- DCEC, FIA fail to investigate Ram
- His partnership with Masisi buys him protection?
- FIA, DCEC conflicted as they report to OP
- FIA, DCEC claim independence
KEABETSWE NEWEL, LAWRENCE SERETSE, LETLHOGILE MPUANG
The Financial Intelligence Agency (FIA) and the Directorate on Corruption and Economic Crimes (DCEC), which are Botswana’s top ‘go-to’ enforcement agencies in financial crime, did not investigate and ascertain the financial wrongdoings which President Mokgweetsi Masisi’s business partner and Choppies CEO, Ramachandran Ottapathu is accused of having committed in the forensic and legal investigations into Choppies’ recent financial scandal.
FIA and the DCEC are Botswana’s top two agencies aimed at uprooting corruption and financial crime. The FIA Director General, Dr. Abraham Sethibe, reports to the Minister of Finance and Economic Development, Dr Thapelo Matsheka, but he is directly appointed by the President. Brigadier Joseph Mathambo at DCEC was also appointed by President Masisi to whom he also reports directly.
It emerged last week that President Masisi is in a profitable venture with the controversial Choppies CEO, Ottapathu. A company called Arcee (Pty) Ltd, which was incorporated just before Masisi became President in 2017 has been paid millions of pula by Choppies Enterprises Limited since 2017 for supply of goods. For 2017 and 2018 only, President Masisi and Ram (through Arcee) benefitted around P8 million. In 2017, over P6.7 million was paid and a further sum exceeding P1.2 million was paid in 2018. Since Choppies is yet to further release its 2019 full year annual report, it is unknown how much Arcee benefitted in 2019.
Masisi owns 10 percent of Arcee while Ram controls the remaining 90 percent.
The company is listed in the Choppies 2018 (latest) annual report under the “related party transaction” section. “Related party transactions” are those transactions through which Choppies directors, especially Ram, as CEO and major shareholder, used the companies that he himself owns to supply Choppies with goods and services. In simple terms, it is when a director transacts with himself or with an entity in which he has interest. As CEO, it was Ram who decided to appoint the company that he co-owns with President Masisi to supply Choppies for a profit. Whether the company was subjected to required corporate governance and procurement requirements of open tender, only Ram knows.
Choppies is a public company listed on Botswana Stock Exchange (BSE), meaning that members of the public are shareholders. In an interview, Ram has confirmed that he is in business with President Masisi, saying there is nothing wrong with that. Asked if he does was not using President Masisi for political expediency, he answered in the negative.
The Botswana Gazette sent questions on Friday last week to Batlhalefi Leagajang, the President’s Press Secretary. In the questions, this publication wanted to know why President Masisi chose to do business with Ram in 2017 just before he became President. Further, this publication asked whether the President was not bothered by previous controversies which alleged that Ram, a multi-millionaire, surrounded himself with politicians for political expediency and patronage.
It also sought Masisi’s views on his fiduciary duty to the Office of the President and judgement of character in being a commercial partner to Ram, who is accused in forensic reports and legal audit reports of financial wrongdoings for personal gain that led to the collapse of Choppies’ value in regional markets.
Further, this publication wanted to know President Masisi’s position regarding the recent findings at Choppies about his business partner, which led to Choppies shareholders losing over P3 billion in value. Ram has denied that he was responsible for putting Choppies in P8 million debt. Despite promising to respond to these enquiries, the Office of the President failed to meet press deadline. Leagajang confirmed that Masisi had seen this publication’s enquiries.
Sometime in 2018, Choppies was unable to release its annual financial statements, owing to a number of irregularities which were highlighted by auditors. Ernst & Young was engaged to conduct a forensic report while Desai Law Group conducted a legal investigation. Findings by both these reports alleged that Ram, in his capacity as Choppies CEO, may have personally been at the centre of the financial mess at Choppies.
According to the forensic investigation conducted by Ernst & Young, it was alleged that Audit firm, Grant Thornton Botswana was paid by the Choppies CEO Ram to conceal fake transactions amounting to more than P90 million in which Ottapathu is alleged to have conducted to enrich himself personally.
Documented evidence compiled by the previous Choppies board of directors (from the forensic investigation), led by now former Chairman and former president Festus Mogae (which The Botswana Gazette has seen), Grant Thornton was engaged by Ram to prepare and present feasibility reports in respect of the acquisition of four stores in South Africa, of which the value was allegedly inflated by millions of pula belonging to Choppies shareholders.
The previous Choppies board said the reports were prepared based on inaccurate information given by Ram then, in collusion with the purported sellers of the four stores to Grant Thornton to secure reports reflecting an inflated valuation for the four stores.
It was found that fictitious transactions were concluded in relation to sale of stock to disguise the historic stock deficit and to mislead the board, its shareholders and the lenders. The transactions entailed the sale of non-existent stock and a purported receipt of payment.
