Durban - ‘Kidnapped” Kloof businessman Bruce Galloway has been accused by his business partners of systematically bleeding successful retail stores and pocketing millions in a fronting BEE 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.
The former chairman of the South African Sugarcane Growers’ Association is now at the centre of a mired Black Economic Empowerment business model, adopted by the Spar group. The model has seen Spar provide finance for black businessmen to open branches across the country in partnership with Galloway, who then pays off their outlets over five years.
While the empowered black businessmen enjoy a 70 percent stake in the venture, Galloway as the minority partner controls all the finances of the businesses, and has sole control over bank accounts and the movement of money.
This unravelled when disputes among his partners arose, primarily because he 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 individual business accounts to pay “loans” that never existed.
So seriously did the Galloway family view these disputes, they listed several of his partners as prime suspects in his disappearance when quizzed by police and private investigators.
Their “chief suspect” was Bheki Qwabe, a vocal detractor who insists that Galloway scuttled his successful Spar and Buildit franchise in Nongoma, north of Durban.
“I approached Spar late in 2008 with the intention of opening up a franchise and they directed me to Bruce Galloway. He told me that his knowledge and experience as an accountant put him in good standing with Spar and he would be the only reason black guys could be financed by them,” Qwabe said.
“We entered into an agreement, with myself as the principal member and Galloway having a 30 percent stake. I would manage the day-to-day operations of the store and he would handle the books.
“Things began to go awry when he refused to give me financial statements and he would not at any stage inform me, the principal member, of what salary he was drawing from our business,” he said.
“From sales records I had been keeping, I knew the business was doing well and growing, but I never had access to figures from Bruce.”
Qwabe said that despite attempts from Spar management to resolve tensions, Galloway refused to budge.
“This went on for years… He would promise to be transparent and then renege on his word.”
Three years after signing the deal with Galloway, Qwabe’s once successful business folded.
“All of a sudden there was not enough money in the business account to pay Spar for goods they had delivered.
“This is a business that had a turnover of over R6 million a month, and we didn’t have R800 000 to pay for an order. I didn’t have the money to go on my own and was forced to fold when I had almost finished paying for my business,” he said.
Having obtained bank records for his business account, Qwabe highlights movements of up to R300 000 a month to “BG loan”, totalling millions.
“This man took me for a ride. I am not the only one he has done this to,” he said.
Another Galloway partner, who asked not to be named, said their relationship soured when his co-director repeatedly failed to provide detailed financial statements and dual access to the company’s business account.
“When I eventually got access to the account and conducted an audit I found he had moved nearly R2m out of the business.
“When asked to explain, he said it was to pay a loan, which I until this day know nothing about.
“He has been pulling money from the business and doing his own thing with it,” the partner said.
A third business partner, who would not be named for fear of reprisal, said Galloway had also denied him access to financial records.
He said he had since uncovered large movements from his business account, with scant explanation from Galloway.
Galloway declined to comment when he was contacted by the Sunday Tribune.
“I am not making any comments to the press.
“The previous reports have been partially inaccurate and I am not saying anything,” he said in an abruptly ended phone call.
Spar managing director Rob Philipson confirmed that Galloway had approached them with a BEE business model which they had adopted.
“Bruce Galloway approached us a few years back to give black entrepreneurs an opportunity to eventually own both Spar and Build It stores.
“In exchange for providing or securing funding, administrative and financial assistance and mentorship, he took a minority shareholding in the businesses and charged a monthly fee.
“His partners then had the opportunity to buy him out at any time at a pre-determined value.
“It’s a very simple model that has worked in the past.
“Over the past year or so, disagreements have arisen between Bruce and some of his partners and legal action has resulted between them.
“I am not at liberty to speculate who was right or wrong in these cases.
“Some of the issues have been resolved with the partners and others are in the process of being resolved, but I am not at liberty to divulge these details as they are confidential and to be resolved between the respective partners and their legal teams,” Philipson said.
Galloway claimed to have been bound and flung from the Krantzkloof Nature Reserve viewpoint after he refused to divulge his ATM pin numbers to his captors.
He claims they had held him at gunpoint when they snatched him from his car as he left his house.
the disappearance, and the apparently motiveless attempt on his life, continue to cast doubt on the legitimacy of his “abduction”.
KwaZulu-Natal police spokesman Captain Thulani Zwane said investigations into Galloway’s disappearance were ongoing.
Galloway refused to take a lie detector test and the men he claims kidnapped him are still at large.
Sunday Tribune