Johannesburg - One of the country’s biggest retail groups, Spar, is embroiled in a scandal that allegedly involves the running of a ‘white boys club’ and side lining black players.
This was after the group allegedly forced black retailers out of the business and left them with no income. Spar has also been accused of harassing and intimidating the retailers to avoid reaching settlement agreements with them. It has further been alleged that Spar has shut the businesses and handed them over to their white counterparts.
More than 10 franchises across Gauteng were affected. The retailers said the group wanted to use their black economic empowerment (BEE) loans to bail out white retailers and dump them. They also added that Spar did not provide the support that was expected as it does to their white counterparts. They added that they were set for failure because they sold the stores that were financially distressed and loss-making.
In an email letter addressed to Spar on April 16, 2021, the affected parties told Spar that the values set by the group discriminate against black retailers. The retailers said the values benefit white retailers at their expense.
“BEE retailers are given no support from the distribution centre (DC) when the feasibilities do not match. We are treated more harshly than white retailers. More favourable terms are given to white retailers versus BEE retailers. White retailers have been bailed out to get more stores,” read the letter.
They said the white retailers were allowed to sell to BEE retailers for exorbitant prices despite the stores not making enough profit. The loss-making stores were sold to white retailers without any cost. But the same stores were sold to BEE retailers at inflated prices, said the black businesses.
After initial complaints were submitted to the board last year, the legal firm, Harris Nupen Molebatsi Attorneys (HNM), was appointed to probe the matter. The report found that the group issued loans without substance in some stores which could be described as fictitious. The report also confirmed widespread fronting and fraud in other franchises. The report also confirmed that BEE loans were used to inflate profit.
They said they have been trying to negotiate settlement agreements but Spar has been delaying through mediation. The mediation should have been concluded last year, but it only started this year due to disagreements between the parties. The businessmen said this was because Spar did not want to reach a settlement agreement.
Today, one of the retailers, Alistair Hans has no income. His vehicles were seized as he failed to keep up with his monthly instalments. Hans, who was a retail operations manager at Spar, was offered a franchise in Springs, Ekurhuleni in 2017.
“At that time, Spar was looking for a buyer and eventually a black gentleman signed an offer to purchase and it was approved. Everything was in progress, including transactions. But four days later, it was discovered that his funds did not come through. That’s when they came and asked if I want the store and I asked how will I afford to buy a store because I am an employee, but they told me not to worry,” he said.
He said the company financed him but after struggling to make a profit, he was denied a chance to sell his franchise. He said the store was given to a white retailer for free.
“White retailers are treated differently. They don’t have to pay but blacks have to pay. If you are struggling to make a profit, you are told that you can pay after a few months. But white people would be given a year without having to pay. I was given a loan of R3 million but ended up with a debt of more than R4 million,” he said.
He said his white colleagues were given another chance to come and work for the group after failing with their businesses.
“I know of one gentleman who is white. He was given the store and he failed. The company hired him and he got promoted. But the same does not apply to blacks. Today, I am here with no income. Sometimes I sleep on an empty stomach.”
The Spar group proposed to offer Hans his job again in an attempt to silence him. In the letter that was sent to him on September 30, 2021, the group said the proposal was on the basis that any claim he has against them should be “abandoned”. Hans rejected the offer, saying it was an insult.
Another retailer, Bernard Katompa has opened a case of fraud, racketeering, and perjury against Spar and its chief executive Brett Botten. Katompa, who owned Wendywood Kwikspar and Jacaranda SuperSpar, and Shop and Bag Spar, said his franchises were closed after Botten became hostile to him.
His businesses were also given to white retailers at a lower price. Katompa said he lost more than R40 million that he invested in the business. It is believed that more retailers were in the process of laying charges against Spar. They also requested the Public Investment Corporation (PIC) to intervene, as this would force the state-owned entity to fork out millions, saying it would lead to mass retrenchments.
Asked why Spar was taking so long to settle, the group’s secretary Kevin O’Brien said the initial settlement attempts were unsuccessful, which led to the parties agreeing to the mediation process.
“The mediation process was only initiated in June 2022, and we believe it’s progressing at pace for this kind of process, given that there were preliminary issues that needed to be dealt with and which have been attended to. The parties that are involved in the process are hopeful of reaching solutions in the shortest possible time frame,” he said.
O’Brien also denied allegations that the BEE funds were used to bail out white retailers. He admitted that some of the retailers were not profitable.
“Not all of the stores sold to retailers are loss-making. In those instances where the stores were trading in distress or were not profitable, Spar had committed financial support as part of the specific arrangement for that store, to assist the buyer to get the store into a profitable situation as soon as possible.”