Brett Botten will step down as Spar’s CEO and board member at the end of January, weeks after the company made headlines over what appeared to be questionable accounting and a highly publicised fallout with former black franchisees.
A leaked investigative report by law firm Harris Nupen Molebatsi revealed that a group of black retailers accused Spar of unfair treatment.
The investigation concluded that stores were sold to black retailers based on inflated valuations, with many stores later failing financially.
The report also dismissed some allegations of unfair treatment, finding in favour of Spar.
Botten headed the South Rand division in 2018 when many of the contested incidents took place.
Spar — which did not give reasons for Botten’s exit — also announced that former board chair Graham O’Connor will retire at the end of the AGM on February 14. Only a few days ago, Spar retailer Manzini Zungu was tweeting support for the re-election of O’Connor to the board, suggesting the retirement was not planned.
Business Day and the Financial Mail have reported on growing governance concerns swirling around the group. Business Day raised questions about two fictitious loans and questionable accounting practices that took place at a division under Botten’s leadership.
The Financial Mail has reported at length on Spar’s legal battles and raised questions around the independence of O’Connor, because he is also a former CEO.
The King IV Code suggests a three-year break between holding the position of CEO and then being appointed as chair.
O’Connor and his direct family members did business worth more than R250m with the group in 2022, according to the company’s annual report.
O’Connor stepped down as chair in December, with the company saying at the time that it was due to governance questions regarding the group.
In December, the retailer said: “O’Connor believes that it is in the best interests of the company to step aside as chair in order to allow the board to focus on the current allegations facing the company.”
Under O’Connor, Spar’s debt is at a 10-year high, reaching about R10bn after the retailer’s expansion into Poland and Ireland. It bought a loss-making wholesaler in Poland in 2019 and is struggling to break even despite plans to do so by 2022.
Spar said last year it had also lost about a third of the retailers in Poland that were buying from it, meaning it could take even longer to break even.
Its Irish bankers showed limited interest in increasing debt in 2022, leading Spar to cut its dividend for that year by more than half.
It is now having to invest in a software upgrade in SA, while the stores it sells to are facing increased competition from Checkers and Pick n Pay’s delivery services.
Meanwhile, its building division, Build It, faces headwinds as the home improvement boom during the Covid-19 pandemic has subsided.
Mike Bosman was appointed to lead Spar’s board after O’Connor stepped down.
On Tuesday, two independent directors, Shirley Zinn and Pedro da Silva, were appointed and will start after the AGM.
Both are highly experienced, with Zinn having served on the Shoprite board and currently sitting on the boards at Spur, Sanlam and MTN SA.
Da Silva’s roles include working as MD of Pick n Pay in SA and president of Dixy Group, the third-largest Russian national food retailer.
Phumla Mnganga will step down as an independent non-executive director after the AGM after 17 years.
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