Further, Desai Law Group reported that Ram used his position to personally and illegally finance, with millions of pula, the acquisition of Payless shares for his associate and to personally acquire 50 percent shares in the Fours Group for himself without the knowledge of the board. This, the lawyers said, was in contravention of the Companies Act and the Competition Act and in violation of the Botswana Stock Exchange (BSE) Listings Requirements. Further, questions over money laundering and fraud were raised, especially at the Choppies Zimbabwe operations.
SURVIVING THE WRATH OF LAW ENFORCERS
Ordinarily, these kinds of happenings would attract the unforgiving attention of FIA and DCEC, especially that Ram was personally questioned over transactions of millions of pula, belonging to Choppies public shareholders. With his business dealings with the President, the failure by the corruption bodies to investigate have led to belief that Ram’s financial relationship with President Masisi may have bought him immunity from FIA and DCEC the Director Generals of which are appointed and answerable to President Masisi. There are beliefs that Ram’s financial relationship with President Masisi bought him immunity from institutions such as FIA and DCEC whose the Directors General are appointed by and are answerable to President Masisi.
Interestingly, DCEC and FIA chose not to pursue the matter. Under normal circumstances, Choppies, and Ram especially, since the forensic and legal ingestions pointed to him personally, DCEC would have taken up the matter at least to ascertain if, according to the allegation, there was any wrongdoing.
At FIA, Dr. Sethibe’s defence was that his agency is not mandated to investigate. This publication asked Dr. Sethibe for reasons why FIA did not look into the Choppies scandal, especially since questionable transactions, which allegedly pointed to possible fraud, money laundering and corruption, were raised. Fraudulent transactions and money laundering fall under the ambit of FIA.
Dr. Sethibe said the mandate of FIA, as stated under Section 6 (1) of the Financial Intelligence Act, does not cover investigations. He pronounced that as per the FIA Act, the agency shall be the central unit responsible for requesting, receiving, analyzing and disseminating to an investigatory authority, supervisory authority or comparable body, disclosures of financial information concerning suspicious transactions.
However, Dr Sethibe says he does not investigate, which is to probe, but only analyzes information. Synonyms for the word “analyze” include examine, inspect, scrutinize, look over, peruse, investigate, probe, inquire into, go over with a fine tooth comb, dissect, audit, and evaluate.
The Choppies CEO was allegedly found by Ernst & Young and Desai Law Group (reports are public information) to have been engaged in a questionable transaction in which four retail stores were bought under the Choppies name in South Africa. Forensic reports show that prices were heavily inflated by Ram to personally enrich himself. It was found that simulated transactions were concluded in relation to sale of stock to disguise the historic stock deficit and to mislead the board, its shareholders and the lenders. The transactions entailed the sale of non-existent stock and purported receipt of payment. However, according to Dr Sethibe, his organisation, FIA did not analyze this financial information (forensic report) which contained alleged suspicious transactions. As an expert in financial crime, FIA was supposed to have analyzed the transactions and ascertain whether there was financial misreporting and wrongdoing before allowing the DCEC to probe the corruption and the alleged fraud.
“After receiving the information from reporting entities, the FIA analyses such information and disseminates the output known as the financial intelligence to the relevant law enforcement agency for investigation. As an intelligence organ, all intelligence products that are produced by FIA are shared only with the relevant authorities and are not for public consumption,” Dr Sethibe stated without noting that did FIA invoke its own mandate.
The Botswana Gazette asked Dr. Sethibe if Ram’s money making partnership with President Masisi creates a conflict of interest to execute his job since he was appointed by Masisi. He answered that an intelligence organ does not kiss and tell. Further, the DCEC boss, Brigadier Mathambo, also reports directly to President Masisi. In the run-up to 2019 general elections, the DCEC pounced on several suspects for alleged money laundering and corruption. It has since slowed its pace. The directorate was accused by the opposition of being selective and pouncing only on those who were not on President Masisi’s side.
A classic example is of DISS agent Wilhemina ‘Butterfly’ Maswabi who was suspected to have, in coordination with former president Ian Khama and ex-spy boss Isaac Kgosi, of looting around P100 billion from the state. The matter is still pending before court. Former top civil servants like ex-Permanent Secretary to the President Carter Morupisi also felt the wrath of Brigadier Mathambo over allegations of corruption and bribery. Carter is defending the charges. Brigadier Mathambo has since rubbished claims of political allegiance.
The Botswana Gazette asked the DCEC why they never took interest in the Choppies matter which was widely reported, especially that the forensic and legal reports containing evidence of wrongdoing are in the public domain. Lentswe Motshoganetsi at DCEC said he is not in a position to share details on the DCEC operational matters as it is non procedural to do so.
Asked whether the DCEC was conflicted by the fact that the office reports to President Masisi, who is a commercial partner to Ram, Motshoganetsi answered that the DCEC is independent.