Who's who of Botswana linked to supermarket chain

Botswana-based supermarket giant Choppies has delivered business and financial benefits to powerful members of the Botswana elite, including President Ian Khama, former president Festus Mogae and the head of the shadowy Directorate of Intelligence and Security, Isaac Kgosi.

AmaBhungane also learnt that Choppies has received favourable treatment from the Botswana government, notably over work permits for expatriate employees, mostly from the Indian subcontinent.

Choppies is a beneficiary of important state business – it is a major supplier of groceries to the Botswana Defence Force and prisons department.

Fair share: Choppies supermarket promises value for money

Media reports in Botswana have alleged that it receives a level of police protection not accorded to other retail groups in the country. Botswana police and Choppies deny this.

The group, which has 72 stores in Botswana, 35 in South Africa and 18 in Zimbabwe, listed on the JSE last month, raising more than P500-million (R687-million).

Its turnover exceeded P5.7-billion last year and its after-tax profits topped P177-million.

Responding to amaBhungane’s questions, Choppies chief executive Ramachandran Ottapathu said: “We categorically deny any misdoings whatsoever in our dealings with any politicians over the years.”

He added that compromised individuals on any Choppies board were required to stand down immediately. Choppies did not make party contributions as a matter of policy, Ottapathu said.

“As a matter of democracy, individuals in Botswana are free to make political contributions to the organisations they support and Choppies management and staff do the same from their private resources, if they so wish.”

He said Choppies was “100% compliant in regard to the labour and immigration laws of Botswana”.

A security expert with knowledge of Choppies, who spoke on condition of anonymity, gave a different picture, describing the group as a quasi-political organisation that used “soft power” to gain and retain influence.

The vice-president of the opposition Umbrella for Democratic Change (UDC), Ndaba Gaolathe, said: “The Choppies business model is based on importing cheap labour from India … there is a special dispensation for Indian expatriates from immigration officials.”

The UDC’s chairperson, Nehemiah Modubule, said he regarded Choppies as an adversary of Botswana’s political opposition.

“It is the only local shop that has grown this big. But we are not proud,” Modubule said.

He complained that Botswana’s largest private sector employer was not sufficiently scrutinised, especially by Parliament. “Politicians are not ready to take on Choppies. At times you even lack the backing of your colleagues,” Modubule said.

Kgosi shares

Choppies’s relationship with Botswana’s political elite came under the spotlight in 2009 when it was revealed that it had transferred shares allegedly worth P4-million to Kgosi before it listed in Botswana.

According to a Botswana Stock Exchange source, Kgosi sold them over the counter in June 2014, three years after the listing, for P16-million.

In a leaked interview in 2012, Kgosi told Botswana’s Directorate of Economic Crime and Corruption (DCEC) he had not fully paid for the shares, but was repaying the debt from dividends.

“I pay back what I owe from the dividends,” he told a puzzled Australian DCEC investigator, Don McKenzie, who left Botswana a few months later. (See “Spy boss tries to explain share deal in his own words”)

Kgosi refused to answer ama­Bhungane’s questions about how and when he repaid the debt. He said: “You can’t go to South Africa and start asking those questions. Why didn’t you ask when you were in Botswana?”

The Directorate of Intelligence and Security vets visa applications for residence and work permits for would-be investors and skilled workers.

Ottapathu said the shares were sold to Kgosi’s company, Silver Shadows, “at an agreed price in terms of a contract”.

“Choppies decided … to broaden its shareholder base as an empowerment exercise, following the examples of empowerment through share-ownership schemes in South Africa and other countries,” he said.

Shares were “allocated to individuals on the basis that these individuals could pay for [them] from their own resources”.

Ottapathu denied claims that the share transfer had taken place while the Directorate of Intelligence and Security was investigating the group over the alleged repackaging of Red Cross food aid for sale. He said the shares were sold in April 2009 and the investigation took place at the end of June that year.

Allegations that food aid had been repackaged were absurd, he said.

Mogae’s directorship

Choppies’s Botswana listing prospectus says Mogae was appointed a Choppies nonexecutive director in 2004, while he was president.

He was named as a director in the group’s Botswana listing prospectus in 2011, after he had stepped down. The prospectus also revealed that he received a director’s fee of P500 000 a year.

Asked whether Mogae was a director during the rest of his presidency, from 2004 until 2008, Choppies lawyer Nick Williams said Mogae was appointed to the Choppies board in October 2008 after he quit the presidency. He said the 2004 date in the prospectus was an error.

The latest Choppies annual report reveals that, before the JSE listing, Mogae held Choppies shares worth more than R142-million. He reportedly sold 10-million during the JSE listing, meaning he would have pocketed R49-million.

A leaked Choppies document shows that, during Mogae’s time in office, the government approved the visa applications of 58 expatriate directors.

