{"id":4386,"date":"2016-06-20T00:00:00","date_gmt":"2016-06-20T00:00:00","guid":{"rendered":"https:\/\/amabhungane.org\/amabhungane\/stories\/botswana-intelligence-agency-hijacks-supermarket-probe-after-boss-gets-shares\/"},"modified":"2024-09-23T14:53:51","modified_gmt":"2024-09-23T14:53:51","slug":"botswana-intelligence-agency-hijacks-supermarket-probe-after-boss-gets-shares","status":"publish","type":"post","link":"https:\/\/further.co.za\/amabwp\/botswana-intelligence-agency-hijacks-supermarket-probe-after-boss-gets-shares\/","title":{"rendered":"Botswana intelligence agency “hijacks” supermarket probe after boss gets shares"},"content":{"rendered":"

Picture: A Choppies store. M&G<\/em><\/p>\n

Botswana\u2019s shadowy Directorate of Intelligence and Security (DIS) allegedly \u201chijacked\u201d an investigation into supermarket chain Choppies \u2013 shortly after DIS boss Isaac Kgosi received shares from Choppies executives.<\/p>\n

The investigation into alleged violations of food, health and safety law went nowhere.<\/p>\n

Choppies\u2019s handover of shares to Kgosi, in 2009, has long been controversial. The Mail & Guardian<\/em>\u00a0reported last year that the DIS boss sold the shares for P16-million<\/a> when Choppies listed on the Botswana stock exchange three years later.<\/p>\n

Choppies is developing into a major retail force in the\u00a0southern\u00a0African region, with 110 stores in its native Botswana, 35 in South\u00a0Africa, 18 in Zimbabwe and eight in Kenya. Its South African footprint\u00a0spans North West, Limpopo and northern Free State.<\/p>\n

The company, whose turnover topped R5-billion in 2014, is listed both\u00a0in Botswana and, since last year, on the Johannesburg Stock Exchange.<\/p>\n

Now a well-placed government official has alleged that the handover took place soon after a massive multi-agency raid on a Choppies warehouse in Lobatse that turned up evidence of consumer law violations.<\/p>\n

The warehouse distributes products to all Choppies supermarkets in Botswana.<\/p>\n

The source said that based on the raid, the trade ministry\u2019s Consumer Protection Office (CPO) sent a dossier to the DIS recommending action against Choppies for selling food unfit for human consumption.<\/p>\n

The official, who asked not to be named, alleged that Choppies executives approached the DIS just two weeks after the recommendation was made.<\/p>\n

\u201cThe DIS hijacked the investigations, which were supposed to be led by the ministry of trade \u2013 DIS was just playing a complementary role like other stakeholders,\u201d the source said. \u201cThe matter should have been sent to the Attorney General for Choppies to face the wrath of the law.\u201d<\/p>\n

AmaBhungane was also leaked documents showing that violations of food health and safety laws \u2013 including the bacterial contamination of foodstuffs \u2013 continued at Choppies over a further three years. There is no evidence that this had legal consequences. (See sidebar below.)<\/em><\/p>\n

The Choppies shares were not the only benefit Kgosi received in 2009.<\/p>\n

According to\u00a0Botswana\u2019s Sunday Standard<\/em>, Choppies chief executive Ramachandran Ottapathu told Botswana\u2019s Directorate on Corruption and Economic Crime (DCEC) that in that year Kgosi was handed shares in a company called RBV.<\/p>\n

RBV is owned by Ottapathu and Choppies deputy executive chairperson Farouk Ismail.<\/p>\n

The Standard<\/em> has also reported that in January 2011, a payment of P300 000 was made to Silver Shadows, a company owned by Kgosi, from the account of a company called Leviathan \u2013 also owned by Ottapathu and Ismail.<\/p>\n

Ottapathu did not deny the transfer, but said it was \u201ca loan arrangement\u201d.<\/p>\n

\u201cThis money was lent on a gentleman\u2019s agreement basis, on the understanding that Mr Kgosi would pay back when he could from his future dividends.\u201d<\/p>\n

