Woolworths boss Brad Banducci has been threatened with a six-month prison sentence and a fine for failing to answer questions from a heated Senate inquiry into the supermarket’s profits.
Banducci was repeatedly asked during a supermarket pricing hearing to reveal Woolworths’ return on equity, a key measure of the company’s profitability.
Instead, the outgoing chief executive, who earned $8.6 million during the last financial year, declined to answer questions and focused on the company’s return on investment.
“We measure return on investment, which we believe is the right way to measure the profitability of a company,” he told the inquiry on Tuesday.
Inquiry chair and Greens senator Nick McKim warned Banducci that failure to answer the question directly could lead to him being found guilty of contempt by the Senate.
‘We are not interested in public relations. “We are not interested in you tricking your way through this committee,” Senator McKim said.
Woolworths boss Brad Banducci (pictured) was threatened with being charged with contempt of court during a Senate hearing.
Such a charge carries a fine of up to $5,000 and a possible prison sentence of six months.
The lack of disclosure of the response forced the investigation to suspend its hearings.
Big supermarkets’ profit margins have come under scrutiny in the investigation, with Woolworths and Coles accused of price gouging.
Woolworths made a profit of $1.7 billion after tax in the most recent financial year.
Senator McKim accused Banducci of cherry-picking data on the supermarket’s profits.
“The fact that (Woolworths’ return on equity) is 26 per cent in a year when you made $1.7 billion in profits shows that your company is thriving like bandits and effectively has a license to print money,” said.
“They have used this market dominance to put pressure on their suppliers, including farmers, to force down wages, compromise staff safety and increase prices to their customers.”
Previously, Banducci denied Woolworths was increasing prices.
The profit margins of major supermarkets, including Woolworths (pictured, have come under scrutiny in the investigation, and Woolworths and Coles have been accused of price gouging).
“It is very difficult to say that we are raising prices,” he said.
“I would respectfully say this is an incredibly competitive market and that’s good for consumers.”
Coles and Woolworths account for around two-thirds of Australia’s supermarket sector.
Banducci said inflation in the grocery sector had largely been the reason behind skyrocketing prices at the checkout.
“Food inflation is real and has been driven substantially by cost increases from our largest global suppliers of consumer goods and cyclical impacts on domestic fresh food markets,” he said.
“Although at Woolworths we are seeing a drop in food inflation rates, we understand that many of our customers are under immense cost of living pressure.”
It is one of the last public appearances for Banducci, who announced his resignation from the top job in February following an interview with ABC’s Four Corners program where he struggled to answer questions about Woolworths’ market share.
Inquiry chair and Greens senator Nick McKim (pictured) warned Banducci he could be charged after attempting to question him several times.
Banducci will step down as chief executive at the end of August, ending his eight-year tenure at the helm of Australia’s largest supermarket.
He had a base salary of $2.6 million, but with bonuses that increased his total compensation to $8.647 million, the company’s annual report showed.
Coles chief executive Leah Weckert will appear before the committee later on Tuesday.
The investigation comes as a review of the voluntary food and grocery code of conduct, which governs the relationship between supermarkets and suppliers, recommended it be made mandatory, with significant financial penalties for non-compliance.