Mogae’s office acknowledged but did not answer amaBhungane’s questions.

Ottapathu said Mogae also received shares as part of Choppies’s empowerment exercise. “Mogae also bought shares with cash. We didn’t give any shares to him.”

The Khamas

The amaBhungane investigation highlighted other dealings between Choppies and Botswana’s rulers:

• Choppies’s annual reports show that, from 2011 to 2014, the chain bought goods worth P3-million from Montrose (Pty) Ltd, whose sole directors are Khama and his sister, Jacqueline.

The company trades in miscellaneous goods, including furniture. Montrose sold Choppies furniture worth more than P630 000 in 2010.

Ottapathu denied that the Khamas owned Montrose, although company records accessed by amaBhungane show that Jacqueline Khama holds 999 of the 1 000 issued shares and Khama one. He added: “Nonetheless, [Choppies] has the right to do business with any legitimate entity in Botswana.”

Khama’s spokesperson, George Tlhalerwa, acknowledged receiving questions from amaBhungane two weeks ago, but did not answer them.

• A senior source in Choppies alleged that the group uses the law firm of the assistant trade minister, Sadique Kebonang, to process work permit applications.

Kebonang rejected this and said the Choppies human resources department dealt with such applications.

In 2007, Kebonang was appointed Choppies’s group executive director. Ottapathu said he had become the group’s legal adviser on contract in 2004 “when he was not in politics or had any business backing”, and had cut all ties on becoming a minister.

Modubule, who lost the Lobatse constituency to Kebonang in last year’s election, believes Choppies played a crucial role in the poll.

He said supermarket staff were forced to wear ruling party campaign T-shirts bearing Kebonang’s image, an allegation both Kebonang and Ottapathu deny. “We complained to Ram [Ottapathu] and Choppies Hillside withdrew the T-shirts,” Modubule said.

• According to a losing candidate, Filbert Nagafela, Choppies donated a truckload of groceries to BDP supporters during a by-election campaign in March 2013 in Letlhakeng West, west of Gaborone.

But BDP secretary general Mpho Balopi dismissed this, and said the party had placed a special order with the supermarket. “When you order, they deliver to your place. They were delivering our food.”

‘Rubber-stamp’ ambassador?

The amaBhungane investigation also focused on Botswana’s ambassador to India from 2004 to 2011, Dorcas Kgosietsile, now one of five Choppies nonexecutive directors.

The Botswana listing prospectus shows that Kgosietsile held more than 15?000 Choppies shares “indirectly” before the group listed in Botswana, and that she acquired an additional 565 000 ordinary shares worth P28-million on her return.

She joined the Choppies board seven months after returning from New Delhi.

Sources at the immigration office said the Botswana High Commission was tasked at some point with processing permits.

During Kgosietsile’s tenure, the number of expatriates approved to work as managers in Choppies Botswana is said to have ballooned, peaking at more than 50 in 2010.

Kgosietsile said it was absolute rubbish that she favoured Choppies while based in New Delhi. She said it was not on her radar and that there was “no allowance for rubber-stamping” permit applications.

She said the pre-listing shares in her name belonged to her daughter. Asked to prove the transaction, she said only a court order would compel her to do so.

Corporate handouts

Choppies’s corporate social responsibility policy also seems tailored to tickle the president’s fancy. It includes:

  •   A pledge to donate 72 low-cost houses worth a whopping P60-million over five years through the President’s Housing Appeal, managed by Khama’s office;
  •   Donations of food hampers worth P1-million to the police and defence force in December 2013 through the Lady Khama Charitable Trust, founded in 2002 by Khama in his mother’s honour;
  •   Donations of food hampers worth P400?000 in December 2010 to the destitute through the Lady Khama Charitable Trust; and
  • Sponsorship of the annual Lady Khama Charitable Trust Marathon.

Policing ‘favours’

Commenting on media reports that some Choppies stores receive special treatment in the form of police security patrols before their 10pm close, Ottapathu said that, “as a corporate citizen and taxpayer”, the group was “the beneficiary of the normal protection and regulation provided by the state of Botswana to all companies”.

“We have never received any favours from the police and have never made any payments.”

But Choppies’s major competitor, the Sefalana group, said it did not receive the same protection.

“We don’t get that. Does anyone get it?” asked Sefalana’s group finance director, Mohamed Osman.

Some of Sefalana’s 60 stores are in crime-prone areas.

Mmegi newspaper this month quoted policemen as objecting to the Choppies patrols. They said they only patrolled shopping complexes with Choppies outlets and had been turned into guards.

Senior police superintendent Dipheko Hansford Motube said the police patrolled all areas “of economic interest”.

“We have developed targeted strategies and often patrol blind spots. We are guided by [crime] statistics and our intelligence. We do not provide a static guard.”

