Mogae fires parting shots as Ram prevails in fiery EGM
Mbongeni Mguni | Friday September 6, 2019 12:10
Suspended CEO, Ramachandran Ottapathu swept to victory in the EGM, being retained on the board by 52.05% of shareholders and securing approval of his handpicked nominees Tom Pritchard (77.75%) and Carol Jean Howard (51.2%). Ottapathu’s close ally and Choppies founder, Farouk Ismail was also retained in the board with 55% of votes in support.
Wilfred Mpai, Dorcas Kgosietsile, Ronald Tamale and Heinrich Standar, all members of the previous board, failed to secure reappointment, in a meeting marked by palpable tension between the board rivals. Standar remains Choppies chief financial officer but will not sit on the board.
Prior to the vote, Mogae, who had held his tongue while presiding as chair, let loose on Ottapathu, popularly known as Ram, during an open session.
The former president accused his long time ally of shooting down any moves towards better governance at the regional grocer and wielding his financial muscle over other directors.
“The structure of Choppies was built around the personality of Ottapathu,” Mogae said at the EGM, sitting feet away from Ottapathu.
“I was appointed years ago but at the time, we did not worry about the institutional governance arrangements and the CEO was everything.
“When they decided to expand to Zimbabwe, South Africa and others, we acquiesced and we did not know the powers or functions of the CEO.
“He could hire, fire, open and close shops all over and that did not look awkward until recently when things went bad.
“The CEO resisted many things such as the establishment of an investment committee and he would say ‘I made this company’ and ‘this is my money’.
“Now he is losing that money in the North West (SA), in Kenya, Tanzania, Zimbabwe and others.
“All the attempts to make money from abroad, to replicate what happened in Botswana, are failing. “We tend to fight over everything and there’s no communication. “As the board, we also have been negligent and he has been the company.”
Mogae said the board tended to fight over “who has more money, who owns what” instead of addressing governance oversights that had led to the crisis Choppies finds itself in.
The homegrown pan-African retailer, which employs up to 17,000 workers in eight countries, shed P1.7 billion in value on a single day on the Botswana Stock Exchange last September, after failing to publish its full year 2018 results. Choppies was subsequently suspended from both the Botswana and Johannesburg exchanges in November.
Legal and forensic investigations ordered by the old board laid the blame nearly totally on Ram, whose contract gives him sweeping discretionary powers for acquisitions, disposals and other strategic decisions.
“We tend to fight over who has what money or who controls what,” Mogae said.
“We have been negligent as a board and he (Ram) has been the company.
“Even over salaries in Botswana, we were subsidising South Africa but if you bring this to Ram, it was a fight. “For me, that salary issue was political and I said I don’t want to subsidise salaries in South Africa and Zimbabwe.
“All these attempts to make money from abroad have not worked.
“All they are doing is getting money from Botswana. They tried to replicate what happened in Botswana abroad, but it has been a disaster.
“It cannot be done.” Ismail, who is Choppies acting CEO, also told the EGM that the group had identified a takeover partner for its Tanzanian presence. He added that negotiations for a prospective buyer in Kenya were ongoing.
“We have also received many offers for our operations in South Africa,” he said in response to shareholder enquiries. “We should finalise the Tanzania deal in a couple of weeks, while SA should be done by the end of October.
“Kenya will take a bit longer.”
Mpai, outgoing audit committee chair, in an earlier presentation to shareholders said the group’s operations in Kenya and Tanzania were ‘distressed’ and were being looked at for disposal.
Addressing shareholders briefly ahead of the vote, Ram defended his actions, saying all the decisions now under review had been taken with a view of returns to investors.
“There’s a scapegoat for all the challenge. I have to take responsibility for that and not runaway.
“But is there anyone talking about the Choppies brand and the damage done?
“I have been saying let’s forget about these things and put in place a plan to rescue this business.” The new board is expected to hold a meeting on Monday where, possibly, an interim chair and other board positions will be announced, with the annual general meeting set for later this year, voting on these names.
Choppies subscribes to the King Code on Governance, which requires that besides the CEO, there should at least be an additional executive director, besides the non-executives.