MacRoberts Compliance & Regulatory Update 16/05/12
POTATO BRIBERY SCHEME GETS ITS CHIPS
Yesterday, Mr Andrew Behagg, a finance director with Greenvale (a company that supplied potatoes to Sainsbury's) was found guilty of corruption at Croydon Crown Court. Greenvale supplied approximately 45% of Sainsbury’s potatoes in 2008, at a cost in the region of £40 million per year. Individuals at the company bribed Sainsbury's potato purchaser Mr John Maylam with lump sum payments, expensive trips and hotel stays.
Sue Patten, Head of the Crown Prosecution Service ("CPS") Central Fraud Group said:
“Potato buyer John Maylam was showered with excessive gifts and hospitality including stays at Claridges, costing a total of £200,000 and a luxury 12 day excursion to the Monaco Grand Prix in 2007, at a cost to Greenvale of around £350,000. Maylam also received lump sum payments, via an account in Luxembourg, to the tune of £1.5 million, supposedly for the storage of potatoes in Spain and other bogus activities."
As a result of the bribery and corruption, Mr Behagg and accounts manager Mr David Baxter (another Greenvale employee), were able to collude with Mr Maylam in overcharging Sainsbury's an estimated £8.7 million. Mr Maylam and Mr Baxter pled guilty to corruption and money laundering last year.
Croydon Crown Court heard evidence that the scheme was discovered when another Greenvale employee grew suspicious, after being asked to withdraw £5,000 bundles of £50 notes from a small local bank.
Jurors heard evidence from an accountant that payments were being entered into their financial systems as "entertaining" expenses and then written off as "raw materials" or storage costs for potatoes at fictitious firms in Spain and the UK. When the accountant raised the issues of payments with Mr Behagg he was told they were "rebates" and part of a "scheme". In court Mr Behagg said that he thought the payments were nothing more than “over-the-top” expenses.
All three men involved in the corruption are to be sentenced in June this year. Judge Nicholas Ainley yesterday warned Mr Behagg that for "a case of this magnitude a sentence of imprisonment is almost inevitably passed and a significant one at that."
The CPS has sent out a strong message, re-affirming their fight against bribery and corruption saying:
“Today’s message is clear: there is no place for corruption in British business. It attacks fair competitive practices and undermines our international reputation. This case demonstrates a clear distinction between reasonable business hospitality and that which is criminally corrupt.”
For further information, please contact David Flint or Valerie Surgenor on 0141 303 1100.
© MacRoberts 2012
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