- Spar says it has identified three R11m worth of loans it arranged for retailers that “should not have taken place”.
- The retailer says its auditors reported a loan to the Board of Independent Regulatory Auditors.
- The supermarket chain has come under scrutiny after some retailers complained about its business practices.
- For more financial stories, go to News24 Business Cover.
Retailer Spar says its auditors have reported a loan the company made to the Independent Regulatory Board of Auditors (IRBA), which oversees the country’s audit profession.
In an update to shareholders on Thursday, Spar said its auditors, PwC, found the loan a reportable irregularity, meaning IRBA needed to be notified immediately.
Spar then conducted its own investigation, which also concluded that a reportable wrongdoing had occurred.
This is the first time that Spar has acknowledged wrongdoing related to loans it arranged for retailers. The shopkeeper previously said that he was waiting for a legal opinion before commenting.
Spar did not give much information about the loan, other than to say that it was signed five years ago between a “voluntary lender and a borrower through a commercial bank” at “normal interest rates with fixed repayment terms.”
The issue of “fictitious” loans at Spar was first raised in an internal investigation by law firm Harris Nupen Molebatsi (HNM) in 2021.
The HNM report, leaked to News24 last year, found that two loans the shopkeeper had made “lacked substance.” But HNM could not say at the time where the loans constituted accounting irregularities.
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The Spar board had now decided yes.
“The board concluded that the loan did not appear to have served any real commercial or economic purpose and should not have taken place,” it said Thursday.
Then there were three
Reviews of other loans organized by Spar for retailers identified two other similar transactions from five years ago.
The combined value of the three loans is R11 million. It was not immediately clear whether these two loans had also been reported to IRBA.
“Spar’s auditors are satisfied that this was an isolated matter and no longer occurs,” he said.
The announcement comes just two days after Spar announced that its CEO Brett Botten would retire at the end of the month amid a board shakeup.
Former Spar chief executive and chairman Graham O’Connor also plans to retire at the group’s next annual general meeting in February.
Longtime independent non-executive director Phumla Mnganga plans to resign at the same time. Printing group Novus Holdings also announced Wednesday that Mnanga would step down as chairman at the end of March, saying he had “considered and reviewed his listed board portfolio for some time” and was seeking to balance his commitments.
Meanwhile, two new non-executive directors, Dr. Shirley Anne Zinn and Pedro Manuel Pereira da Silva, have been appointed to the board, which Spar says “addresses existing shareholder concerns about independence.”
