Connect with us

BUSINESS

Phelekezela Mphoko never invested a cent in the Choppies business

Published

on

Phelekezela Mphoko

Former Vice President Phelekezela Mphoko did not invest a cent in the Choppies business whose majority ownership belongs to the Botswana-headquartered retail group, chief executive officer, Mr Ramachandran Ottapathu, has revealed.

Responding to recent squabbles over the control of Choppies Zimbabwe, pitting former VP Mphoko’s family and its Botswana business partners, Mr Ottapathu said Choppies Enterprises belongs to the Botswana firm, which invested $25 million to set up the business.

In a letter, issued through a consultancy to different media houses in Zimbabwe, he said the media narrative about Choppies boardroom fights has lacked appreciation of real substance around the controversy.

“We have, as a business, had a situation where there have been boardroom challenges, which do not in any way affect the running of the business.

The matters at boardroom level are matters that are now in the public domain and are also matters that are in the courts of law in Zimbabwe,” said Mr Ottapathu.

“As a matter of fact, we would like to state…that Choppies operations in Zimbabwe are owned, in the main, by Choppies Enterprises Limited, a company registered in Botswana.

“The reference of the 51 per cent being owned by Mphokos was done so as to comply with legislation, which was put in place by the Government, which precluded foreigners from owning big stakes in businesses in preference to locals.

That legislation is being looked at as we write to you because of the vision that the Government has to open up the business sector and promote investment.”

Choppies runs 34 branches in Zimbabwe and had indicated plans to increase its local network to 60.

The company employs in excess of 2 000 workers

President Mnangagwa’s Government has since reviewed the Indigenisation and Economic Empowerment Act and clarified that the 51-49 per cent requirement only applies to natural resource-based investments.

As such, Mr Ottapathu said, as Choppies they did nothing else than answer the Zimbabwean government’s call to come and invest in Zimbabwe.

“We have had the family of the former VP of the Republic of Zimbabwe, Phelekezela Mphoko, whom we entered into a partnership with, now refuting that we are the owners of the business because they are using paperwork that was done in order to comply with legislation that was in place,” said Mr Ottapathu.

He said they have documentation to prove they invested $25 million, which was underwritten by Barclays Bank of Botswana, for the setting up of the Choppies Zimbabwe operation.

“We also reiterate that the Phelekezela Mphoko was given the 51 per cent shares in an agreement which allows us to comply with the law. Phelekezela Mphoko never invested any cent in the business. We gave them the shares on paper,” said the Choppies CEO.

“Their seven per cent free carry shares was a way of thanking them for facilitating that we set up business in Zimbabwe. The other 44 per cent shares were allotted to them (the Mphokos) to add to the seven per cent free carry shares to make it 51 per cent. But that is merely on paper.”

According to the shareholder agreement that was signed to facilitate the setting up of the business under Zimbabwean law at the time, Mr Ottapathu said the 44 per cent shares “can be called back” at any minute at no cost to Choppies Enterprises, thus leaving Mphokos with their seven per cent share.

“The seven per cent free carry shares can be bought back by Choppies Enterprises at US$1 per share in the event that we want Mphokos out of the business altogether. We have not yet reached that stage yet,” he said.

“For the record, Siqokoqela Mphoko and his father, who are shareholders of Nanavac, have all along been getting dividends through their bank accounts for the seven per cent shares they hold and not the 51 per cent. We have proof of transfer and we can furnish you if you so wish.”

Mr Ottapathu said there were machinations to seek to wrestle the Choppies Enterprises from its owners through peddling misleading narratives about the company. He said the business partners know the truth although some are now trying to take advantage of the situation to twist facts in their favour.

“All the important and crucial stakeholders know who holds what percentage in the company. They also know who invested what. They also have documents that talk to these issues”.

Meanwhile, last week Siqokoqela was arrested and remanded in custody after he violated bail conditions by harassing State witnesses. He is facing 170 counts of fraud and theft.

