Food fraud called worldwide epidemic

Organized crime networks said to taint products, risk consumer health

Sunday, July 14, 2013

GREAT DALBY, England - Invisible from the roadway, hidden deep in the lush English countryside, Moscow Farm is the base for an international organized crime gang churning out a dangerous brew of fake vodka.

A quarter of a mile off a one-lane road, tens of thousands of liters of counterfeit spirits were distilled, pumped into genuine vodka bottles with near-perfect counterfeit labels and duty stamps, and sold in corner shops across Britain. The fake Glen’s vodka looked real. But analysis revealed that it was spiked with bleach to lighten its color and contained high levels of methanol, which in large doses can cause blindness.

No harm to those who drank it has been reported, but cases of poisoning have been reported throughout Europe, including in the Czech Republic, where more than 20 people died last year after drinking counterfeit liquor.

The Europe-wide scandal surrounding the substitution of cheaper horse meat in what had been labeled beef products caught the most attention from consumers, regulators and investigators this year. But in terms of food fraud, regulators and investigators say, that is just a hint of what has been happening as economic struggles persist.

Investigators have uncovered thousands of frauds, raising fresh questions about regulatory oversight as criminals offer bargain-hunting shoppers cheap versions of everyday products, including counterfeit chocolate and adulterated olive oil, Jacob’s Creek wine and even Bollinger Champagne. As the horse meat scandal showed, even legitimate companies can be overtaken by the murky world of food fraud.

“Around the world, food fraud is an epidemic - in every single country where food is produced or grown, food fraud is occurring,” said Mitchell Weinberg, president and chief executive of Inscatech, a company that advises on food security. “Just about every single ingredient that has even a moderate economic value is potentially vulnerable to fraud.”

Speaking at a recent conference organized by the consulting firm FoodChain Europe, Weinberg said many processed products contain ingredients like sugar, vanilla,paprika, honey, olive oil or cocoa that are tainted.

Increasingly, those frauds are the work of organized international criminal networks lured by the potential for big profits in an illicit trade in which most forgers are never caught. The vodka gang boss, Kevin Eddishaw, was producing at least 165,000 bottles, costing the British government $2.3 million in lost tax revenue.

“He was living a very nice lifestyle,” said Roddy Mackinnon, criminal investigation officer for Her Majesty’s Revenue and Customs, “a couple of properties, nice cars: a RangeRover, a Mercedes.”

The vodka plot fits a pattern, identified by Europol, the European Union’s law-enforcement agency, which said organized crime groups have capitalized on the economic downturn.

“In response to reduced consumer spending power, counterfeiters have expanded their range of products,” a recent Europol report said. In addition to the traditional counterfeit luxury product, organized crime groups “now also counterfeit daily consumer goods such as detergents, foodstuffs, cosmetic products and pharmaceuticals.”

Investigators said a huge array of deceptions exist. Simple ones involve presenting cheap products as branded or topquality ones, such as selling catfish as sea bream, labeling farmed salmon as wild or marketing factory-produced eggs as organic or free range.In February, German authorities began investigating nearly 160 farms suspected of breaking rules on organic and freerange egg production, for example.

In other cases, cheaper ingredients are added to genuine products to increase profit margins. Sometimes vegetable oil goes into chocolate bars, or pomegranate juice, wine, coffee, honey or olive oil is adulterated with water, sweeteners or cheaper substitutes.

Whenever there is tampering, there are potential risks to health. Indian restaurants in Britain have been prosecuted for adding ground peanuts toalmond powder, which poses a risk to allergy sufferers. Food experts say that engine oil is among the substances found in olive oil.

Shaun Kennedy, associate professor at the University of Minnesota, estimated that 10 percent of food that consumers buy in the developed world was adulterated. Because the profit margins for foodstuffs are often within single digits, “if you dilute by 2 percent, that’s a big deal.”

He cited a report from the United States’ Grocery Manufacturers Association saying that economic adulteration and counterfeiting of global food and consumer products was expected to cost the industry $10 billion to $15 billion a year.

“Mostly the perpetrators are not intending to cause anyone harm - that would be bad for repeat business - but often they don’t understand the potential impact,” Kennedy said.

Business, Pages 64 on 07/14/2013