Change apace at Spar after loans scandal

● The first black African to hold the post of divisional MD at Spar says the retail group is transforming after a loans scandal that led to the departure of the board chair Graham O’Connor and CEO Brett Botten.

Dick Siyolo, who in August was appointed MD for Eastern Cape operations, told Business Times that while the scandal did not affect the overall performance of the business, it is fast-tracking transformation at the top.

A report from law firm Harris Nupen Molebatsi detailed alleged discriminatory practices against some of its black franchisees and fictitious loans that painted a misleading picture about the financial health of the retailer.

“This is why Spar has embarked on a transformation process to make sure there is proper representation in its top management structures,” Siyolo said.

“The group is taking the matter seriously and many blacks, coloureds and Indians will be employed as the process unfolds,” he added.

Business Day reported in December that Spar sold one of its corporate-owned stores for just under R11m book value to a group of Vaal-based independent merchants, who were advanced a loan by the retail giant to buy and refurbish the store in 2018.

The report, conducted on behalf of Spar’s board by the law firm, highlighted how the affected retailers paid only R8m, with Spar choosing to shoulder the rest of the loan via a so-called monthly marketing contribution and ensuring that the wholesaler recorded the receipt of the full book

value of the outlet.

The arrangement meant Spar wouldn’t have to record the difference between the lower payment and higher book value of the store as a write-off on its books.

The scandal led to the departure of O’Connor. Botten retired at the end of January, with Mike Bosman taking on the role of executive chair while the retailer looks for a successor to Botten.

Siyolo, who started his career at Spar as a human resources trainee 24 years ago, said while the share price took a hit at the time of the scandal, the business was continuing to grow.

“Our operations remain strong and our customers remain loyal to the brand. Spar dealt with the issue and we are back on track,” he said. “We have been able to open 17 new stores in the past financial year, and this shows the strength of the brand.”

Siyolo said Spar remained the largest food retailer in a highly competitive sector in the Eastern Cape and now accounts for 37% of the retail segment in the province.

“We will continue to grow. There are so many untapped opportunities which we are exploring. Some of our competitors had already written us off. They said they were giving us six months only, but today we own the largest market share.”

Siyolo said Spar was taking precautions on Monday to ensure the safety of

Spar has embarked on a transformation process to make sure there is proper representation in its top management structures

Dick Siyolo

MD for Spar’s Eastern Cape operations

staff and customers in anticipation of the “national shutdown” called by the EFF.

While stores will remain open, trucks will not be delivering produce, he said.