It is alleged that as country managing director, he hijacked the Choppies retail business and “looted” more than $50 000 worth of cash and goods from the outlets countrywide without board approval.

Despite these squabbles, Mr Ottapathu said Choppies remains committed to continuing serving the Zimbabwean market.

“All this drama is not worth the energy that they have put into it. We would rather have the energy being devoted to the growth of the business,” he said.

The Chronicle

Continue Reading
Advertisement
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

18 − 12 =

BUSINESS

Zimbabwe agrees to pay $3.5 billion compensation to white farmers

Published

on

Zimbabwe White Farmers

Zimbabwe agreed on Wednesday to pay $3.5 billion in compensation to Zimbabwe white farmers whose land was expropriated by the government to resettle black families, moving a step closer to resolving one the most divisive policies of the Robert Mugabe era.

But the southern African nation does not have the money and will issue long term bonds and jointly approach international donors with the farmers to raise funding, according to the compensation agreement.

Two decades ago Mugabe’s government carried out at times violent evictions of 4,500 Zimbabwe white farmers and redistributed the land to around 300,000 Black families, arguing it was redressing colonial land imbalances.

The agreement signed at President Emmerson Mnangagwa’s State House offices in Harare showed white farmers would be compensated for infrastructure on the farms and not the land itself, as per the national constitution.

Details of how much money each farmer, or their descendants, given the time elapsed since the farms were seized, was likely to get were not yet clear, but the government has said it would prioritise the elderly when making the settlements.

Farmers would receive 50% of the compensation after a year and the balance within five years. Finance Minister Mthuli Ncube and acting Agriculture Minister Oppah Muchinguri-Kashiri signed on behalf of the government, while farmers unions and a foreign consortium that undertook valuations also penned the agreement.

“As Zimbabweans, we have chosen to resolve this long-outstanding issue,” said Andrew Pascoe, head of the Commercial Farmers Union representing  Zimbabwe white farmers.

The land seizures were one of Mugabe’s signature policies that soured ties with the West. Mugabe, who was ousted in a coup in 2017 and died last year, accused the West of imposing sanctions on his government as punishment.

The programme still divides public opinion in Zimbabwe as opponents see it as a partisan process that left the country struggling to feed itself. But its supporters say it has empowered landless Black people. Mnangagwa said the land reform could not be reversed but paying of compensation was key to mending ties with the West. Reuters

Continue Reading

BUSINESS

Old Mutual’s Share Price Is Focus in Zimbabwe’s Currency War

Published

on

Old Mutual Shares Zimbabwe

The share price of one of Africa’s oldest insurers is taking centre stage in Zimbabwe’s battle to bring order to its chaotic foreign-exchange system.
In the latest in a series of attempts to stabilize its currency, the government wants to eradicate the Old Mutual Implied Rate.

The gauge, used by domestic companies to determine the future cost of goods and services, calculates a potential forward rate for the Zimbabwe dollar by measuring the difference between Old Mutual Ltd.’s share prices in Johannesburg, London and Harare.

The indicator is among many “contrived phantom exchange rates” in use that “conspire to defeat fiscal policy,” the government said in a June 26 edict that halted trading on the Zimbabwe Stock Exchange and stopped most mobile-banking transactions.

The OMIR is one of the multiple exchange rates Zimbabweans use daily to navigate the nation’s myriad economic challenges, including annual inflation of almost 800%.

A perennial shortage of cash means anyone who has physical banknotes is able to negotiate exchange rates with brokers who pay the funds onto mobile-money platforms. The brokers can then sell the hard cash at an even higher rate.

That’s resulted in a widening gap between the official rate of 63.7 per U.S. dollar, and the amount at which it trades on the streets of Harare, which is now at 100.

“People have relied on making money from buying and selling Zimbabwe dollars, and not from any real production,” said John Robertson, an independent economist based in Harare. “It’s what has created these distortions.”

