independent

Sunday 20 April 2014

Tesco supplier sues retailer for almost €4m in 'outstanding' payments

Beaumex says it was unaware of the alleged "serious underpayments" until its former financial manager had "a nervous breakdown"
Beaumex says it was unaware of the alleged "serious underpayments" until its former financial manager had "a nervous breakdown"

A COMPANY supplying CDs and DVDs to Tesco Ireland has sued over some €3.9m allegedly outstanding for certain goods supplied on dates from 2006.

Beaumex says it was unaware of the alleged "serious underpayments" until its former financial manager had "a nervous breakdown" after becoming "simply overwhelmed" by dealings with the retail giant.

While Tesco had agreed to make some €1.1m in payments, some €3.9m remains outstanding, Beaumex claims.

It is alleged a "vast" number of deductions - some 16,000 - made by Tesco Ireland on goods supplied to it by Beaumex led to "serious underpayments" to Beaumex of which it was unaware because its former financial manager had suppressed information concerning its accounts over a nine year period.  That manager had not benefitted personally, Beaumex stressed.

The company, with offices in Walkinstown, Dublin, and a supplier to Tesco Ireland for some 20 years, only became aware of the sums owed after the manager suffered a nervous breakdown, David Moloney, a director of Beaumex, said.

That breakdown was partly precipitated by the Beaumex board becoming aware of financial irregularities relating to a rent account maintained for properties owned by Beaumex, he said.

It seemed, for a long period of time, its former financial manager was under "a high degree of stress" owing to a "vast amount" of deductions made by Tesco Ireland and with regard to goods delivered to Tesco and invoices raised by Beaumex.

That manager had become "simply overwhelmed" by the level of such deductions which in turn led to serious underpayment by Tesco Ireland, he said.

The deductions were made under headings including "non delivery wholes", which result in a  complete reversal of a payment that may have been made earlier; "no  delivery shortages" involving deducting sums for a delivery alleged to be short; "returns debit deductions" involving claims for returns; and "price claims deductions" involving claims products were invoiced at the incorrect price.

When Beaumex became aware of the issue, it notified Tesco Ireland and began the huge task of going back through some 16,000 deductions made.

Tesco Ireland had provided remittances to facilitate that task.

Beaumex also entered into discussions with Tesco Ireland leading to the latter agreeing to pay €1.m for the years 2009-2011, Mr Moloney said. The meetings with Tesco Ireland were "fairly cordial" but the matter was protracted arising from the fact it appeared a lot of Tesco Ireland's finances are run through India, he said.

An impasse had been reached between the sides in recent weeks, leading to the Beaumex board deciding to issue the court proceedings, he said.

Yesterday, when the case came before Mr Justice Peter Kelly in the Commercial Court, he was told by Brian O'Moore SC, for Tesco Ireland, it objected to the court fast-tracking the case arising from delays by Beaumex.

Martin Hayden SC, for Beaumex, argued the delay was explained arising from the manager's stress-related illness leading to his not sharing information with his employer and because of the need to trawl back through the documents.

Refusing to fast-track the case, the judge said he was not satisfied there was no culpable delay. The case will now go through the normal High Court procedures.

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