Deposed Australian NOC Official Accepts Responsiblity in Wage Scandal

(ATR) A day after announcing his retirement from the Australian Olympic Committee’s executive, Russell Withers has accepted responsibility for the allegations of systemic underpayment of employees of 7-Eleven Australia.

In a statement today, Withers announced that as founder and chairman of 7-Eleven Australia he was ultimately responsible and has directed his board and senior executive to fix the issues with "substantial changes".

A joint media investigation into labor practices at 7-Eleven Australia chains last week revealed claims of systemic underpayment of employees, prompting action from the convenience store giant.

As well as reaching out to any employees who have been underpaid, one of the fundamental issues that Withers addressed in his statement today was the 7-Eleven franchise model.

The media investigation revealed that 7-Eleven’s model sees 43 percent of gross profits retained by the franchisee and 57 percent going to head office, forcing the hand of the franchisee to act illegally.

"The business model will only work for the franchisee if they underpay or overwork employees," said Professor Allan Fels, chair of the 7-Eleven Independent Panel.

Fels, the former chair of the Australian Competition and Consumer Commission (ACCC) will head a two-person independent panel, supported by an independent Secretariat to receive and examine claims involving underpayment of staff by 7-Eleven franchisees.

The statement went on to say that the company would help franchisees to establish collective employment agreements for staff.

"Senior franchisees are already collaborating to develop a 7-Eleven franchisee charter, a mandatory commitment beyond the terms of the franchise agreement," Withers said.

"Further safeguards are in train, including a full review of the profit share model, changes to which will be offered in return for the requirement for all franchisees to utilize the 7-Eleven corporate payroll system, and the introduction of external audit of compliance to meet all obligations under law and the franchise agreement."

Withers, 68, built his fortune after travelling to the United States in 1977 where he struck a deal to bring the 7-Eleven license to Australia.

The 7-Eleven chain has 620 stores across Australia and the organization generates $3.6 billion in sales a year, with profits of $1.44 million. Billionaire Withers shares the profits with his sister Bev Barlow and the pair also control

the Starbucks chain in Australia as well as 300 Mobil petrol station stores.

A long-time financial supporter of equestrian sport in Australia, Withers was appointed to the AOC in 2001 but stepped aside yesterday not wanting any "blowback" onto the AOC.

Throughout his tenure with the AOC, Withers played a crucial financial role on its executive serving as chairman of the AOC Audit Committee, a member of the AOC Finance Commission and as a director of the Australian Olympic

Foundation and member of its Investment Advisory Committee.

Written by Alice Wheeler

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