The OMIR also feeds into the black-market Zimbabwe dollar rate, which the nation’s bourse uses, along with the official rate, to determine the value of stock prices.

Old Mutual, founded in Cape Town in 1845, is not involved in determining the rate. Market participants take the company’s share prices in South Africa, the U.K. and Zimbabwe, convert each of them into the U.S. dollar, which should typically trade near par.

The finance minister, however, in March restricted trading in the shares of Old Mutual and two other companies by making the stocks no longer fungible or regarded as being equal in value to those traded on other exchanges, in a bid to prevent outflows caused by the dual listings.

Despite the move, investors poured into Old Mutual, using it as a proxy to the U.S. dollar because of its offshore listings, pushing the Zimbabwe-listed stock up 90% since the beginning of May. The shares in Johannesburg and London were little changed, resulting in the implied rate doubling to 122 as the gap between the securities widened.

Zimbabwe’s benchmark industrial index has risen more than sevenfold this year, reaching a record on June 24, and giving the overall bourse a market value of about 229 billion Zimbabwean dollars ($3.6 billion). None of the stocks in the 57-member index has declined this year as Zimbabweans seek a haven from runaway price increases and the weaker currency, which has slumped to 63.7442 per U.S. dollar after a 25:1 peg put in place since March was abandoned.

Suspend Listing
Authorities now want to eliminate the OMIR before allowing any trading to resume on the Zimbabwe Stock Exchange, people familiar with the matter said, asking not to be identified because the talks are private. The OMIR was the focus of various meetings on Monday between members of Zimbabwe’s stockbrokers’ association, the stock exchange, the Securities and Exchange Commission and the Treasury, the people said.

Measures being considered to include suspending Old Mutual’s shares from the Harare-based bourse, having the securities traded only in dollars, or moving the listing to the Victoria Falls Stock Exchange, a market that will only trade in foreign currency once it opens later this year, the people said.
Nick Mangwana, the government’s spokesman, referred queries to the finance ministry. Several calls and text messages sent to Finance Minister Mthuli Ncube and central bank Governor John Mangudya seeking comment weren’t answered.

“There has not been any official communication from authorities in Zimbabwe to Old Mutual,” the Johannesburg-based company said in an email “We have asked our local subsidiary to reach out to our stakeholders in Zimbabwe to try and understand the circumstances around ZSE closure and other related matters.”

Discussions over the halting of trade on the stock exchange are ongoing and the outcome is still uncertain, SEC Chief Executive Officer Tafadzawa Chinamo said by phone. Zimbabwe Stock Exchange CEO Justin Bgoni said on Sunday that the bourse would wait for guidance from regulators.

In comments at a briefing after a cabinet meeting on Tuesday, the finance minister said that stockbrokers should assure their clients that their investments in the stock market are safe and that the bourse will reopen once investigations are complete. Bloomberg

Continue Reading

BUSINESS

Zimbabwe government suspends mobile money transactions

Published

on

Nick Mangwana

Zimbabwe government has, with immediate effect, suspended all monetary transactions on phone-based mobile money platforms to facilitate investigations that will lead to the arrest and prosecution of people responsible for sabotaging the economy.

In a statement this evening, Secretary for Information, Publicity and Broadcasting Services, Mr Nick Mangwana, said the measures will include the suspension of all trading on the Zimbabwe Stock Exchange.

The suspension will be in place until mobile money platforms have been reformed to their original purpose and when all the present phantom rates have converged into one “genuine rate that is determined by market forces under the foreign currency auction system which was launched by the Reserve Bank of Zimbabwe” on June 23. Operational modalities and details of the envisaged measures will be announced by the relevant monetary, regulatory and law enforcement authorise in the next few days.

The government will ensure that prudent measures are put in place to mitigate and prevent any collateral damage that the interventions may cause to the innocent public that was using the mobile money platforms. The Herald.

Continue Reading

Trending