Woolies boss threatened with jail in fiery Senate hearing

Nick McKim's first question to Brad Banducci

Source: Australian Senate

Woolworths boss Brad Banducci has been threatened with a six-month jail sentence and a fine for failing to answer questions in a fiery exchange at a Senate inquiry into supermarket profits.

Banducci was asked repeatedly during Tuesday’s hearing into supermarket prices to disclose Woolworths’ return on equity, a key measure of the company’s profitability.

He instead focused on the company’s return on investment.

“We measure return on investment, which we think is the right way of measuring profitability in a company,” he told the inquiry on Tuesday.

Banducci said he had been “authentically clear” in answering the question and that he didn’t know Woolworths’ return on equity because it varied.

“The focus is, you put a dollar in, what return do you get out?” he said.

After a fiery back-and-forth, inquiry chair and Greens senator Nick McKim warned Banducci a failure to answer the question directly might lead him to being held in contempt by the Senate.

“I’m not interested in your spin or your bull—t,” a clearly frustrated McKim said.

Such a charge comes with a fine of up to $5000 and a possible prison sentence of six months.

The exchange led to a brief suspension of proceedings for a “short, private meeting”.

The profit margins of major supermarkets has been under scrutiny at the inquiry, with Woolworths and Coles being accused of price gouging.

Woolworths made a $1.7 billion profit after tax in the most recent financial year.

McKim accused Banducci of cherry-picking data about the supermarket’s profits.

“The fact that [Woolworths’ return on equity] is 26 per cent in a year where you made $1.7 billion in profits shows that your company is making off like bandits and effectively has a licence to print money,” he said.

“You’ve used this market dominance to put the squeeze on your suppliers, including farmers, to force down wages, to compromise staff safety and to price gouge your customers.”

Later on Tuesday, Coles chief executive Leah Weckert admitted the supermarket giant had let down its suppliers following claims the company was underpricing the wholesale value of goods.

“Claims have been made about how we interact with our suppliers. We acknowledge that we don’t always get it right, but all of our procedures seek to ensure fair and sustainable relationships,” she said.

“We acknowledge some of the concerns that have been raised by the farming sector, particularly the horticultural sector, around price transparency.

“Coles would be very willing to be part of a solution that would involve greater transparency for fresh produce.”

The inquiry was previously told suppliers were hesitant to speak out about the relationship with major supermarkets for fear of retribution or loss of contract.

Weckert said Coles was looking to put in place measures to improve relationships with suppliers.

Earlier, Banducci denied Woolworths was price gouging.

“It’s very hard to say that we have price gouging,” he said. “I would respectfully submit that this is an incredibly competitive market and that is good for consumers.”

Coles and Woolworths make up about two-thirds of Australia’s supermarket sector.

Banducci said inflation in the grocery sector was the main reason for skyrocketing prices at the checkout.

“Grocery inflation is real and has been substantially driven by cost increases from our largest global consumer goods suppliers and the cyclical impacts in the domestic fresh food markets,” he said.

“While at Woolworths we’re now seeing falling rates of grocery inflation, nevertheless, we understand that many of our customers are under immense cost-of-living pressure.”

It is one of the last public appearances for Banducci, who announced his resignation from the top job in February following a trainwreck interview with ABC’s Four Corners in which he struggled to answer questions about Woolworths’ market share.

He will step down as chief executive at the end of August.

The inquiry comes as a review into the voluntary food and grocery code of conduct, which governs the relationship between supermarkets and suppliers, recommended it be made mandatory, with significant financial penalties for breaches.

-with AAP

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