In the Shadows of COVID-19

Mention COVID-19 and one immediately recalls the economic carnage of 2020. Citizens everywhere, South Africans included, were busy surviving; counting coins, buying sanitisers, masking fear with face masks. Businesses collapsed. Jobs followed suit. Thousands joined the unemployment queues, socially distanced but economically united.

Corporations, naturally, also claimed hardship. Some genuinely struggled. Others, however, appeared to discover that crisis comes with perks - chief among them, the comforting assumption that no one was watching.

Indeed, few seemed to notice when, as its financial year closed on 28 June 2020, JSE-listed Shoprite Holdings Ltd announced that its Chief Executive, Pieter Engelbrecht, would be taking home a modest ZAR 22,271,000. One might assume that such generosity signalled robust performance amid chaos. The shop floor, however, received a different memo - one written in silence.

A closer look at Shoprite’s internal architecture is instructive. The Group has long perfected the art of distance. Divisions masquerade as independents. Drive past OK Furniture or House & Home and you might reasonably assume they stand alone. They do not. They are divisions of Shoprite Checkers (Pty) Ltd, itself a subsidiary of Shoprite Holdings Ltd - corporate matryoshka dolls, each layer further from scrutiny.

Despite “challenging trading conditions,” the Furniture Division somehow increased turnover by 4% to R6.2 billion. Credit participation declined, stores closed, workers absorbed the blow—but the numbers, we are told, smiled just enough. OK Furniture contributed roughly 4% of Group revenue. Evidently, that 4% impressed someone at head office.

So impressed, in fact, that on 17 July 2020, the Division’s General Manager, Paul Fairhurst, wrote to one of its ten Operations Managers, Thembinkosi Sydney Nkatsha, congratulating him - with a pay increase - for a job well done.

Sydney fired for questioning cooked books

What the applause failed to mention was that ten months earlier, Nkatsha had asked an awkward question: why were there two income statements attributed to 41 stores and 5 distribution Centres under his operations? His concern arose after learning that employees under his supervision would receive no performance bonuses, based on a document earlier produced by the Management to justify this austerity. Nkatsha, familiar with his team’s performance, recognised the statement for what it was; or wasn’t and told Fairhurst plainly that the numbers were fake.

He raised the issue again on 31 March 2020 with the subsidiary’s HR head, Zakhele Sibiya. Then again in mid-June. Persistence, it seems, is not a core value at Shoprite Group.

When Nkatsha received his pay-increase letter on 17 July, 2020, he made the innocent mistake of assuming justice had trickled downwards. It had not. His subordinates remained unrewarded. He pressed again for answers.

By 6 September 2020, (a Sunday) the tone changed. A notice of suspension; always the opening act of a familiar corporate tragedy,  was issued, signed not by the General Manager but by one Andre Schoultz. Curiously, the letterhead belonged to OK Furniture, not Shoprite Checkers (Pty) Ltd, the legal employer. Details matter; until they don’t.

The allegations? “Victimisation, harassment, bullying.” Serious claims, requiring serious process. The Labour Relations Act No. 66 of 1995 is quite clear: disciplinary procedures must follow prescribed steps. Shoprite even has its own internal checklist. One struggles to imagine how all requirements were met in record time.

Journalists are said to arithmophobes, but even we can count days. From 17 July to 6 September 2020, excluding the eight Sundays and a public holiday in between, there were 43 work days; Hardly enough time to receive complaints, conduct investigations, conclude and publish findings, and then suspend a senior manager? Not even a legal behemoth like CDH, with over 340 lawyers, could plausibly manage that feat.

The simpler explanation is also the most uncomfortable one: the decision was already made – Nkatsha had to go;  the personal raise he had been awarded had failed to silence him; the nagging issue was how, which was just incidental.

uSpiked asked Shoprite Holdings a simple question: why the company generated two income statements? The response was efficient—an automated reference number. Substance, however, remained in lockdown.

Automated acknowledgment is not a response

We also contacted Mr Thinus Hamman of PwC, the independent auditor who signed off Shoprite Holdings’ 2019 financials. Our question was equally simple: which income statement did he rely on for the audit?

As we were in the final stages of production, Hamman, seemingly appreciating the implication wrote; “As a matter of professional ethics and in accordance with the requirements of the auditing profession, I am not permitted to comment on, confirm, deny, or discuss any confidential client?specific information, including matters relating to audit procedures, management practices, or financial reporting of any entity.

“Any queries relating to the company’s financial information or internal practices should be directed to the management or governance structures of Shoprite Holdings Limited, who are the appropriate parties to address such matters.”

In essence, Hamman is declaring ‘we only did what the client told us to do, Kapish!’

By publication time, the silence from Shoprite Holdings was complete.

And so, in the long shadows of COVID-19, we are left not with answers, but with patterns. And patterns, inconvenient as they are, tend to tell their own stories.

Having obtained records pertaining to Nkatsha’s dismissal, in the third instalment, uSpiked will be revealing the shenanigans that accompanied all proceedings from the Disciplinary hearing to the CCMA handling of the matter.