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February 25, 2010
Bribes Let Tomato Vendor Sell Tainted Food
By WILLIAM NEUMAN
Robert Watson, a top ingredient buyer for Kraft Foods, needed $20,000 to pay his taxes. So he called a broker for a California tomato processor that for years had been paying him bribes to get its products into Kraft’s plants.
The check would soon be in the mail, the broker promised. “We’ll have to deduct it out of your commissions as we move forward,” he said, using a euphemism for bribes.
Days later, federal agents descended on Kraft’s offices near Chicago and confronted Mr. Watson. He admitted his role in a bribery scheme that has laid bare a startling vein of corruption in the food industry. And because the scheme also involved millions of pounds of tomato products with high levels of mold or other defects, the case has raised serious questions about how well food manufacturers safeguard the quality of their ingredients.
Over the last 14 months, Mr. Watson and three other purchasing managers, at Frito-Lay, Safeway and B&G Foods, have pleaded guilty to taking bribes. Five people connected to one of the nation’s largest tomato processors, SK Foods, have also admitted taking part in the scheme.
Now, federal prosecutors in California have taken aim at the owner of SK Foods, who they say spearheaded the far-reaching plot. The man, Frederick Scott Salyer, was arrested at Kennedy Airport in New York City on Feb. 4 after getting off a flight from Switzerland. He was indicted last week on racketeering, fraud and obstruction of justice charges.
The scheme, as laid out by federal prosecutors, has two parts. Officials say that Mr. Salyer and others at SK Foods greased the palms of a handful of corporate buyers in exchange for lucrative contracts and confidential information on bids submitted by competitors. This most likely drove up ingredient prices for the big food companies.
In addition, prosecutors say that for years, SK Foods shipped its customers millions of pounds of bulk tomato paste and puree that fell short of basic quality standards — with falsified documentation to mask the problems.
Often that meant mold counts so high the sale should have been prohibited under federal law; at other times it involved breaching specifications in the sales contracts, such as acidity levels or the age of the product.
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.
Randy W. Worobo, an associate professor of food microbiology at Cornell University, said companies should learn from the SK Foods case that they must do a better job of monitoring their ingredients.
“There’s been a lot of hype about inferior-quality products being made in China and then sold to the U.S. consumer,” Mr. Worobo said. “This is exactly the same thing, but it’s based in the U.S.”
Kraft, the nation’s largest food manufacturer, appears to have been among the biggest companies skimmed by the bribes. Court papers say that Kraft bought about 230 million pounds of processed tomatoes from SK Foods from 2004 to 2008, as Mr. Watson took $158,000 in bribes.
Mr. Watson did not cooperate with investigators and is so far the only person sentenced in the case. He is serving a 27-month prison term and has been ordered to make $1.8 million in restitution to Kraft. A request to meet with Mr. Watson in prison was submitted to his lawyer, Thomas J. Organ of Illinois, who did not respond to follow-up calls.
The products Mr. Watson bought often came at inflated prices, according to prosecutors. When they arrived, they were sometimes tainted with mold.
In 2007, faced with a product shortage, Mr. Salyer allegedly ordered subordinates to ship 3.4 million pounds of moldy tomato paste to Kraft. It was accompanied by documentation falsely claiming that it met federal mold limits.
Renee Zahery, a Kraft spokeswoman, said the company was a victim of SK Foods’ fraud and stressed that there were no health risks in using the moldy paste.
She said that while the company did a variety of tests on the ingredients it used, for mold it relied on the tests by suppliers.
As we know, you can't make this lying corporate sh*t up.
http://www.nytimes.com/2010/02/25/bu...l?ref=business
The check would soon be in the mail, the broker promised. “We’ll have to deduct it out of your commissions as we move forward,” he said, using a euphemism for bribes.
Days later, federal agents descended on Kraft’s offices near Chicago and confronted Mr. Watson. He admitted his role in a bribery scheme that has laid bare a startling vein of corruption in the food industry. And because the scheme also involved millions of pounds of tomato products with high levels of mold or other defects, the case has raised serious questions about how well food manufacturers safeguard the quality of their ingredients.
Over the last 14 months, Mr. Watson and three other purchasing managers, at Frito-Lay, Safeway and B&G Foods, have pleaded guilty to taking bribes. Five people connected to one of the nation’s largest tomato processors, SK Foods, have also admitted taking part in the scheme.
Now, federal prosecutors in California have taken aim at the owner of SK Foods, who they say spearheaded the far-reaching plot. The man, Frederick Scott Salyer, was arrested at Kennedy Airport in New York City on Feb. 4 after getting off a flight from Switzerland. He was indicted last week on racketeering, fraud and obstruction of justice charges.
The scheme, as laid out by federal prosecutors, has two parts. Officials say that Mr. Salyer and others at SK Foods greased the palms of a handful of corporate buyers in exchange for lucrative contracts and confidential information on bids submitted by competitors. This most likely drove up ingredient prices for the big food companies.
In addition, prosecutors say that for years, SK Foods shipped its customers millions of pounds of bulk tomato paste and puree that fell short of basic quality standards — with falsified documentation to mask the problems.
Often that meant mold counts so high the sale should have been prohibited under federal law; at other times it involved breaching specifications in the sales contracts, such as acidity levels or the age of the product.
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.
Randy W. Worobo, an associate professor of food microbiology at Cornell University, said companies should learn from the SK Foods case that they must do a better job of monitoring their ingredients.
“There’s been a lot of hype about inferior-quality products being made in China and then sold to the U.S. consumer,” Mr. Worobo said. “This is exactly the same thing, but it’s based in the U.S.”
Kraft, the nation’s largest food manufacturer, appears to have been among the biggest companies skimmed by the bribes. Court papers say that Kraft bought about 230 million pounds of processed tomatoes from SK Foods from 2004 to 2008, as Mr. Watson took $158,000 in bribes.
Mr. Watson did not cooperate with investigators and is so far the only person sentenced in the case. He is serving a 27-month prison term and has been ordered to make $1.8 million in restitution to Kraft. A request to meet with Mr. Watson in prison was submitted to his lawyer, Thomas J. Organ of Illinois, who did not respond to follow-up calls.
The products Mr. Watson bought often came at inflated prices, according to prosecutors. When they arrived, they were sometimes tainted with mold.
In 2007, faced with a product shortage, Mr. Salyer allegedly ordered subordinates to ship 3.4 million pounds of moldy tomato paste to Kraft. It was accompanied by documentation falsely claiming that it met federal mold limits.
Renee Zahery, a Kraft spokeswoman, said the company was a victim of SK Foods’ fraud and stressed that there were no health risks in using the moldy paste.
She said that while the company did a variety of tests on the ingredients it used, for mold it relied on the tests by suppliers.
As we know, you can't make this lying corporate sh*t up.
http://www.nytimes.com/2010/02/25/bu...l?ref=business
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