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Supermarket giant Coles displayed the “morals of an alley cat” as it supported the systemic exploitation and underpayment of supermarket security guards across Australia, turning a blind eye to glaring indicators that its major contractor was a corrupt tax dodger.
An independent regulator probe has identified serious wrongdoing by Coles, with a top official accusing it of signing up for the “comprehensive abuse” of Australia’s industrial relations and taxation systems through its relationship with security provider MA Services.
The scandal extends to widespread visa rorting, with multiple Coles guards telling this masthead they worked in flagrant breach of their student working conditions, sometimes working 60 or 80 hour weeks across multiple supermarkets.
While the masthead and 60 Minutes’ eight-month investigation into MA prompted the security giant’s Christmas Eve collapse and multiple inquiries, the focus has shifted onto Coles’ due diligence in paying the security firm $50 million a year to secure its stores.
Labour Licensing Commissioner Steve Dargavel accused Coles of entering into its deal knowing MA was rotten and that the workers guarding its stores would be exploited.
“Coles … had enough information to know that workers could not be paid properly under the contracts that they entered into” with MA Services, said Dargavel, who heads Victoria’s Labour Hire Authority.
Dargavel said customers, like Coles, had displayed the “morals of an alley cat” in working with MA to undercut honest operators.
MA Services was once a booming Australian security company whose clients included major retailers including its biggest customer Coles as well as Kmart, Bunnings and Amazon, AFL clubs, the Melbourne spring carnival, Australian Grand Prix and the federal government.
Its sudden Christmas Eve collapse came after this masthead first unearthed evidence of the involvement of its chief executive and founder Micky Ahuja in alleged rampant worker exploitation, sexual harassment and significant suspected tax evasion.
It was also revealed that his firm had partnered with a company controlled by the Finks outlaw bikie gang to deliver a lucrative offshore security contract bankrolled by the Albanese government.
Newly uncovered evidence shows Coles did not act on clear red flags about Ahuja’s links to alleged unlawful activity including rampant worker exploitation or his previous efforts to launch a sex worker escort business, Sin City Entertainment.
“What we now know is that there were thousands of workers who had their wages stolen,” Dargavel said in an exclusive interview in which he revealed his agency had launched its own investigation into MA Services’ “gobsmacking” operations.
That investigation would look at MA’s dealings with Coles and other major corporate customers, he said.
Dargavel’s authority is part of a federal and state joint police and regulatory taskforce initiative probing MA, and which includes the Fair Work Ombudsman – the agency that would most likely lead any civil action or prosecution of Coles.
He said Coles’ contract price with MA made it clear security guards would be getting underpaid.
“Mathematically, those contracts did not add up at all,” he said.
Asked why Coles had not been held to account for profiting from the exploitation of thousands of its guards, Dargavel said: “They shouldn’t get away with it. They need to be held to account for it.
“There’s been enormous harm to small business, medium-sized business and large business who do the right thing. And there’s been enormous harm to vulnerable workers in this country.”
Ahuja refused repeated interview requests but has previously denied all wrongdoing.
Beyond the contracts that indicated mass worker exploitation, Coles missed or ignored other red flags about MA including information that should have been easily accessed by Coles.
A basic search of Ahuja’s prior corporate directorships, for example, reveals he started a company in 2013 to supply sex workers called Sin City Entertainment. Ahuja also held the business rights to the names Sin City Escorts and Melbourne Top Escorts.
Due diligence checks would have also revealed Ahuja’s links to a network of front companies, once again raising red flags for corruption given many of the same companies had collapsed owing the Tax Office millions or appeared to be fronted by dummy directors.
Such searches had been done by some other MA corporate clients as far back as 2019, with leading security expert Graham Manson saying that some had previously sacked MA because of its obvious misconduct.
Manson said he conducted an audit six years ago that found “a number of things that caused us real concern” ranging from MA subcontracting to unlicensed entities to charging its customers for ghost shifts that were never worked, posing a threat to public safety.
He described what he found as “a big red flag” that was “so obvious that you didn’t really have to go looking for it”.
While they wore MA uniforms, Ahuja’s largely migrant workforce were employed via front companies, fixers and ostensibly arms-length corporate entities to avoid paying MA worker entitlements and tax obligations.
Corporate and financial records analysed by this masthead reveal that almost two dozen companies involved in Ahuja’s security empire collapsed owing $65 million to the Australian Taxation Office. In addition to those debts, MA’s Christmas Eve collapse left another $19 million to the Tax Office.
Dargavel estimated the dirty money trail could involve “half a billion dollars of turnover that should have been going to [other] legitimate businesses that conduct themselves lawfully and ethically”.
Multiple MA guards that worked at Coles or with other MA clients said they worked without any or minimal overtime, sick or annual leave or superannuation.
If they complained, an MA fixer would commonly threaten to report them for breaching a 24-hours-a-week work limit on student visa-holders, risking deportation.
After writing to one MA fixer to complain about overtime, the man responded via WhatsApp with the threat that “your visa over-exceeded hours” and “breached of [sic] visa condition”, which would be reported to Australian authorities.
Assigned to four different Coles stores across Melbourne, Ali’s job was to deter, and occasionally confront, shoplifters.
Late last year, Coles publicly complained about the rising dangers its staff faced of violence in-store from thieves.
In a statement, Coles said any exploitation of workers was unacceptable and that MA had misled the company through the use of false documents, and rejected Dargavel’s claims it should have known MA’s contracts would lead to underpayment or unpaid taxes.
“These are serious allegations and we refute them,” it said.
Coles said it undertook detailed due diligence and ongoing monitoring including worker interviews and independent audits.
“What is now clear is that MA Services operated a sophisticated and misleading scheme designed to successfully conceal breaches of workplace laws from Coles and a range of other corporate and government clients,” it said.
“As soon as Coles became aware of the serious allegations, we commenced an internal investigation and immediately began assessing all available options, including termination of the contract, to ensure the matter was treated with the utmost seriousness.”
The supermarket giant in February revealed a net profit of $511 million, which was dragged down after it had to set aside $165 million to cover penalties from another underpayment scandal.
In its statement, Coles said it had responded to a labour hire authority request for information late last year but no concern had been raised with it about pricing.
“It is completely unclear how the alleged accusation now made has any basis,” it said.
“Coles takes its ethical sourcing, modern slavery, and corporate governance obligations seriously, and we acknowledge the importance of robust due diligence in managing labour-rights risks.”
It also noted MA Services had remained a licensed security provider throughout its time working with Coles.
A Kmart spokesperson said it required all suppliers to comply with the law and its policies and that it had ended its relationship with MA when it went into administration.
A Bunnings spokesperson said the hardware giant took the reports about MA seriously and that it, too, had required MA to comply with workplace laws.
“During the period MA Services was engaged by Bunnings, it held valid security and labour hire licences and Bunnings reviewed and verified its governance policies,” the statement said.
When MA Services went under, Bunnings had helped find jobs for the affected guards, it said.
For more, watch 60 Minutes, 8.40pm on Sunday night.
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