Woolworths’ boss has been threatened with jail during a Senate hearing. Photo: Thomas Lucraft.
It’s not every day that a witness before a Senate inquiry is threatened with jail time, but that’s exactly what happened to Woolworths boss Brad Banducci on Tuesday (16 April).
The outgoing Woollies chief executive was grilled during the Senate’s hearings into supermarket prices but wasn’t playing ball with a line of questioning being pursued by Greens senator Nick McKim.
Mr Banducci repeatedly refused to answer questions about his supermarket’s return on equity, which is a key measure of profitability for Australian companies, but is not a key metric in the supermarket sector.
An increasingly frustrated Senator McKim accused Mr Banducci of cherry-picking and offering nothing more than PR spin for his answers.
Then he got angry.
“Mr Banducci, you’ve repeatedly refused to answer my question on return on equity,” the Senator said.
“I feel compelled to advise that it is open to the Senate to hold a witness in contempt when they refuse to answer a legitimate question.
“I also feel compelled to advise you that that opens up a range of sanctions—personal sanctions—that can be applied against you if the Senate decides to do so.
“Having said that, I ask you again: is your return on equity in the last financial year about 26 per cent?”
When Mr Banducci protested that he had answered the question “many times”, Senator McKim interrupted to say he hadn’t answered it all.
“I’m not interested in your spin or your bullshit. This is a senate enquiry. Answer the question,” he said.
“Was your return on equity 26 per cent in the last financial year, which is more than two-and-a-half times the average ROE enjoyed by Australian banks, which are the most profitable banks in the world? Is that true or not?”
It was made very clear to the supermarket boss that the personal sanctions being talked about included potential imprisonment.
“This is important, Mr Banducci,” Senator McKim said.
“This is very important because it is open to the Senate to hold you in contempt, and that carries potential sanctions, including up to six months’ imprisonment for you.”
The CEO finally took the question on notice, saying he didn’t actually know the answer because that wasn’t a metric the supermarket used.
“We make a reasonable profit, both a 10 per cent return on funds employed after tax and also a 10 per cent total shareholder return over the last five years,” Mr Banducci said.
“And as I said earlier, much of this goes back to Australian households in the form of superannuation and dividends.”
Coles chief executive Leah Weckert was later asked the same question, and she answered it. She also backed up Mr Banducci’s assertion that it wasn’t a metric supermarkets used.
Ms Weckert said Coles’ return on equity for 2023 was 31 per cent, but because Australian supermarkets lease 99 per cent of their stores, the ROE figure appeared much higher than it really is.
“As we don’t own those assets, we don’t hold equity on the balance sheet,” she said.
“Therefore, the denominator we’re dividing by here is lower and so you end up with a higher [return on equity figure].”
The Senate inquiry sparked by the Greens is examining possible price gouging by Coles and Woolworths amid growing evidence the giant supermarkets are ripping off their suppliers as well as their customers.
Former Labor minister Craig Emerson, who also appeared before the hearings, has delivered his interim report into the big supermarkets and says they cannot be left to govern themselves with a voluntary code of conduct.
He recommends a mandatory code with accompanying fines of up to 10 per cent of annual revenue for the companies that breach it.
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