Govt in crosshairs as Alliance wage subsidy case widens
Claimant extends loop to all directors after 2020 results show revenue rise
Aprivate prosecution attempt against Alliance Group for returning only part of its $34.3 million Covid-19 wage subsidy is being broadened to include all the big meat company’s directors — and possibly a government minister.
Self-styled professional campaigner Simon Lusk in September sought leave of the court to bring a private prosecution against the South Island meat company’s nonexecutive directors for Alliance’s “disgraceful” failure to completely repay the wage subsidy.
Lusk had been waiting for the farmer-owned company to declare its 2020-year financial results, announced last month, to provide further information to the court at Invercargill to bolster his case.
“My lawyer has forwarded additional information to the judge with the annual results showing an increase in revenue, not a fall in revenue of 30 per cent.
“I have also instructed the lawyer to broaden the case to all Alliance directors.”
Alliance — which, as an essential food-producing service, was permitted to keep operating during New Zealand’s March-imposed Covid-19 lockdown in a year in which the export meat industry declared record sales — in September said it had repaid 50 per cent of the wage subsidy claimed.
It has since paid back another $4m — $13m short of what it claimed.
Lusk’s September court filing proposed prosecution of longer-term Alliance directors, chairman Murray Taggart, and independents Sarah Brown, Peter Schuyt and Graeme Milne.
He said since last month’s annual result, he had extended his proposed prosecution to all Alliance directors. His sights were also now on the Beehive. The Minister of Social Development has had direct oversight of the Covid-19 wage subsidy scheme but it was shepherded in by the Minister of Finance.
“My lawyer is currently working on which minister has failed in their ministerial obligations and which court it would be appropriate to adjudicate on whether they have
I would prefer to work through back channels and have the minister solve the problem before it ends up in court.
Simon Lusk
fulfilled their obligations. While I would prefer not to have to take this action I would prefer to work through back channels and have the minister solve the problem before it ends up in court.”
Alliance announced an underlying profit of $27.4m. Adjusted for one-off events, the annual profit result was $7.5m before tax.
Revenue was a record $1.8 billion for the year ending September 30.
Lusk said Alliance appeared not to fit the eligibility criteria for the wage subsidy.
“The wage subsidy was for companies that had an actual or projected fall in revenue of more than 30 per cent. They were an essential service that continued to operate during the lockdown.
“They either have had 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. There is no criteria where you can pick and choose how much of the subsidy you keep.
“They may be able to justify doing so (part repayment), but they may not and it is important that an impartial referee (the court) adjudicates.”
Alliance chairman Taggart has said Lusk’s court filing is “spurious and unfounded”.
“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,” he said.
He has said the company had been open and upfront about the wage subsidy.
“We have been in ongoing discussions with the Ministry of Social Development about the application of the subsidy and stated from the outset that we would return any funds not used to pay people. In line with that commitment, we have returned $17m of the subsidy.”
Alliance wasn’t the only meat company to claim large wage subsidies.
The subsidy scheme paid around $111m to meat companies, allowed to
keep working in lockdown.
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 suggest 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.
The taxpayer-funded wage subsidy scheme, a response to Covidimpact job losses, has so far cost more than $13b.
Lusk said his court action filing was with the judge and there was no indication of when the case would proceed.
“Unless Alliance pays back the subsidy in full the case will continue in the event that the judge refuses permission for the prosecution to proceed because I will immediately appeal.”