The fallout of the arrest and release on bail of Sainsbury’s potato buyer John Maylam and Dave Baxter, operations director at supplier Greenvale AP, is being felt throughout the trade.
City of London police were called in by Sainsbury’s after Greenvale alerted the retailer to alleged bribery and corruption uncovered by its auditors.
The alleged corruption is on a scale that, if proved, has not been seen in the fresh produce trade before, as Maylam is alleged to have taken kickbacks from Greenvale to the tune of £3 million in the space of a year.
Both Sainsbury’s and Greenvale were remaining tight-lipped over the matter this week, but it appears that Greenvale uncovered financial irregularities that it investigated internally in December, before reporting to Sainsbury’s. The retailer also carried out its own investigation before calling in the police, following a prompt from Greenvale.
Trade analysts have suggested that bribes might have been to secure Greenvale increased business with Sainsbury’s, but sources close to the potato supplier believe it is more likely they were taken just to ensure existing contracts were not lost.
A spokesman for Greenvale said “ a number of staff” had been suspended while the firm continues to conduct its own investigations. But as far as its supply contracts to Sainsbury’s and other customers are concerned “it is business as usual”, said the spokesman.
Sainsbury’s trading director Mike Coupe has written to suppliers, assuring them that it takes its responsibility of sourcing with integrity “very seriously”. He also stated that “this is not something that involves us, other than as the victim of an alleged crime”.
A copy of the retailer’s hospitality policy was also sent to suppliers, along with details of a freephone whistleblowing line for those who suspect irregularities.
Many in the trade wonder why it took so long from Greenvale’s initial discovery of irregularities in December for an arrest to be made in March.
And questions are also being raised about the contribution of a culture of over-riders in dealings with UK multiples as a vehicle for corruption.
James Lowman, ceo of the Association of Convenience Stores, called for supermarkets’ relationships with their suppliers to be “opened up”, and said there were “kickbacks all through the process that are considered lawful”.
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