CEO Ram Ottapathu wins in battle for Choppies board
The suspended CEO appears to have won the latest round in the battle for control of the retailer
Suspended Choppies CEO Ram Ottapathu has wrested control of the board of the budget retail group, following an extraordinary meeting of shareholders in Gaborone on Wednesday.
Shareholders voted to oust almost all of the former board members, who had pitted themselves against Ottapathu after a series of investigations into business practices at the retailer.
Ottapathu, who owns a 19.53% share in Choppies, was due to face disciplinary proceedings at the end of September following two investigations into Choppies’ affairs: a legal report done by the Desai Law Group and a forensic investigation done by advisory group EY.
Shareholders voted to reappoint Ottapathu as a director, as well as back a number of candidates he had nominated to the board ahead of the extraordinary general meeting, including former Astral Foods financial director Tom Pritchard and investment and finance professional Carol Jean Harward. The new board also includes Choppies founder and executive deputy chair Farouk Ismail.
The ousted former board members include Wilfred Mpai, Dorcas Kgosietsile and Heinrich Stander. In a Sens announcement on Friday afternoon the company said that Stander, the group CFO, had resigned following the extraordinary general meeting. The board would meet again on Monday to appoint a new CFO and update shareholders thereafter, it said.
In response to questions from the Business Day regarding what this will mean for Ottapathu’s disciplinary process and his suspension as CEO, the company said it was unable to respond pending the meeting of the new board. In the meantime, Ismail, who has filled in as acting CEO, will continue in the role.
The company, which has operations in SA, Zimbabwe and Botswana, was unable to release its 2018 financial results last year after its auditors, PwC, began “reassessing a number of past accounting practices and policies”. Its shares on both the Botswana and Johannesburg stock exchanges have since been suspended, and remain so.
The subsequent legal and forensic reports highlight alleged questionable dealings involving Ottapathu, or done under his watch. These included how the group accounted for bulk sales and inventory at its stores in SA and Zimbabwe, store acquisitions in SA and questions over why Ottapathu took up a substantial chunk of shares in a Choppies competitor, under his name.
Ottapathu, however, has objected to both investigations. In a letter published to shareholders, he queried the incomplete and conflicting information provided to EY, which mean the “credibility of the forensic report is questionable at best”.
The company said in August that it is considering pulling out of its SA operations after a review of the business.
According to Bloomberg, Choppies said it had received “many offers” for its SA operations and a deal should be done by the end of October. It also has an offer for its Tanzanian business, and is in talks to offload its Kenyan operations.