MacRoberts Compliance & Regulatory Update 25/06/12
FROM POTATOES TO PORRIDGE
We reported earlier this year that 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. On Friday 22 June, Mr Behagg and Mr David Baxter, formerly directors at Greenvale, together with ex-Sainsbury's potato buyer Mr David Maylam, were sentenced at Croydon Crown Court in south London.
Maylam and Baxter last year pleaded guilty to corruption and acquiring criminal property. In sentencing last week, Maylam was jailed for four years and Baxter was jailed for 30 months.
Behagg, who pled not guilty but was later convicted in May of corruption by authorising payments to Maylam, was sentenced to imprisonment for three years. Judge Ainley in sentencing said it was "very nearly as serious a case of corruption as I can imagine".
Greenvale supplied approximately 45% of Sainsbury’s potatoes at the time of the corruption, at a cost of around £40 million per year. Individuals at the company bribed Sainsbury's Maylam with lump sum payments, expensive trips and hotel stays. As part of the scam, Behagg and Baxter were able to collude with Maylam in overcharging Sainsbury's an estimated £8.7 million. The bribery came to light after an internal audit by Greenvale's parent company, Produce Investments. Greenvale will be subject to a confiscation hearing due to be held early next year.
Behagg did not initiate the corruption, and did not directly benefit, but was "aware of what was happening at a very early stage" and should have reported it, the court heard. The Judge, in his sentencing remarks, said of Behagg "you admitted in your own words that you were supposed to be the financial gatekeeper. You deliberately walked away from your post."
What is of note is that all the men involved were long standing employees, with a minimum of 20 years’ service for their respective companies.
A Sainsbury's spokesperson said: "This was an unacceptable and calculated crime against Sainsbury's and we are pleased that justice has been done. Today's sentencing sends a very clear message to anyone that behaves in this way that there are consequences to their actions.
"We demand the highest standards of all our colleagues and suppliers and Sainsbury's code of conduct clearly details how we expect them to behave, and is reinforced by our confidential whistleblowing line."
Produce Investments said: "[We have] no tolerance of bribery, corruption of any other wrongdoing in business. The sentencing of Andrew Behagg and David Baxter, formerly of Greenvale, and of former Sainsbury's buyer John Maylam, should serve to draw a line under this distressing saga".
For further information, please contact Valerie Surgenor or David Flint on 0141 303 1100.
© MacRoberts 2012
To register for MacRoberts e-updates on a variety of legal topics, please click here.