Saturday, July 24, 2021

What’s next for Choppies?

What is next for Choppies? – This is possibly a question on the lips of each and every person who have been following with keen interest the unfolding rise and stall of local retailer – Choppies Enterprises.

The story of Choppies has at some point been likened by some to that of Steinhoff – a South African retailer that is also facing total collapse largely linked to a failure in corporate governance.

Before its collapse, Steinhoff was among the top 10 companies trading its securities on the Johannesburg Stock Exchange where Choppies also has a secondary listing (on suspension).

Investigations on Steinhoff’s near-total financial collapse continue with details emerging each passing week. In Botswana, just like in the case of Steinhoff, the full details of Choppies’s stall or possible fall are also still emerging.

The latest to shed light being the shareholder’s Extra Ordinary General Meeting (EGM) that was held in the capital Gaborone this past week. At the meeting, the suspended CEO – Ramachandran Ottapathu who led the other faction of the board emerged as the winner of the day. His nominees for the new Choppies board were successful whilst those of the faction led by former President and outgoing board chairperson Festus Mogae failed to reach the 50 + 1 percent threshold vote. The threshold is a prerequisite to be nominated to the company board of directors.

The new board members of Choppies now include acting CEO Farouk Ismail, Rom Pritchard and Carol Jean Howard. All of them are allies of Ram who is also back at the Choppies boardroom pending the first meeting of the new board slated for next week.

RAM SUSPENDED BUT….

While in South Africa, Steinhoff Chief Executive – Markus Jooste resigned after it became clear that the company’s external auditors were not prepared to sign off the company’s 2017 financial statements, Choppies’s Ram on the other hand has not done the same. He remains influential even form the sidelines following his suspension.

Ram was suspended by the Mogae led old board on May 20, 2019. At the time, the then board did not specify the reasons for his suspension but linked it to the legal and forensic investigations announced by the retailer on March 5, 2019. The then Mogae led board also made a commitment to take further action against Ram based on the recommendations of the investigations which were completed just about two weeks back.

On the eve of the September 4 EGM Mogae and his allies made one last attempt to keep their words on disciplining Ram but the suspended CEO found refuge at Botswana’s Industrial Court.

He told Sunday Standard a few hours after the court case that after an attempt by the board to “rush his disciplinary hearing”, he notified the Industrial Court which ultimately agreed with him on Friday 30 August 2019 that he needed time to prepare for the hearing.

According to Ram, there was no ample time for him and his witness to prepare for the pending disciplinary hearing as they were only told about it on Tuesday 27th and was slated for three days later being Friday.

“On Tuesday I got a letter from the lawyers which stated that I must appear for disciplinary hearing on Friday. I told them that I need atleast two weeks to prepare as some of my witnesses are outside the country and logistically it would be impossible to get them to South Africa by Friday where the hearing was to be held”, Ram said.

After realising that board was insisting on the Friday date Ram says he then took the matter to the Industrial Court which ruled in his favour.

“I took the matter to the industrial court which said I should be given adequate time”

The disciplinary hearing was then postponed to mid September 2019 but it’s not yet clear if it will go on following the triumph against the old board by Ram at the EGM. The old board members included amongst others Wilfred Mpai, Dorcas Kgosiitsile, Ronald Tamele, and Heinrich Stander – all of whom are allied to the outgoing chairperson Mogae.

Whilst it is not yet clear whether the new board will take any disciplinary action against Ram, institutional investors who attended the September 4 EGM made it clear that they want Ram to be disciplined by the new board.  Choppies institutional investors include amongst others Botswana Public Officers Pension Fund (BPOPF) and BIFM.   

NEW DAWN OR YAWN?

Whilst the September 4 EGM could be regarded as the beginning of the end of a bitter battle between Mogae and Ram, questions remain on the future of the company. What could be next for Choppies?

The new board which is expected to meet as early as next week will amongst other things name its new chairperson following the exit of Mogae and his allies.

Deliverables for the new board entails amongst other things publication of the company’s pending financials which led to its suspension from both the BSEL and JSE over a year ago. The board will also make two key decisions relating to the acquisition of a company known as Fours and the sale of the group’s stores in neighbouring South Africa. The old board in its past deliberations had voted in favour of selling back the stake of Choppies to Fours founding directors as the forensic Audit had picked irregularities in the acquisition of such. At the same the old board recently took a drastic decision to exit the South African market – a move that Ram opposed.

As a result it is highly likely that the Ram allied board will make a u-turn on the process of selling the SA stores.

Choppies currently operates 260 stores in Botswana, South Africa, Zimbabwe, Zambia, Kenya, Tanzania, Mozambique and Namibia, and employs more than 17 000 people.

On Friday 06 September Ram told Sunday Standard that he looks forward to work with the new board to restore Choppies to its glory days. He could not be drawn into discussing some of the pending decisions as he said it is the responsibility of the board to map a way forward. Ram – who is still serving suspension had in the past made it publicly known that he would at some point step down as CEO. On Friday he said only the new board can answer the question of – what’s next for Choppies?

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