Botswana’s largest retail conglomerate, Choppies Enterprises Limited last week lost a case in which they sought their bank accounts to be unfrozen in an ongoing tax brawl with Kenyan Revenue Authorities (KRA), this publication can reveal.
This is after Choppies had filed an application in Court under Certificate of Urgency seeking orders to unfreeze their accounts pending completion of an ongoing tax dispute. Kenyan taxman, KRA froze Choppies bank accounts to secure taxes amounting to Sh173,388,416 which is equivalent to P19. 8 million after learning that Choppies is in the process of winding up its business operation in Kenya.
According to a statement released by KRA last week Wednesday , they presented evidence in court showing that Choppies has already sold their branches, assets and stocks to Tusker Mattresses, Chandarana and Quickmart supermarkets, as well as Appmatt Limited without informing KRA in spite of the ongoing dispute.
“The High Court in Nairobi, Kenya found that KRA was right to freeze Choppies accounts to secure the taxes in dispute,” said KRA in a statement signed by Commissioner, Legal Services and Board Coordination Paul Matuku. “The court also faulted Choppies for not disclosing their financial position stating that they did not disclose how much was held in their accounts and that they would realize from the sales of the assets.”
With that, Choppies was ordered to provide security for taxes to be found due and payable to KRA in view of the fact that they are closing business in Kenya. KRA and Choppies were also given 14 days to explore an amicable settlement of the tax dispute.
Asked of their view on the ruling, Choppies CEO Ramachandran Ottapathu noted that he is not aware of any ruling but acknowledged that there is a letter that noted the two parties should settle by meeting. “There are no dues to tax authorities in Kenya from Choppies and there is no ongoing tax dispute,” he briefly told this publication yesterday (Monday.)
Choppies entered Kenya in January 2016 after acquiring Ukwala Supermarkets in East Africa’s largest economy. Choppies had at the time identified Kenya as a key market for the company in East Africa. “The current retail market in Kenya is moving towards consolidation,” said Choppies CEO Ottapathu in October 2017 when showing his confidence in the Kenyan market. “This should benefit us in growing our footprint more rapidly than originally anticipated.”
However, settling in Kenya seemed problematic for Choppies as it was hit by operational turbulence leading to inability to pay suppliers.
Due to that, the company mid last year received a lifeline from Export Trading Group, a Kenya-based retail business, that pumped in a staggering US6 million (approximately P64 million) to Choppies Kenya which was on the brink of collapse because of liquidity challenges within the Choppies Group. Parin Patel, the Managing Director of Choppies Kenya, at the time announced that part of the funds would be used to settle 50 percent of outstanding debt to suppliers while the rest will be pumped into operations.
Survival in Kenya nevertheless, continued to prove difficult for Choppies as in September last year reports from the country suggested that the retailer is planning to exit the market after putting up their assets on sale classifying twelve of their outlets as distressed. “Zambia has a steady performance in a volatile economy, Kenya’s distressed business has been identified for disposal. Tanzania and Mozambique are distressed while Namibia is performing as expected,” Kenyan publication, The East African, quoted Wilfred Mpai, Choppies Director in Kenya as saying at the time.
Still in September last year, another Kenyan publication, The Standard, reported that Choppies have issued termination letters to over 200 workers as their plans to exit Kenya intensify. The publication stated that Choppies Human Resources Manager in Kenya Joshua Were attributed the lay off to redundancy.“This termination is due to reduced business which has been running for several months…the company is unable to sustain the current wage bill noting that business has gone down,” the newspaper quoted Were as saying at the time.