Co-op chief buyer said ?1m was a loan not a bribe, court told

The former chief buyer for the Co-operative Wholesale Society, who is accused of accepting a £1m bribe to influence a food supply agreement, told serious fraud office investigators the payment was a loan from a businessman he had never met, a court was told yesterday.

David Chambers, 56, is charged with corruption in relation to £1m placed in the Jersey bank account of offshore company Pitchblend in January 1995 - just days after food manufacturer Hobson secured a lucrative extension to its exclusive supply agreement with 800 Co-op outlets.

Douglas Day, QC, for the prosecution, told the jury at Snaresbrook crown court in London that Mr Chambers told investigators that he was not the beneficial owner of Pitchblend. The money, he claimed, belonged to Ronald Zimet, an Israeli businessman, who was a "sleeping, anonymous partner" providing financial backing for the potential business activities of Mr Chambers and his boss, Allan Green.

Allan Green, the former CWS chief general manager, is also accused of accepting a £1m bribe but refused to answer SFO investigators' questions about the Jersey corporate bank account of Monavale, into which his alleged bribe is said to have been paid.

Both payments were said to have been orchestrated by Hobson chief executive Andrew Regan, who is charged with stealing £2.4m from his own firm. According to the prosecution, Mr Chambers told investigators that he had never met or spoken to Mr Zimet, and that all business dealings relating to the two offshore accounts had been conducted between Mr Zimet and Mr Green.

The prosecution claims that Mr Zimet - who is to appear as a key witness - was the unwitting middleman who facilitated the bribe payments in exchange for a £400,000 fee.

Mr Day said that Mr Zimet did not know that the payments from Hobson - which passed through a Swiss bank account held by his company Trellis International - would eventually be received by CWS employees.

Mr Day said Mr Regan had told investigators that Mr Zimet had approached him in late 1994 offering to broker an extension to Hobson's supply agreement with the CWS.

The Hobson chief executive claimed that he had been introduced to Mr Zimet by Robert Bonnier, Mr Zimet's business partner, in January 1995 at Heathrow airport.

Mr Regan told investigators that the Mr Zimet, an Israeli businessman, had contacts within the CWS senior management team in Manchester.

Within two weeks of the Heathrow meeting, Hobson won the contract extension and £2.4m was paid to Trellis International - which was a "brokerage fee", according to Hobson documents.

Mr Chambers and Mr Green deny corruption and Mr Regan denies theft. The trial continues.