Competition Authority faces possible lawsuit
Staff Writer | Friday September 4, 2020 17:11
The claims arise from a report that was commissioned by the Board of the CCA on the merger approval involving Choppies Enterprises and Payless.
Extracts from the report published by Sunday Standard this week accused Ottapathu, popularly known as Ram, of corruption and Kebonang of being a beneficial holder of Payless shares.
A company search by Mmegi and the annual tax returns filed by both Choppies and Payless did not show Kebonang as ever having been a shareholder or director of Payless or Choppies Stores. Asked to comment on the report which was commissioned by the organisation he founded, Kebonang could only confirm that he had asked for a copy of the report and will take it from there.
Kebonang however stated what he had glimpsed from the extracts of the report.
“The report was clearly a hoax intended to defame me and that it was written with that as a primary objective,” he said.
“Make no mistake, the whole objective was to paint all in widely negative light without a right of any rebuttal.”
Kebonang was the Competition Authority’s first chairperson and was responsible for setting it up. That included recruiting staff, getting offices, branding, developing the first organisational strategy and ensuring it took off the ground.
Equally shocked was Ram who stated that whilst he was yet to see the report, the allegations levelled against him and Choppies were defamatory and demonstrably false and a gross mischaracterisation of the facts.
“I find it strange that the Competition Authority would wait for seven years to make false and defamatory statements about individuals. It is a staged report motivated by a desire to defame,” Ram fumed.
Both Ram and Kebonang confirmed that they were never interviewed before the report was published, only to be shocked to see it for the first time in the Sunday publication.
“Is that not strange?” asked Ram rhetorically. Briefly explaining how the Choppies/Payless transactions came about, Ram said Choppies took on Fours Group as a buying group member and Payless owned by Saleem Malique was also added as well to the buying group and took position as approved creditor with the Ministry of Finance approval.
Ram said Choppies never offered to buy Payless.
“Choppies does not have any ownership rights in Payless. Choppies is only a creditor.”
He also denied that Kebonang owned any shares in either Payless or Choppies or both. Ram explained that three years was the initial approval period by Competition and Consumer Commission of the buying group transaction or arrangement adding that buying group can be beneficial financially to the group. Lediretse Attorneys represented Choppies at the hearing. “The buying group got dissolved on the 31st December 2018 and Choppies filed for the winding up of Payless and the liquidation of Payless will be completed soon within a few weeks,” Ram said.
Those in the know say the report was commissioned in September 2019 by the Board following a fallout between former president Festus Mogae and Ram.
“The narrative and overall message was to paint Ram as corrupt,” the source said.
Insiders at CCA claimed that the current chief executive officer (CEO), Tebelelo Pule sat in the Choppies/Payless application and that it was former Board member attorney, Tendekani Malebeswa who presided over the appeal.
Malebeswa and Mogae are said to be related through the former president’s wife. Mogae is a Choppies shareholder and former chairperson. “If the allegations or suggestions of coordination and collusion are being made, why are those not being extended to Malebeswa?” quipped an insider.
In response to Mmegi, the CCA director of communications and advocacy, Gideon Nkala said the report in question was an internal document that was never meant to be discussed outside the CCA.
“We suspect that this report might have landed in the wrong hands. It is not our inclination to discuss the contents of this report with unintended audiences,” Nkala said.
Nkala confirmed that the CCA appointed a law firm to do an audit of its processes, partly to improve its efficiencies in order to bring competition regulation in line with international standards.
“Perhaps much pointedly, the exercise was undertaken to reflect on the integrity of the Authority’s decision-making process with particular regard to the entire Choppies- Payless, Mr Malique-Payless transactions. Suffice to add that it is normal for organisations to reflect and sharpen their systems and processes to serve customers efficiently,” Nkala said.
He narrated the history of the of events that culminated in the contentious report that on December 19, 2013, the Authority received a notification of a merger involving the 90% acquisition in Payless Supermarket (Pty) Ltd by Mohammed Malique.
The 90% was acquired from Payless owner Willem Henning. The acquisition of 90% from Payless by Malique was approved in March 2014 with the conditions that the merged entity should cease its participation in the Choppies buying group and seek alternative supply arrangements, with immediate effect; and the merged entity should absorb the retrenched employees during their expansion process.
In May 2014, Choppies Distribution Centre (Pty) Lt, Payless and Woodblock (Pty) Ltd applied for an exemption from the provisions of the Competition Act in terms of section 32 to enter into a buying group agreement.
“This exemption was initially rejected, but later the parties were given a three-year period under which they were to wean themselves from the buying group agreement. In 2017, the Authority received an exemption application from Choppies and Payless to enter into a buying group agreement. This application was mainly based on the first application and the three-year weaning period. The Authority rejected this application in October 2018 and gave the parties a period of three months to dissolve the agreement,” Nkala said. He added that in or around July 2019, the Authority received information in a detailed Report from Desai Law Group and media reports circulated insinuating that the Authority was misled through the information submitted in 2013 for the merger application and for both exemption applications.
“In September 2019 the Authority was directed by the then Competition Commission to engage an advocate to review all three decisions issued by the Authority and the information relied upon in arriving at these decisions in order to determine whether it was misled and if proper procedure was followed by the Authority in reaching these decisions. The Authority engaged a local law firm to undertake the assignment.”
Nkala re-emphasised that the Authority as a public interest organisation undertook its mandate in the interest of the public.
“The said revelations were of a great concern to the Authority more so that the submission of the Desai Law Group Report commissioned by the Choppies Board led by former president His Excellency Rre Mogae, was physically presented to the Authority and its contents were widely quoted in local press.” Nkala declined to confirm or deny that the commissioned law firm this week wrote to the Authority demanding indemnity from any suit coming from the publication and associated costs because the Authority might have been the one that leaked it to the media.
“We would not want to be drawn into discussing anything that concerns the CCA and its clients,” Nkala said.
He also did not want to disclose the names of the commissioners that adjudicated over the Choppies/Payless appeal preferring to say “a number of Commissioners presided over this matter at different stages over the years”.
Asked whether the law firm engaged to compile the report interviewed people implicated, if not, why were they not interviewed, he said while they do not want to discuss the report “we however wish to underscore that the task was not to do an investigation but merely to audit the processes undertaken by the Authority in its decision-making.
The law firm confined itself to the documentary trail.” Nkala said they religiously subscribed to the principle of confidentiality particularly on matters between the Authority and its clients. “We will be in the wrong to disclose any personal communication, if any,” he responded when asked if the people implicated in the report sought disclosure of the report and CCA was going to disclose the report to them.