Choppies probe opens can of worms

07 Jul 2019

BY KHONANI ONTEBETSE & MPHO KELEBOGE

It appears the Choppies head honcho Ramachandran Ottapathu may not be out of the woods yet.

An investigation by various South African law firms into allegations of mismanagement at the Botswana Stock Exchange listed Choppies Enterprises is expected to open a can of worms, court records show.

Details of why the Choppies chief executive officer have not been made public following his suspension by the board in May this year are emerging from court records that he is facing serious allegations that may lead “to dismissal.”

A string of letters addressed to Ram as he is known in the business circle, from Deswai Law Group (Attorneys for Choppies) which form part of the court records offers a glimpse of why Ottapathu was suspended.

A letter dated 13th April addressed to Ottapathu from Deswai Law Group (DLG) invited him the law firm’s office on 15 April 2019. The meeting which was attended by the company’s Chairman former President Festus Mogae, Deputy CEO Ismail and one of the Non Executive Directors (NEDs) Dorcus Kgosietsile was to discuss an advice offered to the board by global law firm Norton Rose Fulbright South Africa (NRFSA).

The letter shows that initially the plan was not to suspend Ram. But on the advice of NRFSA the board was advised to “consider suspension at this time and it is this, as against voluntary resignation.”

It further stated that: “It is correct that various investigations are ongoing. It is also correct that steps and or actions that may have a likely impact on the Company and shareholder value therein are not to be taken likely. This is in fact the reason that your client has not been suspended from duty as CEO.” Later on the board acted on the advice of NRFSA and slapped Ram with suspension.

When replying to Deswai Law Group, Bookbinder Business Law firm representing Ram said “the stated purpose of the meeting was to discuss certain findings by Norton Rose arising from the forensic audit being effected by E &Young South Africa and an entity known as PSG.”

Bookbinder further states that “at that juncture, the issue was an interaction as between Mr Ottapathu and an entity known as PSG. Having ventilated the issue we are advised that DLG informed Mr Ottapathu that the issue was of no moment and ‘blown out of proportion by some Non Executive Directors (NEDs).

The letter added:“Mr Ottapathu understood this be legal advice to him by DLG in connection with the ongoing circumstances and confirmation to him that in DLG’s view he was not guilty of any wrong doing.” 

Deswai Law Group responded thus, “the issue of interaction between Mr Ottapathu and PSG certainly did come up at the meeting and there was an informal discussion as to whether that interaction was material. Quite how Mr Ottapathu could have misunderstood that discussion to constitute advice to him alone, when there were other Board members present who were privy to the same discussion is not clear.”

Another letter dated 21 May 2019 addressed to Ram reads in part “We advise that the Board has been made aware of serious allegations against you from ongoing investigations.”

It states that “these allegations include but are not limited to the following; breaches of confidentiality; breach of fiduciary duties to act in good faith in the interest of the company.”

The letter also accuses Ottapathu of “gross negligence and/or reckless conduct in the performance of your duties of the Chief Executive Officer (CEO) of the company and contravention of legislation.”

Ram is also accused of “bringing the Company’s name into disrepute thereby causing the Company’s significant financial and reputational damage.”

The letter further states that “the company views these allegations serious enough to lead to a dismissal should disciplinary proceedings be instituted against yourself.”

Meanwhile Ram has lost an urgent application in which he had sought the High Court to compel the Board to call an Extra Ordinary General Meeting (EGM) forthwith. Ram through his lawyer John Peter stated that the purpose of the EGM is to allow shareholders to consider removing the NEDs and replacing them with alternative directors. But Choppies lawyer, Advocate Goolam Ameer said the urgency was self created. He argued that Ram should wait for the release of a forensic report instead of calling for the EGM.

“The meeting cannot take place until the Board has access to the report,” he said. Delivering judgement, Justice Christopher Gabanagae dismissed the application on the basis that it does not satisfy the criteria for urgency.