Coles linked in MA Services guard scandal as retailer rejects claims it knew workers were underpaid
Coles has defended its use of collapsed security contractor MA Services Group, denying it entered a multimillion-dollar deal knowing guards at its supermarkets would miss out on legal entitlements, according to reports.
The retailer is under pressure after Victoria's Labour Hire Authority chief, Steve Dargavel, alleged Coles' $50 million-a-year contract with MA Services could not have supported proper pay and conditions for guards, and that the company knew workers would be exploited, the Australian Financial Review (AFR) reported, citing earlier coverage in The Sydney Morning Herald.
Coles, Australia's second-largest supermarket chain, maintains the pricing of its security deal was in line with industry norms and provided enough margin for MA Services to comply with workplace laws.
Their contract also explicitly required legal minimums to be met for anyone guarding its stores, according to a spokesman from Coles.
"The contract included requirements that all workers employed by MA Services for Coles-related work must receive their full legal entitlements," the spokesman said as quoted by the AFR.
Coles told the news outlet that it carried out regular oversight of MA Services, including audits and spot checks, before the contractor's collapse in December amid allegations of tax fraud, underpayment and links to criminal entities.
"Any exploitation of workers is unacceptable, and Coles condemns any conduct that undermines workplace laws and standards," a spokesman said.
The retailer now argues it was deceived, saying it relied on information later found to be false.
"What is now clear is that MA Services operated a sophisticated and misleading scheme designed to successfully conceal breaches of workplace laws from Coles and a range of other corporate and government clients," the spokesman said as quoted by the AFR.
"MA Services provided falsified information to Coles, including information supplied for the purposes of wage and payroll reviews."
Allegations against security firm
The controversy comes as MA Services' business practices face broader scrutiny.
The Business & Human Rights Resource Centre, citing investigations by The Age, said MA Services has been linked to migrant worker exploitation and a suspected tax-evasion scheme involving a "shadow" workforce of thousands of guards employed through front companies that used corrupt payroll providers to underpay staff and avoid tax obligations.
Allegations include widespread underpayment and denial of superannuation and penalty rates to workers across Australia.
Those reports say major retailers and institutions – including Coles, Bunnings, Kmart, Amazon, property giant CBRE, the Australian Grand Prix Corporation, several AFL clubs and government agencies – used MA Services' guards and have been drawn into investigations into suspected workplace and tax breaches.
Coles was identified as the first major client to announce an internal inquiry once the allegations became public.
The United Workers Union (UWU), which represents many security workers, has criticised Coles and governments for continuing to use MA Services despite concerns in the sector, the Australian Financial Review reported.
UWU national president Jo Schofield said large corporate and public-sector clients had responsibilities that went beyond securing low-cost guarding services.
"Big businesses like Coles and governments who use security services have an obligation to the safety of their customers and the public," Schofield said.
"The duty to provide safety is not served if the money is going to dodgy security operators who work with bikie gangs. The impacts on the workforce are also severe. When proper standards aren't enforced, good companies are pushed aside and the worst actors are rewarded. The collapse of MA Services demonstrates the consequences of failing to act on warning signs."
The union has said it warned the Victorian government in 2024 that MA Services should not be approved for public security contracts.
Regulators are now examining MA Services' operations and its links with major clients.
Coles has been contacted by the Victorian Labour Hire Authority and the NSW Security Licensing and Enforcement Directorate, while the Fair Work Ombudsman has begun preliminary inquiries into MA Services' contracts with Coles, Wesfarmers-owned Bunnings and Kmart, and other companies, according to the AFR.
