It is going to be a very jolly Christmas for the former CEO of Spar, as he has been paid a whopping R14 million for his time at the retailer.
According to Moneyweb, Brett Botten was given the lump sum as payment for his long service after he decided to retire in January this year.
It should be noted that Botten was only 57-years-old when he left Spar, and he was only CEO for less than two years. He was appointed in March 2021.
It should be noted that, at the same time that Botten left, so did former board chair Graham O'Connor. He will leave in December, and Phumla Mnganga, an independent non-executive director, stepped down as well.
Spar said that it would appoint two new independent directors as soon as possible.
According to Spar’s integrated report for 2023, Botten received R12.721 million as a lump sum payment and an estimated R1.5 million as a long service award.
SPAR FACES SCANDALS
There were a number of reports at the time that placed Spar in a precarious situation, and given that Botten was at the helm, it most likely left him under pressure.
When Botten was managing director at Spar’s main South Rand distribution centre, there were a number of questions about his time there, according to Moneyweb.
Spar was also facing a huge backlash for a report by law firm Harris Nupen Molebatsi over racial discrimination. Black store owners were accusing the retailer of being treated unfairly.
FICTITIOUS PAYMENTS
Business Day reported in late November that a store in Midrand was sold by Spar to a retailer, not once, but twice, in a period of less than a month.
This was a way to write-off losses and inflate income, according to the report.
Business Day notes that it has seen documents noting that the Mega SuperSpar in Midrand was sold for R1,000, and then three weeks later it was sold to the same buyer for R8 million.
The Spar group then provided a sum of R167,000 per month as a marketing contribution. This was the same amount needed for the loan repayment value.
According to the whistle-blower, this loan was set up to boost income for the division and make sure certain district managers were given their bonuses during that period.
It should be noted that in January, PricewaterhouseCoopers and Spar’s own legal team noted that a “reportable irregularity had occurred”.
The board noted that a written loan agreement was entered into by willing parties through a bank with normal interest rates.
The board said that the loan did not serve any real commercial or economic purposes and should not have taken place.
Moreover, the investigation found two other similar transactions.
SPAR’S INFORMATION SYSTEM FAILURE
In December, Spar said that it will have to withhold a final dividend to save cash after a huge IT system failure this year.
In September, Spar informed its shareholders that the software system blunder had cost the company R1.4 billion.
Spar moved to a new SAP software system and started rolling it out at their KwaZulu-Natal distribution centre earlier this year.
The system cost R1.8 billion, according to Spar, and negatively impacting distribution operations in KZN.
“The impact of the SAP implementation at KZN amounted to an estimated loss of turnover to the group of R1.4 billion for the period, being approximately R786 million for the six months ended March 31, 2023, as previously reported, and an additional R638 million for the five months to August 2023,” the company said.
Spar said that it had failed to implement the resource planning system in the KZN distribution centre.
This resulted in a 47% drop in annual operating profit, according to the retailer, and this in turn led to a R1.6 billion loss in turnover and a R720 million loss in profit.
Spar did acknowledge that the worst was now over as it relates to the faulty IT system and said it has not rolled out the system anywhere else in SA.
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