Convenience giant 7-Eleven has been called to appear before the Senate inquiry into franchising on Friday following claims it bribed witnesses.
Chairman Michael Smith and chief executive Angus McKay are both scheduled to appear after a franchisee accused 7-Eleven of trying to “buy the silence of a witness”, an allegation denied by 7-Eleven.
There is no suggestion Mr Smith or Mr McKay were involved in the negotiations with the witnesses, or knew about the offers at the time.
As hearings for the parliamentary inquiry have continued, the Australian 7-Eleven Franchisees Association, which represents franchisees, has been decimated by the withdrawal of key members of its leadership group and witnesses scheduled to appear before the inquiry.
Fairfax Media has been provided with a series of Whatsapp messages and a statutory declaration which set out the collapse of the leadership of the group and provides new evidence of the bribery claims.
‘We all r dead now’
On 8 June 2018, two of the association’s leaders, Sunil Singh and Kavin Patel, resigned in quick succession with Mr Patel writing on the association’s group Whatsapp chat that the “next two years will be very important and will require lots of commitment which I can’t see myself doing”.
One franchisee, Kamrul Saman, responded: “Association gone down because of this resignation. 7 Eleven gone up because of this resignation and I think today HO [head office] will have a party.”
“We all r dead now,” said another.
After Mr Singh and Mr Patel’s resignation, franchisee Bharath Gonunguntla announced he would also step down from the leadership of the association but said he would remain until the Senate inquiry hearing.
“It is with regret to announce I am in the same boat, my commitment is until the Senate inquiry”, he said.
Mr Gonunguntla was scheduled to appear at the hearing on 22 June and appeared on the witness list circulated prior to the hearing, but withdrew the day before.
He was replaced by franchisee Paresh Davaria, who told the hearing “none of the association leaders are here today as every single one of them has been bought out by 7-Eleven”.
“I did not think in this country it was legal to buy the silence of a witness scheduled to give evidence,” he said. “It sounds like a bribe to me and contempt of parliament.”
Mr Davaria, who is also the lead witness in the franchisee’s class action against 7-Eleven, has signed a statutory declaration setting out his recollection of events in the lead-up to Mr Gonunguntla’s withdrawal from the hearing.
Mr Davaria claims Mr Gonunguntla told him: “Three association members – Kavin, Lakhwinder and Sunil were made silent by some sort of undisclosed offer from 7-Eleven. They are not answering my calls as well. They know that once they silence the leaders, it will be easy to divide franchisees because they will be like headless chooks”.
Mr Davaria also claims Mr Gonunguntla said “[a senior executive at 7-Eleven] called me and has given an offer to buy back my store provided I do not attend the Senate hearing and do not disclose the offer to anyone else”.
Frequent Whatsapp messages between Mr Gonunguntla and Mr Davaria end with Mr Gonunguntla messaging on June 18: “I will call you once I am out of airport”.
This was followed by a chain of increasingly frantic messages from Mr Davaria, which Mr Gonunguntla failed to reply.
On June 20, Mr Davaria messaged: “Hi Bharath, if possible could you please let us know by today as we preparing another guy for senate in case”.
On June 21, the day before the hearing, Mr Davaria messaged: “Any deal given yet by 7-Eleven?”
Mr Gonunguntla failed to respond and did not turn up to the hearing on June 22.
Following that hearing, he sent a final message to the franchisee Whatsapp group.
“I Bharath Gonunguntla for one on my behalf can declare that I have not received even a penny as of this day and moment from 7-Eleven HO [head office]. I think it’s time I call for a new leadership to replace [me]. I am prepared to step down… It’s time to look after myself and my 7-Eleven store.”
Mr Davaria said he has not heard from Mr Gonunguntla since that message.
Fairfax Media contacted Mr Gonunguntla and he declined to comment.
‘Offensive and untrue’
The franchising sector has been under increasing scrutiny after a series of investigations by Fairfax Media into industry giants including 7-Eleven, Domino’s, Caltex, and Retail Food Group.
Mr McKay told Fairfax Media 7-Eleven had not bribed witnesses.
“What has been insinuated is just offensive and untrue,” he said. “We have been dealing with the committee since the allegation was raised, and dealing directly with them.”
Parliamentary resolutions forbid interference with witnesses “by fraud, intimidation, force or threat of any kind” or any influence in respect of any evidence to be given or to induce someone not to give the evidence.
Interference or molestation of witnesses is a criminal offence under the Parliamentary Privileges Act and penalties include fines or imprisonment.
Extracted from Sydney Morning Herald