20 April 2024 | 09:10 AM

Botswana intelligence agency “hijacks” supermarket probe after boss gets shares

Key Takeaways

Picture: A Choppies store. M&G

Botswana’s shadowy Directorate of Intelligence and Security (DIS) allegedly “hijacked” an investigation into supermarket chain Choppies – shortly after DIS boss Isaac Kgosi received shares from Choppies executives.

The investigation into alleged violations of food, health and safety law went nowhere.

Choppies’s handover of shares to Kgosi, in 2009, has long been controversial. The Mail & Guardian reported last year that the DIS boss sold the shares for P16-million when Choppies listed on the Botswana stock exchange three years later.

Choppies is developing into a major retail force in the southern African region, with 110 stores in its native Botswana, 35 in South Africa, 18 in Zimbabwe and eight in Kenya. Its South African footprint spans North West, Limpopo and northern Free State.

The company, whose turnover topped R5-billion in 2014, is listed both in Botswana and, since last year, on the Johannesburg Stock Exchange.

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.

The warehouse distributes products to all Choppies supermarkets in Botswana.

The source said that based on the raid, the trade ministry’s Consumer Protection Office (CPO) sent a dossier to the DIS recommending action against Choppies for selling food unfit for human consumption.

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

“The DIS hijacked the investigations, which were supposed to be led by the ministry of trade – DIS was just playing a complementary role like other stakeholders,” the source said. “The matter should have been sent to the Attorney General for Choppies to face the wrath of the law.”

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

The Choppies shares were not the only benefit Kgosi received in 2009.

According to Botswana’s Sunday Standard, Choppies chief executive Ramachandran Ottapathu told Botswana’s Directorate on Corruption and Economic Crime (DCEC) that in that year Kgosi was handed shares in a company called RBV.

RBV is owned by Ottapathu and Choppies deputy executive chairperson Farouk Ismail.

The Standard 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 – also owned by Ottapathu and Ismail.

Ottapathu did not deny the transfer, but said it was “a loan arrangement”.

“This money was lent on a gentleman’s agreement basis, on the understanding that Mr Kgosi would pay back when he could from his future dividends.”

However, at the time of DCEC investigation into Kgosi’s affairs in 2012, he had not repaid the loan.

Kgosi refused to answer questions about the role played by the DIS after the May 2009 raid on Choppies. “Talk to the ministry of trade and industry,” he told amaBhungane.

Ottapatu said: “We 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.

“We have consistently maintained our knowledge of the Lobatse town council inspection report in question. … This was not the first inspection on Choppies business and not the only council that sometimes does regular inspection.”

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.

A CPO report leaked to amaBhungane gives details of the raid on Choppies’ 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 “doubtful trade practices”.

The warehouse houses ILO Industries, which package beans, rice and spices for Choppies stores. According to Choppies’ listing prospectus, ILO Industries is co-owned by Ottapathu and Ismail.

The report said it was closed for two days during the raid hile the inspection team searched for violations of Botswana’s Food Control Act, Consumer Protection Act and Public Health Act.

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.

It also found products were not packaged according to regulations under the Food Control Act.

It recommended that Choppies should be “immediately requested to show cause why action cannot be taken against it for violating labelling requirements” and that the Attorney-General’s should be asked for advice.

Other containers were sent to Botswana’s Bureau of Standards, which found they were slightly underweight.

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.

In addition, some bags carried a Red Cross label while others, containing beans, were labelled “Maize Grant of Echo, Humanitarian Aid World Food Programs” and carried a European Union flag.

Choppies’ explanation, according to the report, was that the bags were imported from Malawi and their supplier had stamped them with a “misprint” logo to show they were not for the United Nations.

The report said the UN’s Food and Agriculture Organisation expressed concern about how bags reached Botswana, which did not have a food aid programme.

It said that once the origin of the food aid packaging was confirmed, “appropriate action” should be taken against Choppies. AmaBhungane was unable to establish what happened subsequently.

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.

The Attorney-General’s spokesperson, Caroline Bogale-Jaiyeoba, confirmed her office “has not received any tangible complaint from any client being a department or ministry”.

Asked why the Lobatse council had not laid charges, a council source familiar with the affair sent amaBhungane a text message reading: “That was a small fish for Isaac Kgosi to fry.”

