Choppies Enterprises CEO Ramachandran Ottapathu said former Vice President Phelekezela Mphoko’s family did not invest a cent in the firm, and were only given 7 percent shares for facilitating the Botswana-headquartered retailer’s entry into Zimbabwe.
In a letter to ZimLive.com, Ottapathu said they gave the Mphokos a further 44 percent shareholding on paper to avoid Zimbabwe’s indigenisation laws which require locals to maintain majority shareholding in businesses with an annual turnover of over US$500,000. Part of Ottapathu’s letter to ZimLive.com reads:
…We have the family of the former Vice President of the Republic of Zimbabwe, Phelekezela Mphoko, whom we entered into 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 the legislation that was in place. We have documentation to prove that we are the ones who brought in $25 million from Barclays Bank of Botswana, the underwriters of the funding, for the setting up of Choppies operations in Zimbabwe. We also reiterate that the Mphokos were given the 51 percent shares in an agreement which allows us to buy back the shares as and whenever we want as part of efforts to comply with the law. The Mphokos never invested any cent in the business. We gave them the shares on paper. Their 7 percent free carry shares was a way of thanking them for facilitating that we set up business in Zimbabwe.The other 44 percent shares were allotted to them (the Mphokos) to add to the 7 percent free carry shares to make it 51 percent. But that is merely on paper…