However, at the time of DCEC investigation into Kgosi\u2019s affairs in 2012, he had not repaid the loan.<\/p>\n

Kgosi refused to answer questions about the role played by the DIS after the May 2009 raid on Choppies. \u201cTalk to the ministry of trade and industry,\u201d he told amaBhungane.<\/p>\n

Ottapatu said: \u201cWe have not bought any favour of a public servant to block investigations against us or instigated anyhow that we be excluded from complying with the laws of the land.<\/p>\n

\u201cWe have consistently maintained our knowledge of the Lobatse town council inspection report in question. \u2026 This was not the first inspection on Choppies business and not the only council that sometimes does regular inspection.\u201d<\/p>\n

Last year amaBhungane highlighted the benefits Choppies has bestowed on members of the Botswana elite, including buying furniture from a firm co-owned by President Ian Khama and his sister, Jacqueline.<\/p>\n

A CPO report leaked to amaBhungane gives details of the raid on Choppies\u2019 Lobatse warehouse in May 27 2009 by the consumer affairs department, the health department, the Botswana police, officials of the Lobatse town council and the DIS, acting on complaints that the supermarket chain was engaging in \u201cdoubtful trade practices\u201d.<\/p>\n

The warehouse houses ILO Industries, which package beans, rice and spices for Choppies stores. According to Choppies\u2019 listing prospectus, ILO Industries is co-owned by Ottapathu and Ismail.<\/p>\n

The report said it was closed for two days during the raid hile the inspection team searched for violations of Botswana\u2019s Food Control Act, Consumer Protection Act and Public Health Act.<\/p>\n

It said officials believed there were violations relating to the mislabeling of products. They found bags of rice without expiry dates, while in one case, a different expiry date from the original was being stamped on rice packs.<\/p>\n

It also found products were not packaged according to regulations under the Food Control Act.<\/p>\n

It recommended that Choppies should be \u201cimmediately requested to show cause why action cannot be taken against it for violating labelling requirements\u201d and that the Attorney-General\u2019s should be asked for advice.<\/p>\n

Other containers were sent to Botswana\u2019s Bureau of Standards, which found they were slightly underweight.<\/p>\n

The report said workers were found removing weevils from beans with the aid of a fan. Cooking oil was forwarded to the National Food Control Laboratory for testing.<\/p>\n

In addition, some bags carried a Red Cross label while others, containing beans, were labelled \u201cMaize Grant of Echo, Humanitarian Aid World Food Programs\u201d and carried a European Union flag.<\/p>\n

Choppies\u2019 explanation, according to the report, was that the bags were imported from Malawi and their supplier had stamped them with a \u201cmisprint\u201d logo to show they were not for the United Nations.<\/p>\n

The report said the UN\u2019s Food and Agriculture Organisation expressed concern about how bags reached Botswana, which did not have a food aid programme.<\/p>\n

It said that once the origin of the food aid packaging was confirmed, \u201cappropriate action\u201d should be taken against Choppies. AmaBhungane was unable to establish what happened subsequently.<\/p>\n

The government source said the Consumer Protection Office recommended that the DIS seek the advice of the attorney-general on possible prosecution, but that this had not happened.<\/p>\n

The Attorney-General\u2019s spokesperson, Caroline Bogale-Jaiyeoba, confirmed her office \u201chas not received any tangible complaint from any client being a department or ministry\u201d.<\/p>\n

Asked why the Lobatse council had not laid charges, a council source familiar with the affair sent amaBhungane a text message reading: \u201cThat was a small fish for Isaac Kgosi to fry.\u201d<\/p>\n

Kgosi has made no secret of the shares he received from Choppies. In a statement in 2014, he said that \u201cin about 2009, before Choppies became a public company, I was approached by Farouk Ismail and Ramachandran Ottapathu with an offer to purchase shares in the company\u201d.<\/p>\n

He was offered 750 shares each from Ottapathu\u2019s and Ismail\u2019s holdings, which he would pay off from dividends accruing on the shares \u201cuntil [the acquisition] was fully discharged.”\u00a0The shares would be placed in trust pending payment.<\/p>\n

