In a shocking case of corporate skullduggery, three of the Spar Group’s senior executives are accused of serious fraud caused by misrepresentations and non-dislocures made in two of the country’s High Courts. AfriForum’s Private Prosecution Unit has helped Chris and Harry Giannacopoulos and their family’s group of companies (Giannacopoulos Group) file criminal complaints of fraud and perjury against these executives in Gauteng. Further complaints will soon be filed in KwaZulu-Natal.
It is alleged that the Spar Group, through its executives, falsely claimed in affidavits in 2019 that companies in the Giannacopoulos Group owed it money in order to convince the courts to grant the Spar Group control over the supermarkets owned by the companies. These alleged misrepresentations were confirmed by the very same High Courts when the Giannacopoulos Group successfully challenged the unlawful takeover bid.
Two of the implicated parties who filed affidavits in the legal matters in 2019 are Spar’s managing director Desmond Borrageiro and chief executive Brett Botten. The chairperson of the Spar Group, Graham O’Conner, signed certificates of balance in support of summonses. The alleged misrepresentations – attributed to ignorance by their legal team – have been admitted by some of the suspects and described as an ‘honest and unfortunate mistake’.
More executives will be implicated when another case is filed in KwaZulu-Natal.
In the court applications filed in Pretoria and Pietermaritzburg in 2019, the Giannacopoulos Group alleged that the Spar Group:
Failed to disclose to the court that the Giannacopoulos Group’s retailer membership had been terminated without giving them a hearing as had been promised by the Spar Group.
Made false statements about development loans, indicating that the Giannacopoulos Group of companies was indebted to the Spar Group.
These alleged misrepresentations were repeated in several summonses issued against companies in the Giannacopoulos Group.
Acting on orders obtained from the courts and based on the alleged misrepresentations, the Spar Group in 2019 immediately took steps to take over the stores. Only after a successful urgent court application by the Giannacopoulos Group were the businesses returned to their control.
These facts form the basis for the criminal complaints filed with the police in Pretoria today (8 December 2022) and scheduled to be filed in Pietermaritzburg in the coming weeks.
Giannacopoulos says since the failed court bids by the Spar Group, the relationship between the Giannacopoulos Group and the Spar Group has soured further. ‘The Spar Guild and Spar Group have been pursuing a campaign of oppression against the Giannacopoulos Group in an attempt to drive them out of the Spar trading system and to take their stores. This has resulted in various further court cases between the parties. Some of these court cases are ongoing.’
Speaking on the impact of of this protracted affair, Giannacopoulos said: “We expect the police and National Prosecuting Authoirity (NPA) to do their duty, but appreciate the support from AfriForum’s Private Prosecution Unit to monitor the process and ensure justice is done. However, we will not shy away from pursuing a private prosecution if the NPA declines to prosecute.
“The continued campaign by the Spar Group against our company has caused our stores reputational damage, but worse that that, it has impacted the staff that we employ who go out of their way to serve our loyal customers,” said Giannacopoulos.
The head of the Private Prosecution Unit, Adv. Gerrie Nel, stated: ‘We were approached by the Giannacopoulos Group because of the skills and expertise that we offer in order to deal with what may be perceived as corporate bullying. The impact of the alleged false statements and misrepresentations in court papers has been immeasurable, not only financially but emotionally too.
‘We have been briefed to monitor the matter and to consider private prosecution should the National Prosecuting Authority fail to prosecute,’ said Nel.
BACKGROUND
The Giannacopoulos Group owns a group of 13 companies that operate 45 Spar supermarkets and Tops liquor stores in three provinces.
The Spar Group would from time to time lend money to, inter alia, the Giannacopoulos Group for the acquisition of new stores, or for renovations and refurbishments.
During 2015 and 2016, several companies within the Giannacopoulos Group took development loans totaling over R100 million from the Spar Group. The Spar Group obtains security from its retailers for loans to those retailers in the form of notarial bonds, which the Spar Group registers over the retailers’ Spar and Tops stores at the Deeds Office. The Spar Group then has the right to take control of a retailer’s store if the retailer defaults on a loan payment or other credit obligation.
After the loan agreements had been signed, the Spar Group allegedly ceded the loans to the Giannacopoulos Group to Wesbank. However, neither the Spar Group nor Wesbank informed the Giannacopoulos Group of this development, while the Spar Group represented that the loans were in fact owed to it.
During a dispute in 2019 between the Giannacopoulos Group, the Spar Group and the Spar Guild, the latter entity allegedly held a secret meeting at which it was decided that all 45 stores of the Giannacopoulos Group would have their membership terminated. The Giannacopoulos Group was not present, nor were they afforded an opportunity to state their case.
In October 2019, the Spar Group obtained a court order – obtained on an ex parte basis – to exercise its rights in terms of the notarial bonds over stores owned by the Giannacopoulos Group. This was done despite the Giannacopoulos Group allegedly not owing any money to the Spar Group.
When the Spar Group made its application to the court in October 2019, it allegedly knowingly misrepresented that the Giannacopoulos Group owed the Spar Group money for loans. According to the complainants, the Spar Group knew that the Giannacopoulos Group did not owe it money because the loans had been ceded by the Spar Group to Wesbank.
The Spar Group took control over the stores of the Giannacopoulos Group. Control was returned days later when the Giannacopoulos Group filed a successful urgent application.
In January 2020, the Spar Group issued several summonses against companies in the Giannacopoulos Group, in which the Spar Group allegedly falsely claimed payment for outstanding loans, despite such loans having been ceded to Wesbank.
On 17 July 2020 the Giannacopoulos Group successfully challenged the Spar Guild’s termination of their retailer membership. This judgment was upheld by a full bench of the same court in July 2022.
In April 2021, the Spar Group admitted under oath in other legal proceedings that the loans were not owed to them, but were in fact owed to Wesbank.
Giannacopoulos says in the affidavit in the current criminal complaint: ‘The applications were based on material misrepresentations, non-disclosures and false claims contained in the affidavits filed by Spar Group in support of their applications … two days after the perfection applications were granted, the Giannacopoulos Group companies urgently applied to the Pretoria High Court and the Pietermaritzburg High Court to set aside the perfection orders.
‘The Pretoria High Court agreed that there were material misrepresentations and non-disclosures in the affidavits relied on by Spar Group, and the Pretoria High Court dismissed Spar Group’s application on 18 October 2019 with punitive costs and immediately gave possession of the stores back to the Giannacopulos Group.
‘This intention to get rid of the Giannacopoulos Group is what motivated the Spar Group to make false representations about the development loans, in the Pretoria High Court and also in the 8 summonses issued in the Durban High Court,’ said Giannacopoulos.
TIMELINE
19 September – O’Conner indicates the Spar Group will hold a hearing to determine whether to remove from the Giannocopoulos Group from the retailer network.
20 September – Fluxmans Attorneys, acting for the Giannacopoulos Group, asks on what date the hearing will be heard. No response.
15 October – The Spar Group is again asked when the hearing will be held. On the same day, the Spar Group hosts a secret meeting where it is decided the Giannacopoulos Group’s guild membership is terminated.
16 October – The Spar Group approaches the High Court on an ex parte basis to seize control of the Giannacopoulos Group’s stores. Hours later, the Spar Group executes the order and starts seizing control of Giannacopoulos stores.
18 October – The Giannacopoulos Group approaches the court on an urgent basis and sets aside the Spar Group’s ex parte application.
Read the original article in Afrikaans on AfriForum
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