In the Media

Potato company boss faces jail over Sainsbury's scam

PUBLISHED May 15, 2012
SHARE

A former potato firm director has been told he faces a significant jail term for his role in a bribery scam with a buyer at Sainsbury's.

Andrew Behagg, 60, from the food supplier Greenvale, was found guilty at Croydon crown court of authorising payments in return for lucrative contracts. He was part of a gang of white-collar criminals who overcharged the supermarket by nearly £9m and channelled money back to a senior buyer, John Maylam.

The scam ? described by Sainsbury's as the biggest ever crime against it ? was uncovered when a Greenvale employee grew suspicious when he was asked to withdraw £5,000 bundles in £50 notes from a small local bank.

Simon Forster, a group financial accountant, found payments were being entered into the financial system as "entertaining" expenses and then written off as "raw materials" or storage costs for potatoes at fictitious firms in Spain and the UK.

Forster said that when he raised the payments with Behagg ? one of the signatories of the account used to withdraw the cash ? he was told they were "rebates" and part of a "scheme".

The prosecution's case was that Sainsbury's was overcharged by £8.7m by the potato supplier, who had a two-year contract worth £40m a year to supply 45% of Sainsbury's UK potatoes at the time.

Greenvale handles 10% of the UK potato crop, amounting to 600,000 tonnes a year, the court heard.

The prosecutor Paul Ozin told Behagg, from Chatteris in Cambridgeshire: "The truth ? is that you knew perfectly well that these were simply corrupt payments to Mr Maylam to buy you better prices."

Judge Nicholas Ainley said after the verdict: "For any case of this magnitude a sentence of imprisonment is almost inevitably passed, and a significant one at that."

Maylam, 44, of Bearstead, Kent, and David Baxter, 50, of Hinstock, Shropshire, have already admitted corruption and are expected to be sentenced alongside Behagg on 22 June.

Behagg was bailed on the condition he stays at his home address.

Sue Patten, head of the CPS central fraud group, said: "Potato buyer John Maylam was showered with excessive gifts and hospitality including stays at Claridge's, 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 £1.5m, supposedly for the storage of potatoes in Spain and other bogus activities.

"In return for these criminal payments, Greenvale employees David Baxter and Andrew Behagg were able to collude with Maylam in overcharging Sainsbury's to the tune of £8.7m."

Detective Inspector Matt Bradford, from City of London police's economic crime directorate, said: "This was a very complex fraud but the tireless work of our detectives over a four-year period has seen Andrew Behagg found guilty of corruption today.

"His conviction should send a clear message to anyone considering getting involved in this type of fraud ? the City of London police will bring you to justice."

A Sainsbury's spokesman said: "This was an unacceptable and calculated crime against Sainsbury's of a magnitude never experienced in our history.

"We are pleased that justice has been done with today's verdict and we would like to thank the police for their thorough investigation that led to the conviction of John Maylam and David Baxter in 2011 and Andrew Behagg today."

Produce Investments, the owners of Greenvale, said: "We instigated this investigation and have since then introduced new procedures to make sure that such abuse can never happen again.

"Our relationship with Sainsbury's is now on a footing as before and we continue to be one of the largest suppliers of potatoes to shoppers all over the country."

The company disputed the CPS's figure. A spokesman said: "Our investigations showed that £3.2m, rather than the figure mentioned in court, had been disbursed improperly and all such arrangements were stopped immediately."

CATEGORIES