Spar admits to irregular loan allegations

Source: Reuters/Siphiwe Sibeko

Local media publications Business Day, News24 and Financial Mail have been reporting various allegations of fraudulent and fictitious loans and racial bias brought by independent retailers who use the Spar brand.

In December, Spar denied that the financial allegations were symptomatic of "dodgy" accounting or that it discriminated against some of its retailers based on race or store location.

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"Over the past month, Spar and the external auditors have conducted investigations into the matter. At the end of the process, the board agreed with Spar's auditors that a reportable irregularity had occurred," it said in a statement.

The retailer and wholesaler added that its 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".

Load "should not have taken place"

Spar's board said 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," Spar added.

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The extensive review of all loans arranged by Spar for retailers identified two other transactions of a similar nature, with the value of these three loans totalling R11m ($640,977) and occurred five years ago, the company said.

Spar added that there was no evidence to support any allegations of accounting irregularities with any other loan transactions.

On Tuesday, Spar announced that chief executive officer Brett Botten, 57, would retire from the company on 31 January after close to two years at the helm. It said on Thursday that Botten had requested early retirement.