- Mphoko family given directorship on silver platter
- Their contribution was being Zimbabwean
- Choppies wanted to satisfy Mugabe’s Indigenisation Law
- Choppies paid Mphoko salary of P100 000 per month
- Choppies paid his children’s school fees, fuel, phone bill and car
- Choppies invested 66 million US dollars in Zimbabwe
Former Zimbabwe Vice-President Phelekezela Mphoko’s son, Siqokoqela and his wife Nomagugu have been dragged before the Bulawayo magistrate court on allegations of defrauding Choppies Supermarkets in Zimbabwe. Siqokoqela has been slapped with 170 charges of fraud while his wife is facing 49 counts of extorting money from Choppies Supermarkets.
According to court documents filed by Group Chief Executive Officer of Choppies Enterprises Limited and Choppies Distribution Centre (PTY) Ltd Ottapathu Ramachandran, the Mphoko family made no financial contribution to the company except their Zimbabwean nationality but were so “ungrateful that they usurped the legal ownership” of the enterprise and went on to draw large sums of money from the company through fraud and extortion.
This publication is in possession of documents that include the contracts between the Mphoko family and Choppies. In affidavits filed at the Bulawayo Magistrate Court and in his affidavit, recorded by Detective Inspector Masenda of the CID Commercial Crimes Division (Southern Region) at Bulawayo on 29 August 2018, Choppies Chief Executive Officer Ramachandran stated that in 2012 he was approached by a certain Rajesh Modi who was running Bellevue Spar supermarket with a proposal to buy the store from him. Modi is a Zimbabwean businessman of Indian origin and was recently appointed Deputy Minister of Industry and Commerce by President Emmerson Mnangagwa.
Ramachandran however recorded that Choppies encountered difficulties over the purchase because at the time, former President Robert Mugabe’s government had enacted a law (Indigenisation Law) that reserved supermarkets for majority citizen owned companies. Non-Zimbabweans could not run businesses in Zimbabwe without reserving 51 percent shareholding for citizens. To circumvent the legal stumbling block, Ramachandran together with six other directors at Choppies incorporated a company called Nanavac Investments in Zimbabwe and Choppies took 100 shares in the company. This was done on the 5th of October 2012. Following the formation of the company, Ramachandran invited the Mphoko family to join Nanavac Investments as indigenous shareholders to meet the legislative requirements, ‘‘I knew Siqokoqela from work circles in Botswana and at the material time, he was struggling financially’’, Ramachandran wrote in his statement.
On the 1st of July 2013, Siqokoqela and his father Phelekezela Mphoko joined Nanavac Investments on the board of directors and a shareholders’ agreement was executed on the 24th of July 2013. Siqokoqela would later, on 22 November 2013, takeover the company secretary duties, replacing Raj Modi. ‘‘We must state from the onset that no (sic) cent was contributed by the accused or his father into the business and their presence was purely to comply with the country’s Indigenisation Law. His mere contribution was nationality as Zimbabwean’’, Ramachandran claims in his affidavit.
Choppies Enterprises through Ramachandran, made an initial investment of US$10 million and also took a loan of 20 million US dollars for capital expenditure. The loan was taken by Choppies Distribution Centre and was guaranteed in full by Choppies Enterprises Limited. Additional loans and working capital in the sum of 14.98 million US dollars were disbursed by Choppies Distribution Centre as work capital and capital expenditure.
Additionally, Choppies opened lines of credit and invested its intellectual property rights into the company bringing the total investments to approximately 66 million US dollars. ‘‘At no point were the accused and his father to manage any of the day to day affairs of the company’’, Ramachandran notes in his affidavit. Ramachandran emphasises that the day to day management, operations, stocking, supplier issues, banking facilities and guarantees are handled by himself and his senior management team that is headed by the Head of Operations and Head of Finance who all report directly to him.
Ramachandran informed the Zimbabwean police investigators that Mphoko is not an executive director and as such he holds no authority in the daily running of the business. ‘‘In terms of per (sic) shareholders agreement of the 24th of July 2013, Siqokoqela’s duties are limited to arranging, if required, permits for foreign non-Zimbabwean staff, to build the good name and brand Choppies in Bulawayo and Zimbabwe and to seek out development opportunities for the company.” Ramachandran went on to reveal that Siqokoqela received a gross salary of 10,000 US dollars per month, a company vehicle, fuel for the company vehicle monthly, a telephone allowance, 3.53 percent of profits after tax as dividend at the end of each year and that Choppies pays for his children’s school fees in full.
Despite the lucrative benefits, Ramachandran revealed that there was no requirement that Siqokoqela had to report for duty. Ramachandran informed the court that Siqokoqela abused his position in the company and misrepresented to the employees that he was due other benefits such as groceries, cash, salary advances and other services, well knowing that his representation was false and that he had no board resolution or authority to that effect.
Ramachandran explained that he realised the mismanagement of company funds sometime in May 2018 while going through Management Accounts of the company. ‘‘I then realised that there were serious financial imbalances which were wholly caused by the accused. Upon enquiry with the Head of Finance, I was then alerted to the fact that the accused had given himself unauthorised benefits in the form of advance salaries, groceries, unauthorised cash, withdrawing from the business for his personal use such as building private residence.”
Ramachandran added that he had also learned that Siqokoqela had given others the impression that he is at the helm of the company to the extent that he did not answer to anyone but himself.
‘‘As such, all employees in Zimbabwe were labouring under the misconception that the accused person is the owner of Choppies Zimbabwe. He even threatened the employees with dismissal and deportation’’, the Choppies boss narrated in his affidavit.
After the discovery of the unauthorised activities, Ramachandran indicated that he made several attempts to resolve the matter internally but Siqokoqela failed to respond to his email, and not only continued defrauding the company but intensified his siege of the company finances.
Siqokoqela is accused of defrauding Choppies of 51 945 US dollars. He faces fraud charges as defined in section 136 of the Zimbabwe Criminal Law (Codification and Reform) Act chapter 9:23 also defined as theft in section 113(1) of the same Act.
According to the State, represented by Nkathazo Dlodlo, Siqokoqela, being a shareholder and director of Nanavac Investments Pvt (Ltd), trading as Choppies, deceived the supermarket employees to unlawfully siphon the said amount from the company. Siqokoqela’s wife Nomagugu also appeared at the Bulawayo Magistrates’ Courts facing 49 counts of extorting more than 50 000 US dollars from Choppies Supermarkets. Nomagugu allegedly ordered Choppies Supermarkets managers in Bulawayo to allow her to swipe-for-cash more than 50 000 US dollars from their point of sale (POS) machines after threatening them with either deportation or dismissal.
Nomagugu, who is not a director or employee of Choppies, is said to have demanded and collected cash from the daily takings at various outlets in Zimbabwe with apparent blessing from her husband (Siqokoqela).