Caltex chief executive Julian Segal has hit out at the Fair Work Ombudsman over its handling of the wage underpayment problem plaguing the fuel supplier’s franchise network, blaming the regulator for an unconstructive relationship that is harming public confidence in the system.

In a speech to be given to a business luncheon in Sydney on Thursday, Mr Segal voices frustration at the more than two years it took for the workplace regulator to agree to a meeting with the Ombudsman.

He also takes aim at the way it has handled the release of its findings, releasing them to select media before alerting the company itself.

“I find it frustrating that the regulator has chosen to deal through the media, most recently by releasing a compliance monitoring report to select commentators before making it available to Caltex,” Mr Segal says in an advance copy of the address.

“Across our business we are heavily regulated by a number of technical, economic, safety and environmental regulatory bodies, and I can confidently say that, with the exception of the FWO, we have a constructive and respectful working relationship with all of them.”

The ombudsman has been investigating worker exploitation across a large number of Caltex franchisees, finding a 76 per cent failure rate from 25 stories audited. The findings were released exclusively in The Australian Financial Review after Fairfax Media exposed the wage fraud scandal in late 2016.

Mr Segal fully acknowledges the problem in his address, describing the rate of non-compliance uncovered in Caltex’s audit of 292 sites as “shockingly high”. Compliance reached up to 80 per cent in the first sites exposed by whistleblowers, and has since fallen to a still-unacceptable 45 per cent, he said.

“The improved compliance rate tells me we were quick to deal with the bad apples first, and that our actions are having the right impact to remove wage underpayment from our franchise network,” he says, noting that several franchise agreements have been scrapped.

Caltex’s decision announced in February to end the franchise system has been linked to the problems in the network, but Mr Segal says in the address that it is not connected. He says the decision is part of Caltex’s reviewed strategy of how to achieve its growth objectives in retailing.

Commenting on Caltex’s revamped convenience retailing strategy, Mr Segal notes the company is leaning on skills from employees who have worked for major retailers including Tesco and Asda in the UK, Watson’s in Hong Kong and Coles in Australia.

“Convenience retail represents a great opportunity for us in Australia,” he says.

“The convenience spend in the UK, for example is around 5-6 times what it is here. Their offer is richer and there is much for us to learn from overseas examples about what more we can provide to customers.”

Caltex has built up a network so far of 11 non-fuel sites, including Nashi sandwich bars and The Foodary stores that have nothing to do with petrol retailing.

Mr Seghal also notes that Caltex has a digital team at the Sydney Start Up Hub in Wynyard developing apps intended to “make life easier” such as a new fuel app and number plate recognition.

“Watch this space,” he says.

Extracted from AFR.