Food & Drink
Sainsbury's and Tesco among stores caught out by wholesaler who passed off battery produce as organic
For those who made the conscious decision to spend more on free range or organic eggs, it was worth paying a premium to know the hens that laid them had been kept in ethical conditions.
But those people who ended up paying over the odds for Keith Owen's eggs may feel a little less warm inside after it emerged the 44-year-old egg wholesaler had scammed all the major supermarkets and numerous small shops by passing off about 100m battery farmed eggs as free range or organic.
Owen, a married father-of-two from Bromsgrove in Worcestershire, was jailed for three years today and forced to surrender the £3m profit he had made by "dishonestly and systematically" mis-describing eggs over a two-year period. The fraud abused "well-intentioned public trust" by scamming innocent customers who had paid extra to ensure better animal welfare, Worcester crown court heard.
Defra, which brought the prosecution, said it was the biggest case of its kind it had ever investigated.
Owen ran Heart of England Eggs Unlimited, an egg-packing business that supplied bigger packing companies, which, in turn, provided the vast majority of eggs to the well-known supermarkets, including Sainsbury's, Morrisons and Tesco, as well as smaller retailers.
Last week he pleaded guilty to three charges of fraudulent accounting which involved him altering records to disguise the fact he was buying eggs laid by caged hens and selling them for a vast profit after "mis-describing" them in paperwork.
His barrister, John Kelsey-Fry QC, suggested his client was not alone in creating what he described as "mischief" in the egg industry.
"It's not the case that all those to whom Mr Owen supplied eggs were concerned to ensure the provenance of the eggs was as described," said Kelsey-Fry, adding it would be "inappropriate" to elaborate.
Passing sentence, the judge said Owen had made very substantial profits at the expense of "real-life victims" who believed they were buying premium eggs.
Describing Owen as the firm's guiding mind, the judge told the managing director: "Imprisonment there must be, because the offences are plainly so serious that only a sentence of imprisonment will suffice. This was all a carefully planned and executed fraud by false accounting. By greed, you have corrupted and destroyed the once-legitimate business which you have known all your life."
At the time of the fraud, between 2004 and 2006, farmers could expect a price of about 90p for a dozen organic eggs, 70p for free range and 35p for cage eggs. As a "middle man" wholesaler, Owen would normally make a few pence profit per dozen. But by passing off cage eggs as free range, he could make an extra 35p for every 12 eggs he sold. In a market where demand outstripped supply, he seized the opportunity to make a lot of money.
Richard Jones, a Defra official who investigated the case, said today that Owen was such a significant player in the free range egg market that after he closed down his business two years ago, a number of supermarkets, including Somerfield, had to start sourcing free range eggs from abroad.
The court heard that Owen did not only buy in cheap battery hen eggs in order to dupe customers further down the line, he also bought in huge quantities of so-called "industrial eggs". These do not meet the quality requirements for sale to the public; instead they can be used only in processed foods once liquefied.
Murmurings began circulating in the egg industry in 2004 that there were vastly more British free range and organic eggs being sold in shops than could ever possibly be laid in UK farms.
At the same time, investigators from the Egg Marketing Inspectorate (EMI) noticed during routine checks that eggs coming from Heart of England were not at all they were purported to be. Because all eggs look the same to the naked eye, the law requires that each egg is stamped with a unique number indicating where, and in what conditions, it was laid. Paperwork indicating origin and type must accompany the eggs all along the supply chain.
But when inspectors checked a selection of Owen's allegedly free range eggs using a strong ultraviolet light, the shells bore wire marks – a tell-tale sign that they had been laid not on a bed of straw, or even artificial turf, as farming regulations stipulate, but in a metal cage.
There were also complaints from lorry drivers who arrived at Owen's farms to drop off consignments of caged eggs and then pick up free range or organic eggs. A number of drivers reported to their trade union that they were made to wait hours to pick up their deliveries and suspected the eggs they delivered were being relabelled and sold back to them that day.
