A greedy Sainsbury's executive received corrupt payments totalling £4.9m from a huge potato supplier who lavished him with "excessive gifts and hospitality" for granting them a lucrative multi-million pound contract.
Buyer John Maylam, 44, ran up a £200,000 bill at London's Claridge's Hotel; enjoyed a luxury £350,000 twelve-day holiday to the Monaco Grand Prix and received cash payments totalling hundreds of thousands of pounds stuffed inside brown envelopes.
Maylam, (pic.top) of Bearstead, Maidstone has pleaded guilty to corruption between January 1, 2006 and January 1, 2008 by accepting gifts from directors of potato giants Greenvale AP and acquiring criminal property, namely £1,158m held in a Luxembourg bank account.
Greenvale's account manager, David Baxter, 50, (pic.mid.) of Hinstock, Market Drayton has pleaded guilty to corruptly giving Maylam gifts and consideration between the same dates and acquiring criminal property, namely goods, services and cash between June 1 and July 1, 2007.
Both men will be sentenced after the trial of Greenvale finance director Andrew Behagg, 60, (pic.bottom) of London Road, Cambridge, who denies corruption and told police he was the victim of "extortion" by Maylam.
"What this case concerns is corruption on a massive scale through the payments of gifts and hospitality," prosecutor Mr. Paul Ozin told the Croydon Crown Court jury today. "As a result of the corruption Greenvale gained the benefit of keeping Sainsbury's' valuable business and overcharging Sainsbury's for potatoes."
The £40m contract was ratified by Maylam and Greenvale poured £8.7m of Sainsbury's money into an account nicknamed 'The Fund' - paying Maylam and his associates £4.9m and keeping the remainder for themselves, the jury were told.
"Mr. Maylam was corrupted with wholly excessive gifts and hospitality to show favour to Greenvale and work against the interests of his own employers," explained Mr. Ozin. "The hospitality ran into many hundreds of thousands of pounds.
"Firstly they reimbursed Mr. Maylam's own extravagant expenses after he entertained himself at luxury restaurants and hotels, paying his bills at luxury london hotel's, including Claridge's, which came to two hundred thousand pounds.
"Not only was he staying at the hotel, but he was using it as a bank and withdrawing thousands of pounds.
"There were further payments for luxury holidays abroad and very, very lavish corporate entertainment."
Greenvale were overcharging Sainsbury's to finance the bribes and the supermarket giant knew nothing of the arrangement, said Mr. Ozin. "What is in it for Sainsbury's to fund Mr. Maylam's stays at Claridges, dining on fine food and drinking champagne while at the same time taking out large sums of cash?"
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.
"Further money was syphoned off by Mr. Maylam by using bogus businesses pretending to be something else and became another way of taking lot's of money," added the prosecutor.
"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.
"A peculiar feature of the corruption was that it was self-funding. Greenvale were not paying for it, Sainsbury's were paying for the corruption of their own buyer and this was achieved by overcharging Sainsbury's."
Baxter, who was based at offices in Stoke Heath will give evidence against Behagg, who worked from Chatteris. "Mr. Baxter paints a picture of corruption that goes to the very heart of Greenvale. To the senior management," said Mr. Ozin.
Baxter claims Maylam had an arrangement with the company's chief executive officer from June, 2005 to receive secret cash reimbursements for his expenses.
"Mr. Maylam sent his receipts in envelopes to Mr. Baxter's home address to avoid Greenvale scrutiny and he then took them to Mr. Behagg. Mr. Baxter would then deliver the cash in a brown envelope to Mr. Maylam.
"Mr Baxter says 'The Fund' was discussed in senior management meetings that were attended by Mr. Behagg, who explained to the others what went through the books.
"Mr. Maylam then made it clear he wanted more and was told the payment could be for a consultancy report, which was suggested by Mr. Behagg. This resulted in a payment of eighty-five thousand pounds."
Sainsbury's also ended up paying more for Greenvale's potatoes than agreed.
"What happened under Sainsbury's radar was that Mr. Maylam was agreeing to massive increases in the price of potatoes. The prices were much too high.
"One technique was to add on one pound to a crate and with the volume we are talking about it soon adds up," said Mr. Ozin. "They also supplied smaller packs for the same price and there were illogical prices for new packs."
Behagg was arrested and questioned by fraud detectives. "He said Mr. Baxter told him Mr. Maylam was offering better prices in return for Greenvale providing him with entertainment and hospitality.
"They believed that if they did not do what Mr. Maylam was asking they would lose Sainsbury's business. He described is as 'extortion' by Mr. Maylam.
"He said he assumed Mr. Maylam had the permission of Sainsbury's to use 'The Fund' for whatever he wanted.
"His explanation that Sainsbury's knew what was going on is incredible."
The trial is expected to last three weeks.
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