Court action proposed against Alliance meat company over wage subsidy

Plaintiff says Alliance paying back half a $34m wage subsidy is incomprehensible. Photo / Dave Murdoch

Professional campaigner Simon Lusk is planning court action against non-executive directors of meat company Alliance Group for repaying only half the $34.3 million Covid-19 wage subsidy it claimed.

Lusk, in a guest post on Kiwiblog, said he was seeking leave of the court to bring a private prosecution against the company's non-executive directors for Alliance's "disgraceful" failure to completely repay the wage subsidy.

The farmer-owned cooperative said earlier this month it had returned $17m of the wage subsidy.

"Throughout the process, we have been in ongoing discussions with the Ministry of Social Development over the application of the wage subsidy. We said at the outset we would return any funds not used to pay people and can confirm we have since returned $17 million of the wage subsidy," said chief executive David Surveyor.

The taxpayer-funded subsidy programme paid around $111m to meat companies, a sector deemed an essential service and allowed to keep working in lockdown.

The meat industry reported record export sales this year.

Alliance has been approached for comment on Lusk's move.

Lusk said the company paying back some of the subsidy was "incomprehensible".

"They either have a fall in revenue of more than 30 per cent in which case they are entitled to keep the entire amount, or they have not had a fall in revenue of more than 30 per cent and they should pay back the entire amount.

"Alliance is a strong profitable company that should be doing its part in helping rebuild the economy. The retained wage subsidy is less than the profits they made last year. Instead they chose to take corporate welfare.

"They may be able to justify doing so, but they may not, and it is important that an impartial referee adjudicates," said Lusk's post.

He said non-executive directors were well remunerated for their governance role, which came with consequences.

"This case aims to make the consequences personal, not something the directors can avoid by hiding behind the corporate structure."

The largest meat company claimants were Silver Fern Farms, paid $43.2m for 6161 employees, Alliance Group, which received $34.3m for 4913 staff, and the Anzco group of companies which got $17.3m for 2478 employees.

Silver Fern Farms repaid the subsidy in full in July.

Herald inquiries suggested the wage subsidy was claimed for around 13,500 of the meat industry's estimated 22,000 employees.

Several smaller meat companies also claimed the subsidy.

But some large industry players did not. They included Affco, Greenlea and Hellaby, which between them employ more than 6000 people.

Alliance posted a before-tax profit of $20.7m for FY19. Silver Fern Farms, half owned by Shanghai Maling (Hong Kong) and half by a New Zealand farmer co-operative, announced a $70m net profit for FY19. Japanese-owned Anzco posted record revenue of $1.7b and a net profit after tax of $22m. Operating cashflow was $140.7m.

Alliance's Surveyor said earlier this month that taking the wage subsidy meant the company was able to maintain jobs and ensure employees' earnings were not impacted during the lockdown.

"We were also able to continue paying those people with underlying health conditions or aged over 70 who were unable to work during the lockdown and those on stand-by to cover absenteeism. Our application for the wage subsidy was also supported and endorsed by the New Zealand Meat Workers Union.

"Alliance Group predominantly processes sheep and the nature of our processing means we were more severely affected by the Covid-19 operating restrictions than other companies.

"From the beginning, we have been committed to applying the subsidy to the right people in the right way."

Alliance has 10 directors. Its chairman is Murray Taggart.

Lusk's website says he is one of the very few professional campaigners in New Zealand. He runs campaigns for local government, central government, party selections and specialises in third-party campaigns.