DEC trip to South Africa to probe Shoprite dividend saga blocked

The planned trip to South Africa by three Drug Enforcement Commission (DEC) investigators to probe Shoprite Holdings for refusing to pay Zambian minority shareholders has been cancelled because Ministry of Home Affairs Permanent Secretary Maxwell Nkole has refused to sanction to the journey.

But in an act of defiance, the DEC is now courting the Secretary to the Cabinet Evans Chibiliti so that he can prevail over Maxwell Nkole.

Three investigators from the DEC were expected to travel to South Africa to probe why Shoprite Checkers has refused to release K5.3 billion dividends for Zambian minority shareholders.The trip to South Africa by the DEC investigators was going to be funded by Shoprite Checkers.

Highly placed sources at the DEC have revealed this information. The officers are questioning the logic why DEC should go to South Africa to investigate Shoprite Checkers’ operations in Zambia and why Shoprite should fund the trip.

Maxwell Nkole wants the DEC to conduct the investigation locally because Shoprite Checkers, which has refused to pay Zambian shareholders operates in Zambia and not in South Africa.The sources at the DEC have also asked why the top commissioners are not allowing officers from the Zambia Police and Zambia Security Intelligence Services to amalgamate their efforts and probe the Shoprite Checkers scam.

“The corruption-marred investigation has continued to impact negatively on the standing of the Lusaka stock exchange and the Government which has serious issues of governance. The central Government is embroiled in a potential cliff-hangar that could deal a huge blow to its integrity following the hurried appointment of the tribunal to probe the judges’ conduct in the controversial Development Bank of Zambia 14 billion matter,” said the source.

And the LuSE has publicly censured Shoprite Holdings, its subsidiary Shoprite Checkers and directors for breaching rules governing listing of securities on the bourse in relation to the declaration of dividends.

According to information available at the Lusaka bourse, the listing committee of the LuSE board resolved that the Shoprite Group collectively breached rules 3.1 and 3.28 in relation to non-payment of the dividends as earlier declared by Shoprite itself.

This was resolved on May 16 this year. The committee considered the matter in the wake of the Shoprite Group failure to honour their November 16, 2011 declaration made during the Annual General Meeting undertaking to pay dividends which were due in September last year and April this year.

The LuSE committee made the resolution in exercise of its powers provided in section 1 of the Listing Rules and “hereby directs Shoprite Holdings Limited to remedy its breaches by way of effecting full settlement of the dividends outstanding to the LuSE shareholders within 14 days of this notice” issued on May 24 this year.

“The Lusaka Stock Exchange publicly censures Shoprite Holdings Limited (SHL) and its subsidiary Shoprite Checkers Limited (SCL) and their Directors for breaches of the rules governing the listing of securities on the LuSE and the undertaking with regards to Directors given to the Exchange in the form set out in schedule 7 of the Listing Rules,” the censure reads in part.

As it has turned out, a section of shareholders who purchased shares on LuSE were duly issued by SCL in Zambia but have not been paid.

The LuSE notes that the Shoprite Group instead paid other shareholders to the exclusion of the Zambia-based shareholders who bought the shares in the ordinary course of trading business. It has been established that only Namibia and South Africa shareholders were paid their dividends while their Zambian counterparts have to this day not been paid.

The grounds of the censure notes; “the sale, following which the LuSE shareholders acquired ownership of shares in SHL, was authorized and sanctioned by SCL through its appointed agents, Lewis Nathan ,acting as its transfer secretary.

“The LuSE shareholders purchased the shares as bona fide purchasers in open market without notice of any defect in the authority of the transfer agent appointed by SCL, and the transfer agent was at all times presumed to have ostensible or apparent authority to sell the shares at the price at which they were offered,” the LuSE media release reads.

The LuSE also directed that Shoprite Group contention that the mandate to pay the dividends was subject to a court action as null and void.The Lusaka bourse has therefore noted in its censure that the court dispute has nothing to do with the right of shareholders to be paid their dividends and thus the default could not be sustained by the matter in court in the absence of an order stating so.

Shoprite Group had obtained an injunction and freezing order against its transfer secretary who have however successfully challenged the order in the Kitwe High Court.

Similarly, the transfer secretary quashed a Shoprite Group originated complaint through a Lusaka High Court Judicial Review following the Drug Enforcement Commission seizure of the same accounts at which were on issue in the Kitwe court.

While legal experts expected DEC to file a complaint showing origination and its attendant indictment documentation, the Attorney General’s chambers could not as the Commission never provided such affidavit.

This prompted Justice Christine Phiri to order the opening of the accounts for Lewis Nathan and stated that the action was illogical and that the action also went beyond the scope of investigations. While alive to the fact that a Judicial Review has no effect of ‘arresting” criminal investigations, DEC has however failed to put their act together to challenge the judgement which also names some investigations officer, Frederick Chishala of having had lied on oath in a sworn affidavit.