Sainsbury’s food buyer pleads guilty to corruption

A Sainsbury’s food buyer who received £4.9m of backhanders from a potato supplier in return for a multi-million pound contract with the supermarket, has pleaded guilty at a Crown Court trial.

Croydon Crown court heard that John Maylam, 44, of Bearsted, Maidstone, Kent, took “gifts and hospitality” from potato suppliers Greenvale.

The court was told that Mr Maylam’s gifts included a £200,000 bill at London’s Claridge’s Hotel and £350,000 for a 12-day trip to the Monaco Grand Prix.

And, that he received cash bribes, delivered in plain envelopes, totalling hundreds of thousands of pounds.

Mr Maylam pleaded guilty to corruption between January 2006 and January 2008 by accepting gifts from Greenvale AP and acquiring criminal property by storing millions of pounds in a foreign bank account.

Greenvale’s account manager David Baxter, 50, from Hinstock, Market Drayton, admitted corruptly giving Mr Maylam gifts during the same period as well as acquiring criminal property including goods, services and cash in 2007.

Prosecutor Paul Ozin told the court that the case concerned corruption on a “massive scale”.

“Mr Maylam was corrupted with wholly excessive gifts and hospitality to show favour to Greenvale and work against the interests of his own employers,” Mr Ozin said.

He added that Greenvale financed the bribes by overcharging Sainsbury’s for potatoes – the supermarket knew nothing of the practice.

Sainsbury’s own code of conduct demands all hospitality gifts must be placed in a charity raffle and failure to do so may result in misconduct proceedings and dismissal.

Mr Ozin continued: “One technique was to add on one pound to a crate [of potatoes] and with the volume we are talking about it soon adds up. They also supplied smaller packs for the same price and there were illogical prices for new packs.”

“As a result of the corruption Greenvale gained the benefit of keeping Sainsbury’s’ valuable business and overcharging Sainsbury’s for potatoes,” the prosecutor added.

A £40m contract was ratified by Mr Maylam and £8.7m of Sainsbury’s money was paid into an account which was used to pay the backhanders.

“One and a half million pounds was paid to Mr Maylam through third parties and a bank account in Luxembourg. The payments were made on the bogus basis they were for potato research or storage of potatoes in Spain,” Mr Ozin said.

In a statement, the owners of Greenvale AP, Produce Investments, 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 supplier of potatoes to shoppers all over the country.

“We acquired the company in early 2006. In December 2007 it became clear to us that there might be financial discrepancies involving the company’s commercial relationship with Sainsbury’s. After a thorough investigation carried out on our behalf by accountants and legal advisors, we reported what was found to Sainsbury’s in March 2008 with a view to jointly alerting the police.

“Our investigations showed that £3.2 million – rather than the figure mentioned in court –  had been disbursed improperly and all such arrangements were stopped immediately.

“After further investigations, Mr Behagg and the operations director, Mr Baxter, were required to resign. Mr Baxter pleaded guilty at the start of these proceedings.

“A new management structure has been in place since we discovered the improper payments.”

The trial, which is expected to last three weeks, continues.

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