Spar is urged to act on Galloway BEE dealsComment on this story
Durban - Black business owners who claim they were defrauded by Kloof accountant Bruce Galloway, the man allegedly kidnapped and thrown off a cliff at Kloof Gorge, are threatening to take the Spar Group to court.
The businessmen, who were all once in partnership with Galloway, allege that Spar managing director Rob Philipson acted in concert with Galloway who, they claim, bled their businesses and pocketed millions as part of a black economic empowerment scheme.
Galloway, 53, went missing in July in an apparent hijacking and was found days later on a ledge in the Kloof Gorge, less than 5km from his Intengu Road home.
Last week the Sunday Tribune revealed that the former chairman of the South African Sugarcane Growers’ Association was at the centre of a mired BEE business model adopted by the Spar group.
The model has seen Spar provide finance for black businessmen to open branches in partnership with Galloway, who took reponsibility for repaying Spar over five years.
While the empowered black businessmen have a 70 percent stake in the venture, Galloway as minority partner controls the finances and has sole control of bank accounts and the movement of money.
This unravelled when disputes arose among his partners, primarily because Galloway allegedly refused to provide monthly financial statements and declare how much he was earning from each venture.
Irate businessmen, in dissolving their agreements with Galloway, have claimed that he moved millions of rand from their business accounts to pay “loans” that never existed.
Now they have turned their attention to Spar and allege that Philipson’s failure to act made him responsible for their businesses failing.
A letter sent to Philipson this week spells out the demands of three of Galloway’s former partners, Bheki Qwabe, Leonard Mseleku and Boniface Ndokweni.
“This is what lawyers may call ‘collegial courtesy’. There is no reason we are drafting this letter other than to show we are still humane in spite of monstrous wrongdoing to us.
“It is clear to us, you and the public at large that we fell victim to gross negligence, mismanagement, disrespect and carelessness.
“It is clear that you are to blame for the failure of this BEE initiative, both because of your action and inaction. This is not to highlight your faults, as you are fully aware of them. This is to provide you with the last opportunity to do right in a cost-effective way without being compelled to do so.
“You not only chose the wrong person to assist in implementing the BEE initiative, but when that individual proved to be nothing other than a crook, a fraud and a highly skilled con artist, you chose to turn a blind eye and deny responsibility,” it reads.
The letter demands Philipson reverse the sale of their businesses or face litigation.
“As you receive this letter, our lawyer will be preparing for the worst and they know more about punitive damages than we do; hence we would appreciate a response no later than seven days from now.
“All we want is the sale of our businesses reversed and to be given back our businesses free of obligation.
“We understand that BEE initiatives in any company are in their infancy and there is a huge lack of understanding and so mistakes are and were bound to be made. However, the level of care with which our situation was meant to be treated was not forthcoming.
“This is the first and final plea to Spar to at least allow for fair discussions as to how Spar will give us our businesses back, free of obligation, so we can carry on with what we do best, so we can contribute to our families, businesses and essentially Spar’s bottom line,” it says.
Philipson last week confirmed that Spar had been in business with Galloway.
“The scheme was brought to us as an initiative by Galloway and is localised to KZN. We saw some merit in the scheme (and) provided part-funding for the initiative by way of five-year loans,” he said.
Philipson could not be contacted and repeated attempts to get Spar to comment proved futile.
It is understood, however, that Qwabe’s dated and signed letter was received.