Two men arrrested on charges of potato fraud

A senior buyer for Sainsbury's has been arrested over claims that he took £3m in backhanders from a major potato supplier, police said.

John Maylam is alleged to have received cash from the Shropshire-based growers Greenvale, one of the country's leading producers. It supplies about half of Sainsbury's potatoes.

Mr Maylam was arrested, along with Greenvale's operations director David Baxter, by the City of London Police fraud squad on suspicion of corruption and money laundering. Both men have been bailed. They were arrested on Thursday, when police also raided a number of houses and business premises in Cambridgeshire and Shropshire.

A Greenvale spokesman said a number of staff had been suspended after an internal investigation. A Sainsbury's spokeswoman said: "We can confirm that allegations have been made concerning certain payments and benefits by a supplier to an individual employed by us. We have the highest standards of corporate governance and, following inquiries, have passed our findings to the police for further investigation. We are unable to comment further at this stage."

A Sainsbury's source told The Sunday Times: "None of the payments went through our system and we believe this was limited to the one supplier."

Sainsbury's sells 190 million kilograms of potatoes a year, worth about £130m. The British potato market as a whole is said to be worth £1bn. Greenvale also supplies Tesco.

Greenvale won the Queen's Award for Innovation in 2006 for its introduction of environmentally friendly growing techniques and technical improvements. Mr Maylam, speaking at the time, said: "The news comes as no surprise, as we have always found them to be particularly progressive in innovation. We have enjoyed working with Greenvale's team over the past 40 years and look forward to offering more of their top-quality produce to our customers."

In 2005 Sainsbury's ditched Cambridgeshire-based potato supplier MBM while increasing its business with Greenvale, which was able to take on an extra 130 workers as a result.

Commenting on that decision, Mr Maylam said: "By streamlining our potato supply base we are in a much better position to improve efficiencies for everyone involved in the supply chain, which ultimately means we will be able to serve our customers better."

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