Kgosi has made no secret of the shares he received from Choppies. In a statement in 2014, he said that “in 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”.

He was offered 750 shares each from Ottapathu’s and Ismail’s holdings, which he would pay off from dividends accruing on the shares “until [the acquisition] was fully discharged.” The shares would be placed in trust pending payment.

“Several 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,” said Kgosi.

He said the motivation was the empowerment of Botswana citizens and that the shares had now been paid for in full.

“I was happy to accept. Shorn of all prejudice, who would not?” he said.

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.

“Several 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,” she said.

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.

She said the Bureau of Standards ordered the repackaging of underweight products.

She denied that DIS hijacked the ministry’s mandate. “Action was taken in accordance with relevant statutes,” she said. “Choppies was warned against non-compliance with relevant standards.”

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.

The court may also cancel or suspend any licence relevant to the offence.

Lobatse mayor Boikhutso Matenge and her deputy, Oganne Gontse did not respond to questions sent by amaBhungane two months ago.

Choppies spokesperson Otsile Marole said the company was quick to address all cases “where clarifications are sought or faults are found.”

“We have set up a high-standard quality assurance system for our products to ensure that we do not offer our consumers sub-standard goods.

“Wherever we discover that a product is not good for consumers … we quickly recall it,” said Marole.

Botswana supermarket chain continues to sell contaminated food, despite massive raid

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.

They also show that Botswana’s National Food Laboratory found evidence of bacterial contamination in tests on ILO Industries food samples on at least three occasions in 2011 and 2012.

There is no evidence that other than the destruction of the food items, any action was taken against the company.

The trade ministry’s permanent secretary, Peggy Serame, told amaBhungane that after the 2009 crackdown her ministry warned Choppies to comply with consumer laws.

“In future we will take action against any business enterprise party that contravenes the law,” Serame said.

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.

The court may also cancel or suspend any licence relevant to the offence.

The Public Health Act states that “no person shall sell … or bring into Botswana or … have in his possession without reasonable excuse any food for human consumption in a diseased or unwholesome state which is unfit for human consumption”.

Asked what action it had taken under the Act, the health ministry responded that “the press pursuing issues of 2012 do not improve food safety”.

Choppies said it has put measures in place to address the problems.

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 ’n Carry and ILO industries. They included:

  • a January 11, 2010 certificate listing 29 expired, damaged or dented items;
  • on January 6, 2010 770kg of rice, 300kg of maize rice and 250kg of peanuts were listed as rotten, and 400kg of samp, 250kg of popcorn and 100kg of black-eyed peas as weevil-infested;
  • on February 22, 2010 18 separate items were listed as weevil-attacked, including 845kg of popcorn, 643kg of cow peas and 271kg of black-eyed peas;
  • on July 27, 2010 more than a tonne of Choppies rice was listed as mould-attacked and 200kg of waste bean as weevil-infested, among 29 condemned items;
  • on August 12, 2011, 20 items including sweets, cold drinks and packs of meat were listed as expired, damaged or “petrified”; and
  • on September 1, 2011 more than a tonne of chicken spice, 775kg of chip spice and 750kg of braai spice were among those condemned as lacking an identification label, manufacturer’s name, place of origin or list of ingredients.

The leaked documents also show that in 2011 and 2012, the health ministry’s National Food Laboratory tested a range of spices packed by ILO Industries and found them wanting:

  • a report of August 17 noted the bacterium E.coli in samples of BBQ spice, chicken spice and steak and chip spice, and the bacterium Colistridium perfringens in BBQ spice. Both can cause food poisoning;
  • a report of March 19 2012 noted E. coli in braai spice and Cl. Perfringens in the braai spice, crushed chillies, chicken spice, steak and chop spice and paprika. “Proper quality control measures must be put in pace at production … as these organisms must not be detected in the spice,” the laboratory notes; and
  • a report of May 2 2012 noted E. coli in the crushed chilli sample, which also showed a high mould count.

The amaBhungane Centre for Investigative Journalism produced this story. Like it? Be an amaB supporter and help us do more. Know more? Send us
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Before joining the amaBhungane team in 2017, Micah was the national coordinator for media freedom and diversity at the Right2Know Campaign. He holds a Masters in African Studies from Oxford University and a BA Honours in History from Wits University.

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