All of Owen's major contracts were to supply British eggs, bearing the British Lion hallmark. But investigators from Defra discovered that he was regularly buying eggs from the continent and passing them off as homegrown.
He used another of his companies, Owens Eggs, to disguise the accounting fraud. Owens Eggs was a legitimate business selling organic eggs laid in a barn on the same site as the Heart of England business. He laundered money by selling organic eggs from Owens Eggs to Heart of England at a hugely inflated price – £10-£40 a dozen at a time when others were selling a dozen for no more than £1.
Investigators found Owen had not only falsified records with real suppliers but also invented firms that had supposedly provided him with premium eggs. He was banned from being a company director for seven years.
A Sainsbury's spokesman said: "We have the highest standards of quality for all our products, and the eggs we sell are either Woodland eggs or Lion Mark eggs from non-caged flocks. So we were naturally very angry and concerned to learn that we and other retailers were the victims of this fraud.
"We purchased the eggs from a long-term supplier in good faith and it is important to note that at no point did we have any contact with Mr Owen or Heart of England Unlimited."
The British Free Range Egg Producers Association said: "As a result of this case, the British Egg Industry Council with the 'Lion', have introduced a raft of measures, one of which is the stamping of all eggs since January 2010. Consumers can therefore now be reassured that eggs cannot be tampered with as in this case."
Seal meat banned by the EU will be served to Canadian MPs in Ottawa to show public backing for the country's annual seal hunt
Canadian MPs will be served seal meat this week in support of hunters fighting an EU ban on products from the animals.
A Liberal MP, Celine Hervieux-Payette, said Wednesday's seal meat menu in the parliamentary restaurant would allow politicians to show their backing for the annual hunt.
"All political parties will have the opportunity to demonstrate to the international community the solidarity of the Canadian parliament behind those who earn a living from the seal hunt," she said.
The EU ban on seal imports was imposed last July on the grounds that Canada's annual hunt was cruel.
The east coast seal hunt, the largest in the world, kills about 275,000 harp seals between mid-November and mid-May. The seals are either shot or hit over the head with a spiked club called a hakapik.
Animal rights groups believe the hunt is cruel, poorly monitored and provides little economic benefit. Seal hunters and Canadian authorities say it is sustainable, humane and provides income for isolated communities.
The EU ban includes processed goods derived from seals, including their skins which are used to make coats, bags and clothing, as well as meat, oil blubber, organs and seal oil, which is used in some omega-3 pills.
It exempts products derived from traditional hunts carried out by Inuit in Canada's Arctic, as well as those from Greenland, Alaska and Russia.
Canada has requested talks with the EU at the World Trade Organisation, which is the first step before launching an official trade challenge to salvage a Canadian industry valued at £6.46m in exports last year.
Last month, an offer of seal meat caught by indigenous hunters to the world's leading economic ministers at a G7 meeting in Iqaluit, 200 miles south of the Arctic circle, sparked outrage.
Arlene McCarthy, a Labour MEP who was involved in agreeing the ban, accused the Canadians of using the summit to put seal hunting back on to the agenda: "This is quite a callous way to manipulate an indigenous community which we've already given exemption to on this issue."
• Supermarket customers duped in two-year, £3m scam
• Lawyer claims client is far from industry's only bad egg
A Midlands businessman was jailed for three years today after admitting making a fortune by fraudulently passing off battery farm eggs as free range or organic.
Around 100m mislabelled eggs sold by Keith Owen ended up on the shelves of supermarkets including Sainsbury's and Tesco. That the fraud was able to carry on for two years while he made a £3m profit raises questions for the food industry about the provenance of goods.
Owen, 44, from Bromsgrove, in Worcestershire, ran Heart of England Eggs Unlimited, which supplied eggs to major packing companies that in turn supplied them to supermarkets and smaller retailers.
