Sanjeev Gupta’s GFG Alliance blasted over late payments to small Whyalla businesses

Whyalla saviour Sanjeev Gupta has come under stinging criticism from the Small Business Ombudsman, who has accused his company of using local small businesses as “cheap banks” by delaying payments.

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Whyalla saviour Sanjeev Gupta has come under stinging criticism from Small Business Ombudsman Kate Carnell, who has accused his company of using Whyalla small businesses as “cheap banks” by delaying payments.

Under GFG Alliance policy, which stipulates businesses should be paid back inside 62 days plus the period until the end of the calendar month, small businesses can wait more than 90 days for payment.

Ms Carnell condemned that arrangement as “not even nearly good enough” but said she’d also received a host of complaints from businesses who had waited for more than 100 days for payment.

She said her office had received between 10 and 20 complaints from businesses, including one supplier who had waited more than 120 days to be paid back $200,000.

Sanjeev Gupta in Whyalla. Picture: Sean Kelly, GFG Alliance

Kate Carnell, Australian Small Business Ombudsman. Picture: Kym Smith

GFG Alliance on Thursday issued a statement apologising to suppliers whose payments had been delayed for longer than the standard period, and said it was “prioritising small businesses to rectify the situation”.

A spokeswoman said it had inherited payment terms and conditions from Arrium when it began the purchasing process of the Whyalla Steelworks in July 2017.

“At the end of 2018 we began a process of reviewing our working capital management across the group,” the spokeswoman said.

“This includes a review of the payment terms that we have with small business owners, who are a critical stakeholder in the transformation of our business.

We purchased these businesses out of administration and inherited a number of systems and processes that had not been invested in for some time. This has unfortunately delayed this important work.”

Ms Carnell said it was “fantastic” GFG had stepped into deliver a huge economic boost to Whyalla but it was “absolutely essential they don’t do that off the back of paying small businesses slowly”.

“We understand that margins are tight but that doesn’t give them any right to use small businesses as cheap banks,” she said.

“It’s not OK and it’s really important to put that line in the sand.”

Under new Federal Government rules, companies must pay suppliers inside 20 days to receive government contracts, but no rules exist compelling a payment inside a certain time period.

Ms Carnell said most businesses had moved towards paying suppliers inside 30 days in recent years, with a large growth in businesses paying businesses more swiftly in recent years.

State Treasurer Rob Lucas said Ms Carnell’s engagement with GFG was “appropriate” and hoped it led to a “successful resolution”.

Centre Alliance Senator Rex Patrick said he wanted Mr Gupta’s enterprise to be successful and “turbocharge the regional economy” but stressed everyone should be a winner from the investment.

“I agree with Ms Carnell that small businesses are not bankers for large businesses and welcome Sanjeev Gupta’s commitment to speed up the process,” he said.