Wage subsidy case haunts Alliance Group

Alliance Group is facing a private prosecution by self-proclaimed professional campaigner Simon Lusk for only returning part of the $34.3 million Covid-19 wage subsidy it claimed.

In September, Lusk sought leave of the court to bring a private prosecution against the South Island meat company’s non-executive directors for Alliance’s “disgraceful” failure to completely repay the wage subsidy. He has now expanded his case to all of the company’s directors – as well as a yet-unnamed government minister.

Alliance – along with other meat processors – was declared as an essential food-producing service and permitted to keep operating during New Zealand’s March-imposed Covid-19 lockdown. In September, the farmer-owned co-op said it had repaid 50% of the wage subsidy claimed. It has since then paid back another $4m, leaving it $13m short of what it claimed in total.

Lusk’s private prosecution is now also targeting government ministers. The Minister of Social Development had direct oversight of the Covid-19 wage subsidy scheme but it was directed 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 fulfilled their obligations,” he told the NZ Herald.

Lusk claims Alliance did 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%. They either have had a fall in revenue of more than 30%, in which case they are entitled to keep the entire amount, or they have not had a fall in revenue of more than 30% and they should pay back the entire amount.”

Last month, Alliance announced an underlying profit of $27.4m for the 2019-20. However, adjusted for a one-off expected historical wage claim of $20 million, annual profit was only $7.5m before tax.

However, Alliance chief executive David Surveyor told Rural News Lusk’s claims are unfounded and show no understanding of the process being run by the Ministry of Social Development.

“Alliance Group has always been open and upfront about the wage subsidy application, which has been widely shared with the public. We have been in ongoing constructive discussions with MSD 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, the co-operative has already returned $21 million of the original $34 million that was not required for the purpose of retaining jobs and income,” Surveyor says.

“The remaining wage subsidy balance is sitting in a bank account by agreement with MSD, awaiting a decision by them as to our eligibility. We publicly committed in our year-end financial result that none of this money will be recognised or used by the company until discussions with MSD are complete.”

Surveyor says the wage subsidy meant Alliance was able to keep employing its workforce during lockdown and ensure their earnings were not impacted.

“We were also able to continue paying those people with underlying health conditions or aged over 70 who were unable to work during the lock-down and those on stand-by to cover absenteeism,” he adds.

“Our application for the wage subsidy was also supported and endorsed by the New Zealand Meat Workers Union.”

Surveyor added that the farmer co-op predominantly processes sheep and the nature of its processing meant it was more severely affected by the Covid-19 operating restrictions than other meat companies.

Alliance wasn’t the only meat company to claim the wage subsidy. Silver Fern Farms was paid $43.2m and the Anzco Group got $17.3m. Several other smaller meat companies also claimed it. However, Silver Fern Farms has now repaid the subsidy in full.

Meanwhile, other large meat industry players did not claim the subsidy – including Affco, Greenlea and Hellaby.