He pleaded guilty at Worcester crown court to three charges of fraudulent accounting, relating to altering his records to disguise the fact he was buying in eggs laid by caged hens and selling them on for a profit after relabelling or "misdescribing" them in paperwork.
Prosecutors said Owen had "dishonestly and systematically passed off millions of battery farm eggs as free range/organic eggs".
Amanda Pinto QC said: "The victims of Keith Owen's false accounting were not only the direct customers of Heart of England, but also the public, as well as the legitimate egg producers.
"The ultimate customer, a member of the public buying these eggs, would have received inferior eggs – sometimes even eggs not fit for sale to the public – or eggs produced by hens kept without the stringent welfare schemes from which they were said to benefit."
Owen's barrister, John Kelsey-Fry QC, suggested his client was far from the only one creating what he described as "mischief" in the egg industry.
"It's not the case that all those who Mr Owen supplied eggs were concerned to ensure that the provenance of the eggs was as described," he said, adding it would be "inappropriate" to elaborate.
At the time of Owen's fraud, between 2004 and 2006, farmers could expect to receive a price of around 90p per dozen for organic eggs, 70p for free range and 35p for cage eggs. As a "middleman" wholesaler, Owen would normally make a few pence profit per dozen, but by passing off cage eggs as free range he could make an extra 35p profit for every 12 eggs he sold.
The court heard that Owen not only bought in cheap battery hen eggs, he also bought in huge quantities of so-called "industrial eggs". These do not meet the quality requirements for sale to the public, and instead are meant to be used only in processed foods.
The fraud came to light in 2004 when allegations began circulating in the egg industry that there were vastly more British free range and organic eggs being sold in shops than could ever possibly be laid in UK farms. At the same time, investigators from the Egg Marketing Inspectorate noticed during routine checks that eggs coming from Heart of England were not at all what they purported to be.
Because all eggs look the same to the naked eye, the law requires that each egg is stamped with a unique number indicating where the egg was laid and in what conditions. Paperwork must accompany eggs transported through the supply chain to indicate their origin and type.
When inspectors checked a selection of Owen's allegedly free range eggs using ultraviolet light, the shells bore telltale wire marks – a sure sign that they had been laid not on a bed of straw or even Astroturf, as farming regulations stipulate, but in a metal cage.
There were also complaints from lorry drivers who arrived at Owen's farms to drop off consignments of caged eggs and then to pick up free range or organic eggs. A number of drivers reported to their trade union that they were made to wait hours to pick up their deliveries and suspected that the same eggs they had delivered were being relabelled and then sold back to them the same day.
All of Owen's major contracts were to supply British eggs bearing the British Lion hallmark. But investigators from the Department for the Environment, Food and Rural Affairs discovered that he was regularly buying eggs from the continent and passing them off as home-grown.
He used another of his companies, Owens Eggs, to disguise the accounting fraud. Owens Eggs was a legitimate business selling organic eggs laid in a barn, on the same site as the Heart of England egg-packing business. Owen tried to mask the fraud by selling organic eggs from Owens Eggs to Heart of England at an extremely inflated price – £10-£40 per dozen at a time when other producers were selling a dozen for no more than £1.
Owen agreed under a confiscation order to surrender £3m of the profit he made from selling the misdescribed eggs, and will not be allowed to be a company director for seven years.
Makers of The Cove, an Oscar-winning documentary on Japan's dolphin slaughter, drew authorities' attention to alleged whale meat smuggling operation at a Santa Monica sushi restaurant
Federal prosecutors filed charges yesterday against a sushi chef and a Santa Monica restaurant following allegations that they served illegal and endangered whale meat.
Typhoon Restaurant Inc, which owns The Hump restaurant, and sushi chef Kiyoshiro Yamamoto, 45, were charged with illegally selling an endangered species product.
According to a search warrant, marine mammal activists were served whale during three separate visits to the restaurant. Tests confirmed the meat came from a Sei whale, an endangered species protected by international treaties, documents said.
