This comes after various publications reported that Spar was offering two fictitious loans to retailers, and that it repaid the loan through a marketing subsidy, which amounts to irregular accounting. File
The Spar Group on Thursday informed its shareholder that only three of its loans -- valued at R11 million, and offered to retailers five years ago -- had been irregular, and they were isolated.
This comes after various publications reported that Spar had offered two fictitious loans to retailers, but that it had repaid the loan through a marketing subsidy, which amounts to irregular accounting.
In a statement, the group said its auditors, PricewaterhouseCoopers (PwC), notified the company that they believed one loan to be a reportable irregularity, which required them to report the matter to the Independent Regulatory Board of Auditors (IRBA).
"The board of directors then engaged a legal team, containing an accounting expert, to fully investigate and provide the board with their professional opinions. Over the past month, Spar and the external auditors had conducted investigations into the matter.
"At the end of the process, the board agreed with Spar’s auditors that a reportable irregularity had occurred. Spar’s auditors are satisfied that this was an isolated matter and is no longer taking place, and adequate steps have been taken for the prevention of any loss as a result thereof," it said.
The group said that a written loan agreement was entered into between a willing lender and borrower through a commercial bank, at normal interest rates with fixed terms of repayment.
"However, the board concluded that the loan did not seem to have served any real commercial or economic purpose, and should not have taken place," it said.
According to Spar, the board confirmed that the extensive review of all loans arranged by Spar for retailers identified two other transactions of a similar nature. The combined value of the three loans totalled R11m.
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," the group said.
The announcement comes two days after Spar announced that its CEO, Brett Botten, would retire at month-end amid a board shake-up.
The group said Botten would be retiring as CEO and member of the board on Tuesday, January 31, 2023.
"Botten’s retirement is pursuant to his request to the board for early retirement. Shareholders are advised that succession discussions are under way, and the appointment of a new group CEO will be announced in due course," Spar said.
On allegations of discrimination against certain retailers, Spar said it would like to reiterate its deep regret over the allegations of discrimination.
"According to the findings of the investigation by law firm Harris Nupen Molebatsi, the allegations of discrimination towards any retailers were unfounded,“ the company said.
"HNM prepared a report containing highly confidential information. Spar and eight retailers are involved in an ongoing mediation process relating to claims lodged by these retailers, and every effort is being taken to resolve these issues as quickly and effectively as possible," Spar said.
The group said the HNM report did highlight certain areas of improvement, and these areas were being addressed at their distribution centres.
Spar said the board had met several times over the past few months to address concerns about the perceived shortcomings regarding the board’s composition and the independence of its former chairman, and before that, CEO Graham O’Connor.
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