HARARE – Regional retailer Choppies is battling to contain uncertainty stemming from a boardroom fall-out over its shareholding in its Zimbabwean unit, with the Botswana retail chain refuting local majority shareholding in the company.
Choppies is already battling to contain a crisis occasioned by the delay to publish its financials, which resulted in the JSE and the Botswana Stock Exchange suspending its shares.
Choppies has about 34 outlets in Zimbabwe and intends to bump up its presence in the country to 60 stores, according to executives at the company. However, the 51percent shareholding held by the former Zimbabwean vice-president Phelekezela Mphoko is now disputed.
Choppies chief executive Ramachandran Ottapathu said in a letter published in Zimbabwean media yesterday that the company’s operations in Zimbabwe were owned, “in the main, by Choppies Enterprises Limited”, which is registered in Botswana. “The reference to the 51percent being owned by the Mphokos was done to comply with legislation that was put in place by the government which precluded foreigners from owning big stakes in businesses in preference to locals,” he said.
The retail outlet is now hoping that the government will allow it to retain majority control in the Zimbabwe chain after recent pronouncements indicated that foreign companies could own majority shares in local operations, with the exception of those in diamond and platinum mining.
Relations between Botswana’s Choppies and the Mphoko family as shareholders in the Zimbabwe unit have soured over the past few weeks, with Mphoko’s son, Siqokoqela, accused of looting funds and resources from the company. The case is pending in the Zimbabwe courts. Siqokoqela was remanded in custody last week.
However, his lawyer, Welshman Ncube, has been quoted in Zimbabwe media as saying “there are no compelling reasons to deny the accused person his right to bail” pending trial.
“The proven goings on in the company are a natural, inevitable consequence of the disputes among shareholders and directors, more so in circumstances where the complainant has acted unlawfully in denying the accused person his salary and fuel allocation in a manner calculated to cause pain and provoke him,” said Ncube.
On the shareholding dispute, Choppies Botswana said it was hoping that the opening of Zimbabwe’s economy to more investments, as espoused by President Emerson Mnangagwa, would enable it to claim back the shares it gave to the Mphoko family as it sought to comply with the policy.
Former Zimbabwean leader Robert Mugabe pushed the indigenisation policy, which analysts say scared away investments.
“We have the family of the former vice-president of the Republic of Zimbabwe, Phelekezela Mphoko, whom we entered into partnership with, now refuting that we are the owners of the business, because they are using paperwork that was done to comply with the legislation that was in place,” said the Choppies chief executive.
He argued that Choppies Botswana “brought in $25million (R353.25m) from Barclays Bank of Botswana, the underwriters of the funding, for the setting up of Choppies operations in Zimbabwe”. He said “the Mphokos were given the 51percent shares in an agreement which allows us to buy back the shares as and whenever we want”.
“The Mphokos never invested a cent in the business. We gave them the shares on paper. Their 7percent free-carry shares were a way of thanking them for facilitating that we set up business in Zimbabwe.”
Ottapathu said the other 44percent shares were allotted to the former Mphoko “to add to the 7percent free carry shares to make it 51percent”, although this was “merely” on paper.