Spar wars: family hit back
The Giannacopoulos family seek court action against retailer’s execs
Two more senior Spar Group executives have been drawn into the fractious legal battle between the grocery wholesaler and its single most important franchisee, the Giannacopoulos family.
The family have named Max Oliva, MD of Spar South Africa, and Martin Conradie, the KwaZulu-Natal divisional human resources director, in a criminal complaint of fraud and perjury filed this week in
KZN.
Former CEO and chair Graham O’Connor and former CEO Brett Botten were mentioned in earlier criminal complaints filed by the Giannacopoulos family.
O’Connor and Botten announced in January they were quitting the Spar Group. This surprise development prompted the appointment of Mike Bosman, who had joined the board as a nonexecutive director in December, to the unusual position of executive chair in late January. His appointment, which conflicts with corporate governance guidelines, was limited to a three-month period.
The latest legal development is likely to make things a little messier for Bosman and his board colleagues as they try to settle investors’ nerves and deal with the fallout from a number of governance issues that exploded into public sight in December. Bosman tells the FM the move was not unexpected. While he’s obviously disappointed complaints were made against Spar employees, he understands the Giannacopoulos
family must follow whatever process they feel they have to. “We have met and had constructive discussions and are working on resolving the issues between Spar and the Giannacopoulos family.”
The latest move by the Giannacopoulos family follows similar filings in Gauteng and Pietermaritzburg late last year and relates to aborted attempts by the Spar Group to oust the family from the Spar franchise system. That system is based on a guild structure, which requires every Spar franchisee to be a “retailer member” of the guild.
The arcane guild structure, which for decades formed the basis of the successful Spar model, is at the heart of the acrimonious battle between the Giannacopoulos family and Spar.
That battle boiled over in October 2019 when Spar launched two “extremely urgent” ex parte legal applications in Pretoria and Pietermaritzburg to preserve its security over some of the Giannacopoulos stores by “perfecting” its bonds. In both instances the high court agreed to Spar’s request, which meant that Spar employees were able to move into several of the Giannacopoulos stores and take control.
Those court rulings came days after the Giannacopoulos Group’s membership of the guild system had been terminated unilaterally by Spar, at a meeting to which the family had not been invited.
This termination played a significant part in Spar’s ex parte request for perfection of the family’s stores. In addition, there were loans outstanding to the Giannacopoulos Group.
It turns out the high court had not been told about the kangaroo-court manner in which the Giannacopoulos family had been deprived of
their guild membership. Neither had the court been told that the family owed no money to Spar because that debt had been ceded to WesBank years earlier. Essentially, Spar executives had misrepresented the situation to secure the “perfections”.
The family managed to get the two judgments set aside. High court judge Jody
Kollapen described
Spar’s ex parte application as a “spectacular failure” and said if all the facts had been placed before the judges who first heard the matter, they would have come to a different conclusion.
In terms of the Prevention & Combating of Corrupt Activities Act, the Giannacopoulos family appear to be obliged to report the suspected offences committed by the Spar executives to the police. The executives named in the criminal complaint provided the tainted information backing the application to the court.
Last October the Giannacopoulos Group served summons on Spar for damages relating to the guild membership dispute, including the harm caused to its stores during the brief perfection process.
For Bosman the latest development creates distraction and the risk of further reputational damage. It also highlights the complexity of the relationships that need to work if Spar is to again enjoy the success of past decades.
The share price has benefited from Bosman’s board involvement, recovering from a low of R112 in late December to a high of R153 in February. It has been a little less robust in recent weeks.
For Bosman the latest development creates distraction and the risk of further reputational damage