we are using at our current permanent quarantine sites, and we are still observing the results of the project. The outcome of this pilot will be presented to the World Organisation of Animal Health to assess its effectiveness and potentially be approved to be used elsewhere,” said Dr Odireleng Thololwane, the Principal Veterinary Officer (Maun).

Through co-financing of almost P1 billion from the Botswana government and Green Climate Fund, these interventions will be replicated, through The Ecosystem Based Adaptation and Mitigation in Botswana’s Communal Rangelands project, across the country. Both projects aim to improve the economic benefits of cattle owners and multitudes of Batswana households, while contributing to land restoration and climate change efforts by the Botswana government

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