Labour MP Shane Jones accuses Countdown in Parliament of corruption, racketeering and acting like 'Tony Soprano'; Countdown rejects accusation

By Bernard Hickey

Labour MP and former leadership candidate Shane Jones has used parliamentary privilege to accuse Australian-owned supermarket chain Countdown of extorting payments from New Zealand suppliers in a way that amounted to "corruption, racketeering and blackmail."

Describing the practice as the "Countdown Shakedown", Jones said the suppliers who had complained about their treatment by Countdown had declined to be identified and he had decided to use Parliament Privelege, which protects MPs from defamation proceedings, to expose the activity.

"People that have requested that I publicise this issue live in fear. They live in a climate of threat, intimidation and menace. It is without a sliver of doubt I believe in this speech I am fulfilling my duties as a parliamentarian to alert us to a level of extortion that is going unchallenged in our food and grocery sector," Jones said. A full video of his speech can be viewed above.

A spokeswoman for Countdown told Interest.co.nz the supermarket group was "stunned" by the allegations and "absolutely and categorically rejected them."

"I want this Prime Minister and us as parliamentarians to challenge a repugnant story of supermarket behaviour and monopolistic malice and extortion," he said, describing the practice as "The Countdown Shakedown."

Jones said the corporate culture at Countdown "could only be described as something that Tony Soprano would be proud of," describing its practices as "racketeering, extortion and something imported from Australia that corrrupts established commercial practice in New Zealand."

He said a number of firms had contacted him and related being ordered to meetings with managers of the Countdown chain, who had then related that profit margins had not met shareholder expectations and they wanted more from suppliers.

"The Aussie managers are saying to our Kiwi employers, our Kiwi firms 'we're not here to talk nursery rhymes.' They are demanding from Kiwi businesses backdated cheques and recompense for the losses the supermarkets assert they suffered last year. And if they don't pay these cheques, they are being told no shelf space into the future. In any other sort of country that's blackmail, that is extortion," Jones said.

"Why should we as New Zealanders the Australian shareholders and Australian supermarket chains to treat our fellow taxpayers, our fellow businessman and women in that fasion,"

"In Australia it may be the corporate culture that extortion is some sort of casual liason between consenting adults. That type of extortion is an offence in our country.

"Why should we, as New Zealanders, allow the Australian shareholders and the Australian supermarket chains to treat our fellow citizens, our fellow taxpayers, and our fellow businessmen and businesswomen in that fashion? It is an offence. OK, in Australia, it may be the corporate culture that extortion is some sort of casual liaison between consenting adults. That type of extortion, which I have outlined, is an offence in our country," Jone said.

Jones then repeated his comments

"A number of firms have been told their products will not be placed on the shelves of our supermarkets unless they make backdated payments and offer remuneration for losses sustained by the supermarket. It is not the fault of New Zealand producers that an Aussie-owned supermarket could not compete with our New Zealand - owned cooperative supermarket chain," Jones said.

"This is how it works. The Aussie-driven owners and managers of the supermarket chains—and I know their names because I have been contacted by the people who were in the room—are saying to our Kiwi managers and our Kiwi firms: “You will hand over a cheque for my historic losses or you will never gain shelf space in the supermarkets. If you breathe one word of this, we will blacklist you permanently,” he said.

"That is not extortion; that must be approaching a crime."

Complaint to Commerce Commission

Jones said he would send an official letter of complaint to the Commerce Commission, "because this is monopolistic abuse."

"These threats, and this intimidation are driving our fellow Kiwis to their wits’ end. They begin to fear now whether their businesses are viable and they have told me that if they are forced to make these retrospective backdated cheque payments, they will start laying off workers," Jones said.

"This is the feral culture in this Australian-owned supermarket chain that saw them bring a Tasmanian Devil out 6 years ago to smash the union movement. They stopped to smash the union movement in that particular supermarket chain. Eventually consumers turned and supported the workers," he said.

'Corrupt culture of Australian shareholders'

"I only hope my fellow citizens and consumers from all around the country say they will not acquiesce with the importation of this corrupt culture from the Australian shareholders into our business environment. Let me be absolutely explicit: this covers a whole host of sectors in the New Zealand economy."

Jones said his contacts in the grocery supplies industry had sought legal advice about whether to speak to him because they lived in "abject fear."

'Supermarket fascism."

Jones then went on to attack Ralph Waters, the Chairman of Woolworths and the former Chief Executive of Fletcher Building in New Zealand. Waters remains the Chairman of Fletcher Building, although he is due to stand down at the end of 2014.

"I feel that we, as parliamentarians, ought to stand up for our fellow Kiwis in the face of this type of supermarket fascism. What possessed the Government, the Ministers, and, apparently, the richest man in Parliament, our Prime Minister, to come back after a brief discussion with Ralph Waters—a man who chairs Woolworths (NZ), made a handsome fortune out of New Zealand, and has done nothing to lift his finger or to change this operation's corporate culture," Jones said.

"He obviously convinced our Prime Minister, because he is from the big end of town, to let it slide. Well, it might be slippery enough for him, but on this side of the House, let us stand up against this monopolistic, extortionate, and menacing behaviour," Jones said, "we should not be intimidated by their corporate lawyers and lobbyists."

'Mafioso tactics'

"We should not be intimidated by their lobbyists. We should say, as I am today, to the Countdown management: stop threatening. Stop your Mafioso tactics against Kiwi businesses. Give them a decent shot. Give them a fair go," he said.

"Stop threatening that they will be bankrupted or blacklisted if they squeak about this extortionate behaviour. This verges on corruption. It has been imported into our business culture by the Australian-owned supermarkets. I will go to Pak ’N Save because the Aussies should pack up and go home."

Countdown statement

Progressive Enterprises Managing Director Dave Chambers said Progressive, which owns Countdown and is owned by Woolworths, "categorically rejected the allegations."

"We’re very proud to have a long history of supporting New Zealand suppliers and we have strong relationships with more than 1200 local and multinational companies here," he said.

"As a passionate Kiwi, I am also proud of the 18,000 New Zealanders who work hard to serve our customers every day, and of the investment our business continues to make in the economy. If any MP or supplier has questions or concerns about our business they are welcome to contact us directly to discuss them," he said, adding Countdown would fully cooperate with any enquiries from the Commerce Commission.

Food and Grocery Council comment

Food and Grocery Council Chief Executive Katherine Rich said in a statement the council was "aware of a number of incidents where our member companies have been asked for retrospective payments."

"We have raised our general concerns about this practice with the supermarket chain involved," Rich said.

"This is a serious issue that is new to the New Zealand grocery sector and we view it as an unwelcome development," she said.

"We have asked members to report further occurrences."

(Updated with more detail from Jones' statement, comment from Countdown, comment from Katherine Rich)

Note to readers - Our comments have been closed for legal reasons.