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SPAR LOANS WORTH R11M FLAGGED TO REGULATORY BOARD

Eye Witness News | 19 January 2023

Outgoing Spar CEO Brett Botten. Picture: Spar South Africa


JOHANNESBURG - Three fraudulent loans reported by retailer Spar are believed to be "isolated" incidents, a statement released on Thursday by the company stated.


Spar has battled a wave of negative publicity emanating last year, which included allegations it had manipulated the value of stores, fictitious loans, and discriminating against black franchisees.


Eyewitness News reported earlier this week that legal firm Harris Nupen Molebatsi Attorneys found widespread fronting and fraud in some Spar franchises.


The firm's report also said that black economic empowerment (BEE) loans were used to inflate profit at the retailer.


Spar, however, said the report contained "highly confidential" but "unfounded" information regarding allegations of discrimination, but did find "certain areas of improvement" that were being addressed.


"Spar would like to reiterate its deep regret over the allegations of discrimination against certain of our retailers."


Eight retailers and Spar are currently involved in a "mediation process".


FICTITIOUS LOANS


Spar's auditors, PricewaterhouseCoopers, revealed to the company that a loan they entered into was a reportable irregularity.


The loan agreement was entered into between a "willing lender and borrower through a commercial bank", it said. The matter was reported to the Independent Regulatory Board of Auditors (IRBA), which confirmed that an irregularity had taken place.


The IRBA's investigation concluded the loan "did not seem to have served any real commercial or economic purpose", and "should not have taken place".


Two other transactions of a similar nature were subsequently flagged, the value of which totalled R11 million.


The retailer said "adequate steps" were being taken to prevent any losses incurred as a result of the loans.

"These loans were isolated and occurred five years ago. This arrangement is not Spar practice and there is no evidence to support any allegations of accounting irregularities with any other loan transactions."


Spar CEO Brett Botten is stepping down at the end of the month, and former board chair and CEO Graham O'Connor did not make himself available for re-election. Succession discussions are reportedly under way.


"The board believes the changes in respect of non-executive directors adequately addresses any existing shareholder concerns around independence."


‘Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER’.


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