Food Companies Riddled with Corruption, Bribery, Conspiracy
In the last several years, Americans have witnessed a series of the largest financial scandals it its history — from Bernie Madoff and Wall Street bailouts to the government take over of GM, Chrysler and AIG. We’ve all become accustomed to associating greed, graft and corruption with bankers, politicians, lobbyists and powerful corporations — rarely are we exposed to scandals that expose the murky underworld of those who supply food to our supermarkets in cheerful and deliciously bright packages.
For ten years, from 1998 through 2008, a group of high-ranking corporate purchasing managers from some of the most well-known and largest food companies in North America were involved in racketeering, bribery, conspiracy, price fixing, bid rigging, and falsifying laboratory tests. The scope of corruption has reached more than 55 companies, and includes PepsiCo’s Frito-Lay, Kraft Foods, B&G Foods, the maker of Ortega Mexican foods, Safeway, and SK Foods LP, one of the nation’s largest tomato processors.
The alleged kingpin of this massive web of corruption was Frederick Scott Salyer, the founder of SK Foods. Salyer is accused of masterminding a racketeering enterprise that regularly paid bribes to the purchasing managers of Kraft Foods, Safeway, B&G Foods, and PepsiCo’s Frito-Lay. Not only it’s alleged that Salyer bribe the purchasing managers to pay above market prices on behalf of their companies, the purchasing managers knowingly paid for and supplied millions of pounds of bulk tomato paste and puree contaminated with high levels of mold (prohibited under federal law), substandard acidity levels, and date expired content.
Robert Watson, a top food buyer for Kraft Foods, and three other purchasing managers at Frito-Lay, Safeway and B&G Foods, plead guilty to taking bribes. Five people with SK Foods also plead guilty.
Robert Turner served as a corporate purchasing manager for B&G Foods Inc., a multinational manufacturer, seller, and distributor of food products; he was also employed by Nabisco as a purchasing manager. Turner admitted to receiving some $65,000 in personal bribe payments from Randall Lee Rahal, a former sales broker and Director of SK Foods.
And Robert Watson and James Wahl, former purchasing managers at Kraft Foods Inc. and Frito-Lay Inc., admitted to receiving illicit payments from Rahal over extended periods. Rahal plead guilty to racketeering, price fixing, bid rigging, and contract allocation conspiracies, among other charges, in U.S. District Court in Sacramento on December 16, 2008.
According to court papers, Rahal recounted how he would drop a $100 bill on the floor, then bend to pick it up, saying: “You must have dropped this. Is it yours?”If the person said yes, Rahal considered him receptive.
Additionally, a former records and business analyst for SK Foods, Jennifer Lou Dahlman, plead guilty to mislabeling shipments of adulterated products. Dahlman routinely falsified grading factors and laboratory results of required testing contained on “Certificates of Analysis”and other quality control documents that accompanied customer-bound shipments.
The prosecution of these corrupt corporate officials was the result of a three-and-a-half-year probe by federal agents. But this racketeering scam had been going on for 10 years. Where was the FDA while the American public was being sold contaminated food?
The New York Times reports that the scope of the tainted shipments was much broader than the bribery scheme, touching more than 55 companies. “In some cases, companies detected problems and sent the products back” but in many cases, according to prosecutors, they did not, and the tainted ingredients wound up in food sold to consumers.”
From 2004 to 2008, Kraft bought about 230 million pounds of moldy processed tomatoes from SK Foods, as Watson took $158,000 in bribes. Renee Zahery, a Kraft spokeswoman, portrays Kraft as a victim because they rely on the tests by suppliers. “We do not duplicate those efforts,”Zahery said in an e-mail exchange with the Times.
Ms. Zahery told the Times that Kraft tested all its finished products for possible food safety hazards and that no problems were found with products made with SK Foods ingredients. Another Kraft spokeswoman, Susan Davison, said Kraft sent a quality expert to monitor SK Foods’ operations in 2007 and 2008 because of other quality concerns. Evidently Kraft’s quality expert missed 230 million pounds of moldy processed tomatoes.
Randy W. Worobo, an associate professor of food microbiology at Cornell University, told the Times companies should learn from the SK Foods case that they must do a better job of monitoring their ingredients. But companies don’t learn because the USDA and FDA essentially allow mega food corporations to police themselves.
“This was a very large fraud encompassing food for the American people,” said U. S. District Judge Lawrence K. Karlton.
According to Dan Flynn with Food Safety News, the Criminal Investigation units of the U.S. Food and Drug Administration (FDA) and the Internal Revenue Service (IRS), the FBI, and the Antitrust Division of the U.S. Justice Department are involved in what they call “a joint and extensive investigation” that is continuing.
Indeed, and you can bet the corruption, bribery, and conspiracy in our nation’s corporate food supply isn’t limited to tomato suppliers. Michael P. Doyle, the director of the Center for Food Safety at the University of Georgia, told the NYTimes there had been several cases in recent years in which ingredient suppliers were suspected of falsifying documentation to mask quality or safety faults in foods, especially with imports.
As we’ve previously reported, last year alone left nine dead and over 22,000 sick from contaminated food that was used by dozens of manufacturers in hundreds of products that were all recalled.