JOHANNESBURG, Jan 19 (Reuters) – South Africa’s SPAR Group (SPPJ.J) said on Thursday it agreed with its auditors that a reportable irregularity related to an alleged fictitious and fraudulent loan at the grocery retailer had occurred.
Local online newspapers Business Day, News24 and the Financial Mail news magazine have been reporting on several allegations of fraudulent and fictitious loans and racial bias by independent retailers using the SPAR brand.
In December, SPAR denied that the financial allegations were symptomatic of “dubious” accounting or that it discriminated against some of its retailers on the basis of race or store location.
“Over the past month, SPAR and the external auditors have conducted investigations into the matter. At the end of the process, the board has 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 is an isolated matter and that it is no longer occurring, “and appropriate steps have been taken to prevent any loss as a result.”
SPAR’s board said a written loan agreement was signed between a willing lender and a borrower through a commercial bank, at normal interest rates with fixed repayment terms.
“However, the board concluded that the loan did not appear to have served any real commercial or economic purpose and should not have happened,” SPAR added.
SPAR’s extensive review of all loans arranged for retailers identified two other transactions of a similar nature, with the value of these three loans totaling 11 million rand ($640,977) and occurring 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 CEO Brett Botten, 57, would retire from the company on January 31 after nearly two years at the helm.
He said on Thursday that Botten had applied for early retirement.
($1 = 17.1613 rand)
Information from Nqobile Dludla; Edited by Emelia Sithole-Matarise
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