Former Northern Foods chairman Lord Haskins slams his firm’s new owner for bullying suppliers

Exclusive: But 2 Sisters says it operates in a 'manner very similar to most other large companies'

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The Independent Online

The influential industrialist and peer Chris Haskins, who turned Northern Foods into one of the UK’s biggest manufacturers, has attacked its new owners 2 Sisters as unethical bullies after it was revealed bosses made suppliers wait up to four months for payments.

Lord Haskins told The Independent: “My company was built up on the principles of Marks & Spencer – being fair and equal with those we worked with. It was very much above board and we treated our suppliers with respect.

“These practices should make everyone worry. People [suppliers] are very reluctant to give chapter and verse on what exactly goes on, because they are fearful. However, I’d say suppliers need to stand up for themselves against unethical bullying. They need to tell 2 Sisters to take a jump.”

His criticism of 2 Sisters comes as the firm, which owns Fox’s Biscuits and Goodfella’s Pizza admitted it started any negotiation with its suppliers by withholding payments for at least 90 days. 2 Sisters is the UK’s biggest fresh food manufacturer and provides chickens to several retailers, including Tesco and M&S, where it runs factories solely dedicated to the supermarket titans.

The behaviour, which also saw 2 Sisters writing to suppliers offering early payment, but with a 3 per cent discount, was also condemned by the Institute of Directors, which said two-thirds of its members had suffered a late payment. James Sproule at the IoD, said: “Having to wait up to three months to be paid makes life very difficult for SMEs, and can hold back their plans for growth. 2 Sisters should look carefully at whether their policies fit with the Prompt Payment Code, and help them to build a positive, collaborative relationship with their suppliers.”

Lord Haskins ran Northern Foods in the 1990s. He now sits as a crossbench peer in the House of Lords.

Some insiders suggested 2 Sisters may be imposing tough clauses on its suppliers due to its own financial struggles. Its parent company, Boparan Holdings, revealed pre-tax losses of £143.5m, after its Corby factory closed with the loss of 900 jobs. It bought Northern Foods in 2011 and analysts suggested it would need to offload parts of the business to tackle its £800m debt pile.

The firm called the revelations “an unfair reflection” on its relationships and suggested it operates in a “manner very similar to most other large companies”. It added the terms and conditions of its contracts are negotiable and the standard 90 payment period is only a “starting point”.

However, the Federation of Small Businesses, rejected this argument and said 2 Sisters needs to change its practices.

John Allan, FSB national chairman, said: “This is a poor defence at best, and misses the point that small firms do not have the power or resources to reject such unfair terms, nor to get recompense when the terms are breached.”

EU directives say businesses should pay all outstanding invoices within 60 days, however, there is a clause that allows this to be extended if both sides agree beforehand.

Lord Haskins’ attack comes weeks after Premier Foods, which owns Mr Kipling and Oxo, was found using so-called “pay to stay” clauses. The firm claimed its actions were “misinterpreted” but since said it would “simplify” its practice.

Tesco scandal: Workers suspended

One of 2 Sisters’ biggest clients, Tesco, has suspended a ninth employee as part of a £263m accounting scandal. The worker is thought to be based in the accounting department, where the scandal was first raised by a whistleblower. Four of the suspended directors left, one returned to work, and three await  decisions on their futures.

The Serious Fraud Office is conducting an investigation, although Tesco boss Dave Lewis said the internal review by the supermarket is now complete.