Localisation policy

It is widely perceived in Botswana that the top management of Choppies is dominated by expatriates, mostly from India.

The government’s localisation policy gives preference to Batswana with equivalent qualifications to non-nationals.

An internal report leaked to amaBhungane shows that, in 2013, the group employed 66 expatriates as senior managers, executives and specialists in Botswana, as well as six “nonexempt” directors.

According to Ottapathu, about 140 of his managers were Indian, but he emphasised that the group had 600 managers overall. All had proper permits accessed through normal channels, he said. According to the internal document, the number of expatriates leading the group is due to rise by 6% next year, to 158.

What has raised eyebrows in particular is the appointment of expatriates to run small rural stores.

One example is the tiny mining town of Letlhakane in central Botswana.

Ottapathu said Choppies had received approval for a training and localisation plan running until 2019 and, “of course, is adhering to the ministry’s plan at all times”.

The acting commissioner of labour, Goitseone Kokorwe, declined to comment. He said the number of expatriates in Botswana was classified information.

“Why don’t you go and ask Choppies?” she said.

An official at the labour department, who asked not to be named, said he had seen a Choppies localisation report submitted to the government arguing that local graduates were less inclined to show interest in managerial positions.

Critics see a similar operating style in Zimbabwe, where the group has now established 18 stores.

In 2013, Choppies struck a deal for an undisclosed amount with Phelekezela Mphoko, the Zimbabwean vice-president, giving Mphoko 51% of Nanavac Investment, the Choppies holding company in Zimbabwe.

Previously the chairperson of Choppies Zimbabwe, Mphoko had stepped down immediately from the board “to avoid the conflicts to which you refer”, Ottapathu said.

Additional reporting by Keabetswe Newel. Joel Kopono, a former editor of the Botswana Guardian, is doing an internship with amaBhungane

Spy boss tries to explain share deal in his own words

This is an edited excerpt from an interview between Isaac Kgosi
(DGK), the director general of Botswana’s Directorate of Intelligence and Security, and Don McKenzie (DJM), formerly of the Directorate on Corruption and Economic Crime. The interview, conducted in 2012, was leaked to the media. 

DJM Right, now I just ask about the private company that you have shares in … ? 

 DGK I hope you don’t ask the name of the company. Oh my, I would have to do the thing “I can’t remember the name”.

DGK I hope you don’t ask the name of the company. Oh my, I would have to do the thing “I can’t remember the name”.

DJM Now, when you said it’s a private company, is it that you own the company …? 

DGK What happened is I bought ... when I started buying shares from the secretary ... my company secretary, I said rather than opening the account in my name, open the account in the company name. And, as I don’t use it every day ... I can’t remember the name. 

 DJM We have been told about a company called Silver Shadows … 

DGK Yep, that’s the one … 

DJM And where did the money come from to buy shares? 

DGK I, I, you see, when you are given shares you pay when you earn dividends. I pay back what I owe from the dividends. 

 DJM From time to time you have paid those?

 DGK Whenever I am given dividends, I pay part of that back to the company where I have shares.

 DJM I don’t get what you are trying to say.

 DGK I ... I got shares from you, yah, and then whenever these dividends are paid to me I pay back to the parent company a certain amount that we have agreed on. 

DJM That “we” have agreed on, who is “we”? 

DGK From the parent company that I got dividends from, where I bought the shares from. 

DJM I am sorry that I am struggling to understand this. 

DGK No, the thing is, let’s say you have shares, you are selling shares, yah, and then I said, OK, I want so many shares from you, yah, and then you said, OK, you have so many shares; we agree that whenever I receive dividends from you I have to pay back for my shares. OK? And then whenever I receive a certain amount of dividends a certain amount of money I pay back to you, I pay back a certain amount of money. 

DJM Because the shares that you have you haven’t actually paid for? 

 DGK Fully paid for.

 DJM Fully paid for, so it’s not really generating any income, it’s just bit by bit paying off the amount that is owed for the shares that have been obtained? 

 DGK Yes. 

DJM What does it have shares in? What sort of companies, a number of companies, or just one company? 

 DGK It really, it is one company, two companies, one is a toilet paper company and one is a shop – Choppies. 

DJM So Silver Shadows has shares in these two companies? 

DGK Yep. 

DJM Those shares have been partially paid and, as dividends arise, that money goes back to pay for the shares. But you are able to draw out of Silver Shadows because it has money in its bank account? Does that mean not all money is going back to pay for the shares? 

 DGK Yes, not all money is going back, because it was not an agreement that we have reached between myself and Choppies.

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The M&G Centre for Investigative Journalism (amaBhungane) produced this story. All views are ours. See www.amabhungane.co.za for our stories, activities and funding sources.



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