\u201cSeveral other citizens were approached as I had been, and were sold Choppies shares on the same terms and in accordance with the same business model,\u201d said Kgosi.<\/p>\n

He said the motivation was the empowerment of Botswana citizens and that the shares had now been paid for in full.<\/p>\n

\u201cI was happy to accept. Shorn of all prejudice, who would not?\u201d he said.<\/p>\n

Asked what action the trade ministry took after the 2009 raid, permanent secretary Peggy Serame said she had taken steps provided for in the Consumer Protection Act, including sealing the warehouse pending investigations.<\/p>\n

\u201cSeveral questionable food products were seized for further testing to ensure that specifications, quality and safety standards are met in accordance with the Consumer Protection Act,\u201d she said.<\/p>\n

Serame said the products, which included rice, spices, cooking oil, sugar beans, cow peas and peanuts were taken to the Bureau of Standards and the National Food Control Laboratory for testing and were found to be safe for human consumption.<\/p>\n

She said the Bureau of Standards ordered the repackaging of underweight products.<\/p>\n

She denied that DIS hijacked the ministry\u2019s mandate. \u201cAction was taken in accordance with relevant statutes,\u201d she said. \u201cChoppies was warned against non-compliance with relevant standards.\u201d<\/p>\n

The Food Control Act carries a maximum penalty of a P1 000 fine and three months in jail for a first offence. Legal sources said that as a retailer, Choppies would be separately liable for each violation.For a repeat offence, this rises to a P5 000 fine and six months in jailand a P2 000 fine and imprisonment for two months for each day on which the offence continues.<\/p>\n

The court may also cancel or suspend any licence relevant to the offence.<\/p>\n

Lobatse mayor Boikhutso Matenge and her deputy, Oganne Gontse did not respond to questions sent by amaBhungane two months ago.<\/p>\n

Choppies spokesperson Otsile Marole said the company was quick to address all cases \u201cwhere clarifications are sought or faults are found.\u201d<\/p>\n

\u201cWe have set up a high-standard quality assurance system for our products to ensure that we do not offer our consumers sub-standard goods.<\/p>\n

\u201cWherever we discover that a product is not good for consumers \u2026 we quickly recall it,\u201d said Marole.<\/p>\n

Botswana supermarket chain continues to sell contaminated food, despite massive raid<\/h4>\n

Leaked documents show that inspectors continued to seize and destroy expired, damaged, wrongly labelled, rotten, weevil-infested and mould-attacked food items from Choppies and its sister company, ILO Industries, after the massive 2009 raid on the superstore.<\/p>\n

They also show that Botswana\u2019s National Food Laboratory found evidence of bacterial contamination in tests on ILO Industries food samples on at least three occasions in 2011 and 2012.<\/p>\n

There is no evidence that other than the destruction of the food items, any action was taken against the company.<\/p>\n

The trade ministry\u2019s permanent secretary, Peggy Serame, told amaBhungane that after the 2009 crackdown her ministry warned Choppies to comply with consumer laws.<\/p>\n

\u201cIn future we will take action against any business enterprise party that contravenes the law,\u201d Serame said.<\/p>\n

Under the Food Control Act, anyone found in possession of food liable to seizure faces a fine of not less than P1 000 and a maximum six-month prison term. In theory this would apply to each condemned or contaminated item.<\/p>\n

The court may also cancel or suspend any licence relevant to the offence.<\/p>\n

The Public Health Act states that \u201cno person shall sell \u2026 or bring into Botswana or \u2026 have in his possession without reasonable excuse any food for human consumption in a diseased or unwholesome state which is unfit for human consumption\u201d.<\/p>\n

Asked what action it had taken under the Act, the health ministry responded that \u201cthe press pursuing issues of 2012 do not improve food safety\u201d.<\/p>\n

Choppies said it has put measures in place to address the problems.<\/p>\n

The documents show that between January 2010 and September 2011, the Lobatse council issued seven condemnation certificates under the Public Health Act or Food Control Act to Choppies warehouse, Choppies Cash \u2019n Carry and ILO industries. They included:<\/p>\n