EDITORIAL: Much to read in Spar CEO’s painless exit

What’s the board to do when its CEO is at the centre of a small but reputation-sapping scandal about questionable accounting practices? Fire him, of course — or so you’d think. But that was a step too far for the board of Spar, one of the country’s biggest grocery retailers and franchisers.   

The board, led by Mike Bosman, gave Brett Botten an opportunity to frame his departure as “an early retirement” from his role as CEO and board member of the company. 

Translation: Botten chose to go. 

It is likely that readers of this newspaper and our sister publication, the Financial Mail, do not buy it. Botten is 57 and entered the same C-suite just two years ago, embarking on an ambitious cross-border expansion strategy that bulked up the company’s operations in Poland and Switzerland. One would be forgiven for thinking that all self-respecting CEOs would like to see such a critical project through, and to hold it up as one of their legacies. 

Botten’s “early retirement” came six weeks after this newspaper reported evidence that put him at the heart of at least two accounting irregularities at a Spar division.

In the broadest brushstrokes, the report compiled for Spar by law firm Harris Nupen Molebatsi that was obtained by Business Day last month, raised questions about potentially “fictitious loans” to the value of about R11m being used to “inflate the profitability” of its South Rand unit. One reason advanced by a whistle-blower for Botten to be at the forefront of such an affair was that he may have stood to earn bonuses for making his division’s financial health more flattering than it would otherwise have been.

Spar hasn’t commented, let alone said whether it will pursue charges against the man responsible for what the board has admitted to being a reportable accounting irregularity, a term in auditing parlance that means an intentional misstatement or omission of information regarding a financial transaction or matter.

The board wasted no time and employed very precise language  in pointing out that the incidents were isolated, emphatically denying the accounting irregularities in the division were symptomatic of companywide questionable bookkeeping practices. It is clear they are able to say what they mean.

The language the board used to frame Botten’s departure downplays the seriousness of this affair, and smacks of loyalty rather than an admission that something went horribly wrong in the running of Spar’s South Rand division.

While the business community is demanding higher standards of governance and compliance from the state and its companies, this unserious approach is deeply regrettable.