The credibility of Desai Law Group Managing Partner Rizwan Desai has been called into question in a response paper by suspended Choppies CEO, Ramachandran Ottapathu‘s (Ram).
Ottapathu ‘s response to the board on the legal and forensic reports into the affairs of the company stated that, “Desai Law Group (DLG), which prepared the legal report, used to be my lawyers and have since been retained by Choppies, and it is a serious conflict of interest in the investigation.”
Ottapathu further revealed that, “all the transactions ostensibly investigated and impugned in the legal report by Desai Law Group, were transactions on which Choppies and Mr Ottapathu received legal advice from Mr (Rizwan) Desai through Collins Newman & Co and later DLG. Mr Desai was involved in the planning, structuring, documenting, presentation for Board approval and implementation of almost all transactions from the very beginning.”
Curiously, the DLG legal report to the Choppies board threw Ottapathu under the bus and did not mention any role they played in his decisions.
The report by Desai Law Group states that “…We have also taken note of Mr Ottapathu’s statement to us that there are a number of other instances in relation to which both he and Mr Ismail have assets of the company registered in his own, and Mr Ismail’s name, such as various butchery licenses, to give but one example.”
The law firm advised: “This appears to have been a peculiarity in relation to the pre-listing days of Choppies and must be corrected in early course.”
According to the report, “The contention by Mr Ottapathu here appears to be that, because he holds certain licenses in his own name, this justifies the similar holding of the Fours Group shares in his name of the benefit and on behalf of the company.”
“This contention is unsupportable in and of itself (the fact that an incorrect act has taken place previously does not justify the occurrence of further incorrect acts). We therefore strongly recommended to the Board Mr Ottapathu be required to produce a full list of any such licenses held in his own name (and /or that of Mr Ismail) in order to initiate requisite processes to have such licenses transferred to the Company at the earliest opportunity,” the report says.
Ottapathu states that besides advising him and the board on the issue, DGL also hid the fact that the Fours shares were already pledged to Choppies.
Ottapathu’s response harps on the fact that both legal and forensic reports are inconclusive and carry serious conflict of interest.
“I caution shareholders not to accept the report at face value,” Ottapathu said. The Choppies former boss made out a case that both reports have created a false impression that the business relationships between Choppies, Payless and the Fours group were somewhat untoward and were kept a secret.
It emerges in the report that the business relationship was known to the Board. The agreements between the entities were drawn up by Collins Newman & Company were the DGL Managing partner Rizwan Disai was a senior partner and were approved by the board.
Ottappathu notes that the “so-called legal report’s analysis largely clears him and his conduct, but its conclusions drawn by Desai Law Group (DLG), condemn him.
“Regrettably there was no attempt by DLG to present a fair and unbiased account in its legal report. Both the Legal Report and its summary (Annexure 1) present a skewed version of events on incorrect assumptions and are flawed,” he said in his response to the board.
Turning to the forensic report, he said its summary (Annexure 2 of the Board’s X-News and Sens announcement) was “a skewed and contrived version of a bland, poorly drafted and largely exculpatory forensic report”.
He said inferences which appear to have been drawn in Annexure 2 of the report rely on the flawed Forensic Report which is premature and inconclusive.
The language and leaps of logic in Annexure 2 appear to have been designed to embarrass Mr Ottapathu instead of focusing on what the Forensic Report actually says.
Like the legal report, the forensic report took “excessive liberties with its assumptions and its fundamental premises are flawed”. The report’s methodology was flawed and its “credibility is questionable at best”.
He adds: “Annexure 2 presents an inaccurate and incorrect summary of the report. In addition, the forensic report fails to verify any of the information it received and failed to resolve any conflicting versions of facts presented to it. Instead, it simply ignored certain facts. As a result, it cannot credibly resolve any issues relating to the finalisation of the 2018 annual financial statements.”