It followed a HMRC investigation into a £350,000 bonus paid to six Emerald DebtCo directors and £70,000 spent on corporate hospitality at rugby matches.
Former Arla Foods amba board director Jonathan Ovens has denied any wrongdoing after the co-operative terminated his membership last week following ‘serious failings in corporate governance’ in his role as chairman of Emerald DebtCo.
Emerald DebtCo was set up in 2013 by a group of farmers who individually had contracts to supply milk to Arla when they were invited to become owners.
It enabled the Arla Foods Milk Partnership members to secure a loan to buy their entry into the Arla Foods amba.
The Emerald DebtCo board mirrors the UKAF board, but is an entirely separate entity from Arla Foods.
Mr Ovens, chairman of Emerald DebtCo, said the accusations referred to a bonus of £350,000 shared between six people.
“That payment was what HMRC queried. It was paid on a consultancy basis and HMRC queried if it should have gone through PAYE (Pay As You Earn),” he said.
“HMRC came back and said they do not have an issue.”
HMRC was also querying £70,000 of expenses spent on corporate hospitality at rugby matches.
Mr Ovens said corporate hospitality was ‘just a part of doing business’.
“I felt it was appropriate to entertain customers and industry stakeholders,” he said.
He also questioned the method of Arla’s termination as he felt the firm should have referred him to the district chairman and vice-chairman, rather than terminate his milk contract so he could not hold a role.
Mr Ovens claimed he had been targeted by the board.
“There were five other directors who had bonuses as well, it is only me that has been accused of wrongdoing,” he said.
An Arla spokesman said, as it stood, UK Arla Farmers Co-operative (UKAF) did not believe any further action was required with any other farmers but it would be determined following the completion of the HMRC inquiry.
He added irrespective of the findings of the HMRC probe into Emerald DebtCo, there was ‘enough evidence’ for the UKAF board to determine terious failings in corporate governance by Mr Ovens were prejudicial to the interests of the co-operative.
“These actions have also led to a loss of confidence in Mr Ovens by the Arla Foods amba board of Directors, which supports the UKAF decision.”