Ram cleared of money laundering

SHARE   |   Tuesday, 27 August 2019   |   By Phillimon Mmeso
ON THE COMEBACK: Ram got a major boost last week ahead of the September 4 EGM after being cleared of money laundering accusations ON THE COMEBACK: Ram got a major boost last week ahead of the September 4 EGM after being cleared of money laundering accusations PRESSPHOTO

Suspended Choppies Enterprises Chief Executive Officer Ramachandran Ottapathu will attend the Extraordinary General Meeting scheduled for September 04 with renewed hope, after being cleared of any wrongdoing by a legal and forensic audit.

The Circular to shareholders which was issued on the 14th of August 2019 and signed by the board Chairman Festus Mogae and Company Secretary Shathani Kgwarae is an update to them regarding the status of the 2018 Audited Financial Statements (AFS) and gives them a summary of the legal report and the Forensic Report. The Forensic report by Ernest & Young Advisory Services has exonerated Ottapathu from allegations of money laundering, saying there is no evidence.


“Other than establishing what appears to be a link between the accounting entries passed to capital work-in-progress as part of rebalancing of cash records to obfuscate the non-receipt of cash in settlement of Bulk Sales transactions, the Forensic Report did not substantiate the Money Laundering Allegations,” reads part of the report.

Last year Ottapathu and some senior managers were accused of using Choppies Zimbabwe to launder money. The accusations were made by Siqokoqela Mphoko, Executive Director and senior partner of Nanavac Investment which owns Choppies Zimbabwe. The allegations on money laundering were related to unsupported purchases of inventory from a supplier as well as unsupported payments purportedly for store refurbishments being made in Zimbabwe.


The Forensic Report found that the Group’s Zimbabwean accounting records reflect cash receipts for Bulk Sales. “However, there were inconsistencies between operating records routinely used to report and control physical cash receipts and the accounting entries recording receipts in settlement of the Bulk Sales,” reads the report.

Siqokoqela Mphoko, who is the son to the former Zimbabwean Vice President Phelekezela Mphoko, informed authorities in Zimbabwe that the Zimbabwean Choppies was used to launder money by putting substantial cash into the shops and entered as sales while no single commodity was sold. He claimed that in some instances some companies were paid large sums of money under the pretext that they supplied the supermarket with some stock while it was not true.


The Forensic Report states that only a portion of the Bulk Sales value could be verified as having received in cash (i.e., either as banked with one of the Group’s banks or as recorded in operating records as cash received). “In order to rebalance the accounting records to reflect actual cash balances on hand or in the bank, a series of accounting entries were passed,” reads the report.


The result of the accounting entries was to capitalize costs to capital work-in-progress for store refurbishments, the forensic report established. Evidence was found through the forensic investigations that vouchers were created (on instruction of former member of the Group’s Zimbabwean senior management) in order to support the accounting entries reflecting as cash expenditure for these refurbishments costs.

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