The Department of Immigration & Citizenship has accused Allied Brands of breaching immigration laws by running an elaborate immigration rort where it sponsored a group of Korean nationals to work in administrative roles under 457 visas, put them to work in Baskin Robbins stores and in some cases sold Baskin Robbins franchises to their family members.
The revelations, contained in documents seen by SmartCompany, are another blow to the ailing franchise brand manager, with Allied Brands chief executive Sean Corbin admitting today that the company is locked in a day-to-day battle for survival.
Allied Brand’s Cookie Man franchise chain was placed into the hands of liquidators last week, and its shares remain in a trading halt on the Australian Stock Exchange, with auditors unwilling to sign off on the company’s accounts as a going concern.
The latest problems at the company Allied Brand follow a three-year investigation by the Federal Department of Immigration and Citizenship (DOIC).
On August 17, the DOIC sent Allied Brands a Notice of Intention to Act, outlining three alleged breaches of the Migration Act 1958, and claiming the company had provided false and misleading information to the Department.
According to the documents, in early 2007 a 100% subsidiary of Allied Brands called Allied Brands Services sponsored six Korean nationals to work at its offices in the Gold Coast suburb of Mermaid Beach under 457 class visas.
According to the visa applications, the six were supposed to be working in administrative and management roles with Allied Brands. Job titles under the sponsorship arrangements included sales and marketing manager, training officer, project administrator and business and information professional.
However, in late December 2007 the DOIC made a number of unannounced site visits to the Allied Brands Services headquarters in Mermaid Beach and two Baskin Robbins outlets in Sydney, Brisbane and the Gold Coast.
The Department’s investigators claim they found that the Koreans were not working at the Mermaid Beach office (only five of the six Koreans issued visas actually came to Australia) although the Allied Brands Services had not informed the DOIC of this change of arrangements, as it required under immigration laws.
During a series of store visits and phone interviews, the DOIC claims they discovered that most of the 457 visa holders appeared to be working directly in or actually running Baskin Robbins outlets in New South Wales and Queensland.
Further, it appears that Allied Brands used the 457 visas for so-called administrative workers to bring new franchisees to Australia.
The DOIC claims that in one case, one of the sponsored workers appeared to actually own a franchise outright, as her name appeared on a ‘Certificate of Business Registration’ and a ‘Certificate of License’ alongside that of her husband.
In addition, the wives of two of the Korean 457 visa holders were found to be franchise store owners, with their husbands allegedly working in these stores.
In one case, a male Korean was granted a 457 visa in February 2007 as a ‘sales and marketing manager’, with his duties to include price setting, weekly reports on marketing activities and the distribution of merchandising materials.
However, when DOIC officers visited the Baskin Robbins outlet and Henry Deane Plaza in Haymarket on December 13, 2007, they found the man “wearing a Baskin Robbins apron and doing what appeared to be maintenance on a freezer”, accepting deliveries and serving customers.
The DOIC says visa holder told the officers the franchise was owned by his wife. When quizzed about his national sales role, he was unable to provide much information about Baskin Robbins operations.
“When asked to give details of how many Baskin Robbins stores there were nationally, [he] was uncertain,” the DOIC letter states.
“He also advised he was not able to advise where Western Australia was until he was told that Perth was the capital.”
In March 2009, Allied Brand’s migration agent, Megan Driscoll, who then worked for Australian Migration and Visa Lawyers and now works for Greenberg Australia, responded to a breach notice from the DOIC and provided examples of the sort of reports prepared by the man in his sales and marketing role. (Driscoll and her firm were hired by Allied after the company received its first breach notice.)
But DOIC described these documents as “poorly written and very amateurish in nature, and not something I would expect to see from a highly qualified, highly skilled sales and marketing manager.”
According to the DOIC documents, Allied Brands has most recently used Greenberg Australia as its migration agent. However, the managing partner at Greenburg’s Brisbane office, Ben Willis says Greenburg is no longer acting for Allied Brands.
“I haven’t been able to obtain any instructions for six to eight weeks,” he told SmartCompany this morning.
He also says Driscoll and Australian Migration and Visa Lawyers (where Willis also previously worked) only began acting for Allied Brands after Allied had received an initial breach notice was issued by the Department.
It also appears that the man’s franchise in Henry Deane Plaza has collapsed. According to a spokesperso for Toga Group, the property company which manages Henry Deane Plaza, the Baskin Robbins outlet in the centre has been closed for about two years.
DOIC alleges five of the six Koreans (the sixth never worked in Australia) have never worked in the positions nominated as part of their 457 visas, as says the visa holders were “groomed to run/work in the day-to-day operations of one of the Baskin Robbins outlets.”
Further, it alleges Allied Brands Services failed to notify the Department of changes in the circumstances of their sponsorships, such as a change in working address or role.
DOIC gave Allied Brands 14 days to respond to the alleged breaches. The Department has the power to bar Allied Brands for sponsoring workers in the future.
This morning, the DOIC confirmed the Notice of Intention had been sent and received, but a spokesperson said no further update was available at this time.
However, Allied Brands chief executive Sean Corbin – who was not employed by the company at the time of the visa sponsorships – says the company has written to the Department and has accepted that Allied Brands will not be able to bring in workers on 457 visas in the future.
“It was never our intention to use that strategy for bringing in our new franchisees in the future,” he told SmartCompany today.
Corbin said he would neither deny nor accept the Department’s allegations, but said he did accept that the Department did have grounds for complaint.
He said the visa program was established by an employee who is no longer working for Allied Brands.
What impact the alleged visa breaches will have on Allied Brands relationship with the owner of the global Baskin Robins brand, US franchising giant Dunkin’ Brands, is unclear.
Allied Brands told the ASX in September that Dunkin’ Brands had threatened to terminate Allied Brand’s master franchise agreement for Baskin Robbins in Australia, and Corbin confirmed this morning that discussions between the two groups are on-going.
“If we can’t negotiate something with Dunkin’ Brads in the US, it’s going to be very difficult to save the company,” he says.
Dunkin’ is believed to be watching developments in Australia closely, but representatives were not available to comment prior to publication.
Corbin also acknowledged that Allied Brands was locked in a day-to-day struggle for survival.
“I am focusing on trying to sell the assets I need to sell to try and keep the whole thing afloat.”
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
