Shadowy Directorate of Intelligence and Security Services (DISS) allegedly “hijacked” an investigation into supermarket chain Choppies ÔÇô shortly after DISS boss Isaac Kgosi received shares from Choppies executives.
The investigation, into alleged violations of food health and safety law, tapered off after Kgosi was given Choppies shares.
Choppies’ handover of shares to Kgosi, in 2009, has long been controversial. The DISS boss sold the shares for P16-million when Choppies listed on the Botswana stock exchange three years later.
The handover took place soon after a massive multi-agency raid on a Choppies warehouse in Lobatse that turned up evidence of consumer law violations.
The warehouse distributes products to all Choppies 70-odd supermarkets in Botswana.
A well placed source inside government revealed recently that based on the raid, the trade ministry’s Consumer Protection Office (CPO) sent a dossier to the DISS recommending action against Choppies for selling food unfit for human consumption.
The official, who asked not to be named, alleged that Choppies executives approached the DISS just two weeks after the recommendation was made.
“The DISS hijacked the investigations, which were supposed to be led by the ministry of trade ÔÇô DISS was just playing a complementary role like other stakeholders,” the source said. “The matter should have been sent to the Attorney General for Choppies to face the wrath of the law.”
Leaked documents show that violations of food health and safety laws ÔÇô including the bacterial contamination of foodstuffs ÔÇô continued at Choppies over a further three years. This was after the DISS boss became a shareholder at the supermarket chain. There is no evidence that this had legal consequences. (See accompanying story)
The Choppies shares were not the only benefit Kgosi received in 2009.
Choppies chief executive Ramachandran Ottapathu told Botswana’s Directorate on Corruption and Economic Crime (DCEC) that in that year Kgosi was handed shares in a company called RBV.
RBV is owned by Ottapathu and Choppies deputy executive chairperson Farouk Ismail.
The Standard has also reported that in January 2011, a payment of P300 000 was made to Silver Shadows, a company owned by Kgosi, from the account of a company called Leviathan ÔÇô also owned by Ottapathu and Ismail.
Ottapathu did not deny the transfer, but said it was “a loan arrangement”. “This money was lent on a gentleman’s agreement basis, on the understanding that Mr Kgosi would pay back when he could from his future dividends.”
However, at the time of DCEC investigation into Kgosi’s affairs in 2012, he had not repaid the loan.
Kgosi refused to answer questions about the role played by the DISS after the May 2009 raid on Choppies. “Talk to the ministry of trade and industry,” he told amaBhungane.
Ottapathu said: “We have not bought any favour of a public servant to block investigations against us or instigated anyhow that we be excluded from complying with the laws of the land.
“We have consistently maintained our knowledge of the Lobatse town council inspection report in question. … This was not the first inspection on Choppies business and not the only council that sometimes does regular inspection.”
Last year amaBhungane highlighted the benefits Choppies has bestowed on members of the Botswana elite, including buying furniture from a firm co-owned by President Ian Khama and his sister, Jacqueline.
A leaked CPO report gives details of the raid on Choppies’ Lobatse warehouse in May 27th 2009 by the consumer affairs department, the health department, the Botswana police, officials of the Lobatse town council and the DISS, acting on complaints that the supermarket chain was engaging in “doubtful trade practices”.
The warehouse houses ILO Industries, which package beans, rice and spices for Choppies stores. According to Choppies’ listing prospectus, ILO Industries is co-owned by Ottapathu and Ismail.
The report said it was closed for two days during the raid while the inspection team searched for violations of Botswana’s Food Control Act, Consumer Protection Act and Public Health Act.
It said officials believed there were violations relating to the mislabelling of products. They found bags of rice without expiry dates, while in one case; a different expiry date from the original was being stamped on rice packs.
It also found products were not packaged according to regulations under the Food Control Act.
It recommended that Choppies should be “immediately requested to show cause why action cannot be taken against it for violating labelling requirements” and that the Attorney-General’s should be asked for advice.
Other containers were sent to Botswana’s Bureau of Standards, which found they were slightly underweight.
The report said workers were found removing weevils from beans with the aid of a fan. Cooking oil was forwarded to the National Food Control Laboratory for testing.
In addition, some bags carried a Red Cross label while others, containing beans, were labelled “Maize Grant of Echo, Humanitarian Aid World Food Programs” and carried a European Union flag.
Choppies’ explanation, according to the report, was that the bags were imported from Malawi and their supplier had stamped them with a “misprint” logo to show they were not for the United Nations.
The report said the UN’s Food and Agriculture Organisation expressed concern about how bags reached Botswana, which did not have a food aid programme.
It said that once the origin of the food aid packaging was confirmed, “appropriate action” should be taken against Choppies. AmaBhungane was unable to establish what happened subsequently.
The government source said the Consumer Protection Office recommended that the DISS seek the advice of the attorney-general on possible prosecution, but that this had not happened.
The Attorney-General’s spokesperson, Caroline Bogale-Jaiyeoba, confirmed her office “has not received any tangible complaint from any client being a department or ministry”.
Asked why the Lobatse council had not laid charges, a council source familiar with the affair sent amaBhungane a text message reading: “That was a small fish for Isaac Kgosi to fry.”
Kgosi has made no secret of the shares he received from Choppies. In a statement in 2014, he said that “in about 2009, before Choppies became a public company, I was approached by Farouk Ismail and Ramachandran Ottapathu with an offer to purchase shares in the company”.
He was offered 750 shares each from Ottapathu’s and Ismail’s holdings, which he would pay off from dividends accruing on the shares “until [the acquisition] was fully discharged”. The shares would be placed in trust pending payment.
“Several other citizens were approached as I had been, and were sold Choppies shares on the same terms and in accordance with the same business model,” said Kgosi.
He said the motivation was the empowerment of Botswana citizens and that the shares had now been paid for in full.
“I was happy to accept. Shorn of all prejudice, who would not?” he said.
Asked what action the trade ministry took after the 2009 raid, permanent secretary Peggy Serame said she had taken steps provided for in the Consumer Protection Act, including sealing the warehouse pending investigations.
“Several questionable food products were seized for further testing to ensure that specifications, quality and safety standards are met in accordance with the Consumer Protection Act,” she said.
Serame said the products, which included rice, spices, cooking oil, sugar beans, cow peas and peanuts were taken to the Bureau of Standards and the National Food Control Laboratory for testing and were found to be safe for human consumption.
She said the Bureau of Standards ordered the repackaging of underweight products.
She denied that DISS hijacked the ministry’s mandate. “Action was taken in accordance with relevant statutes,” she said. “Choppies was warned against non-compliance with relevant standards”
The Food Control Act carries a maximum penalty of a P1 000 fine and three months in jail for a first offence. Legal sources said that as a retailer, Choppies would be separately liable for each violation. For a repeat offence, this rises to a P5 000 fine and six months in jail and a P2 000 fine and imprisonment for two months for each day on which the offence continues.
The court may also cancel or suspend any licence relevant to the offence.
Lobatse mayor Boikhutso Matenge and her deputy, Oganne Gontse did not respond to questions sent by amaBhungane two months ago.
Choppies spokesperson Otsile Marole said the company was quick to address all cases “where clarifications are sought or faults are found”
“We have set up a high-standard quality assurance system for our products to ensure that we do not offer our consumers sub-standard goods.
“Wherever we discover that a product is not good for consumers … we quickly recall it,” said Marole.