Allegations have been made that Brett Botten has been caught in what could be called a ‘Spar CEO scandal ‘after he and Chair Graham O’Connor wanted to use their BEE loans to save white-owned businesses. A law firm has been hired to investigate these and other allegations.
The retail company Spar has announced that its Chief Executive Officer, Brett Botten, will step down at the end of January, and that its Former Board Chair, Graham O’Connor, will step down in February.
‘Spar CEO scandal & BEE loans’
According to EWN, the new leadership was brought in after Spar was subjected to a wave of negative publicity in 2022, which included allegations that the company had manipulated the value of its stores, reported fictitious loans, and discriminated against black franchisors.
Harris Nupen Molebatsi Attorneys has been tasked with conducting the investigation into the matter.
READ MORE: Executives at Spar accused of committing fraud
The findings of the report demonstrated that fronting and fraud were commonplace in certain franchises.
Additionally, the report provided evidence that the retailer inflated their profits by using BEE loans.
What are the allegations against Spar?
More than ten retailers claimed that the group intended to use the money from their Black Economic Empowerment (BEE) loans to save white retailers at the expense of black retailers.
The findings of the report showed that fraud and fronting were widespread in certain franchises.
In addition, the findings of the report demonstrated that the retailer inflated their profits by using BEE loans.
Brett Botten: The Man at the Center of the Storm
BEE retailers initiated legal action against Botten and the group for criminal and fraudulent activity. Botten is suspected of tampering with valuations as well as financial documents in order to inflate asset values and increase profits through the use of BEE funds. It has been suggested that this action was also part of a plan to conceal losses while simultaneously increasing bonuses for executives.
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According to the allegations, Botten used a variety of techniques to inflate assets that had very little to no value in order to increase the balance sheets and profits of the distribution centers. It is alleged that he was given a share incentive in the amount of R4.9 million as a reward.
Widespread fronting and fraud in some Spar franchises
Botten is being accused of lying in a case that was opened by Professor Phinda Madi and is currently being heard by the high court in the province of Kwazulu-Natal. The case alleges that Botten claimed that the shops that Madi wanted to purchase did not have any financial records since the prior owner did not submit them. According to Madi, the group was in possession of the financial details that they wished to keep from him.
He claimed that Botten had been aware of the losses that had been deceptively misrepresented to him through fraud. In addition, another retailer by the name of Amaan Sayed filed a criminal complaint against Botten at the Midrand police station. He stated that the matter was also brought to the attention of the Hawks in Germiston. After purchasing the Megastore in Midrand in 2018, which included a Superspar and a Tops liquor, Sayed stated that he became aware of Botten’s illegal activities at that time.
Botten used BEE loans to prop up white-owned businesses at the expense of black-owned stores
The retailers stated that they had reported the matter to the group, however, the group did absolutely nothing to address the issue. They claimed that Botten and the Spar group had used a variety of techniques to inflate assets that had very little to no value in order to boost financial statements and a profit distribution center. They stated that the loss-making stores that had historically been sold to retailers for the fictitious amount of R1 were valued at an amount that was approximately equivalent to the remaining liability to the distribution centers.
Who is the new CEO of SPAR?
Mike Bosman, the recently appointed chairperson of Spar, will take on a more active role at the supermarket till the permanent successor to Brett Botten can be identified.
According to a statement released by Spar, Bosman will be assuming the role of executive chairperson as of the first of February. Additionally, efforts were taken to shore up governance at the company through the development of new board structures.
During the past few months, the supermarket chain has been the subject of scrutiny regarding its corporate governance practices and the way it treats store owners (black ones in particular), especially how it calculates earnings predictions for potential purchasers.