Agents also seized some suspected whale meat during a search of the restaurant Friday but are awaiting test results to confirm it was Sei whale, US attorney spokesman Thom Mrozak said.
In October, two activists posing as customers went to The Hump and ordered "omakase," which means they let the chef choose the choicest fresh fish. They also requested whale and pocketed a sample.
The young women worked with Louie Psihoyos, director of the Oscar-winning documentary The Cove, to record the meal with a hidden camera and microphone.
"These are endangered animals being cut up for dinner," Psihoyos said. "It's an abuse of science."
Psihoyos took their findings to the National Oceanic and Atmospheric Administration, which started an investigation.
Activists claim the whale meat came from Japan's scientific whaling program and was illegally exported, but the US attorney's office is still investigating the source of the meat.
Japan kills hundreds of whales in Antarctic waters each year under its research whaling programme, which has triggered violent protests by conservationists and caused strong objections by diplomats in recent years.
An attorney for Typhoon, Gary Lincenberg, said the restaurant accepts responsibility for serving whale and will agree to pay a fine. If convicted, the company could be fined up to $200,000.
Court records say agents interviewed Yamamoto, a Culver City resident and a chef at The Hump for the past seven years, and he admitted serving whale to two young women.
Yamamoto's attorney, Mark Byrne, declined to comment on the charges, saying he hadn't had time to review them. If convicted, Yamamoto could face a year in prison and a fine of up to $100,000.
Despite the decision by the European Union last week to approve the cultivation of a GM potato, plant scientist Eoin Lettice argues that consumers will only accept the technology when it provides tangible benefits for them
Last week's decision by the European Commission to allow genetically modified potato varieties to be grown in some European Union countries concludes a 13-year campaign by the German chemical company BASF.
Ordinary potatoes produce two kinds of starch, but the GM potato Amflora only produces the economically useful form, amylopectin, which is used in the paper, textiles and adhesives industries. Production of the uneconomic form, amylase, has been turned off by genetic modification, so the useful starch doesn't need to be separated from the useless form during processing.
BASF says that while starch from its GM potato will not be used in human food, it may use the product in animal feed.
What particularly worries opponents of GM technology, however, is that Amflora carries an extra gene that makes the potato resistant to the antibiotics neomycin and kanamycin.
Why is it there? GM plants are produced by inserting novel genes into individual plant cells and then growing the cells into whole plants in the laboratory. Gene insertion can be achieved by using a bacterium to "ferry" it into the cell or by blasting it in using a gene gun. Alternatively, the tough plant cell wall can be stripped off and the gene can be inserted into this "naked" cell.
Regardless of the technique used, not all of the plant cells will take up the novel gene and incorporate it into their own DNA – perhaps just five cells out of every thousand. Tagging the novel gene with an antibiotic resistance gene allows modified cells to be singled out, because they will be resistant to a specific range of antibiotics.
This has been a source of concern for campaigners, but in June 2009, the European Food Safety Authority ruled that marker genes like this are unlikely to cause adverse effects on human health and the environment. As a result of limitations in sampling and detection it was unable to be conclusive, but the authority emphasised that it considered Amflora to be safe.
BASF first submitted its Amflora potato for approval in 1996. However, an EU-wide moratorium on GM between 1998 and 2004 delayed the process substantially.
When the potato was resubmitted for approval after the moratorium ended, progress was so slow that in 2008 BASF filed an action against the EC in the European Court of First Instance for "failure to act" and decide on the issue despite the European Food Safety Authority saying in two separate reports that the product was as safe as any conventional potato.
The company claimed that the previous commissioner, Stavros Dimas, "unjustifiably delayed" the decision on several occasions.
Now, within weeks of stepping into the role, the new European Commissioner for Health and Consumer Policy, John Dalli, has given the green light for planting to begin. BASF says the potatoes will be grown in Germany and the Czech Republic this year, and in Sweden and the Netherlands in 2011.
Opponents of GM technology have been quick to denounce the decision, with Greenpeace saying that Dalli has "steamrolled" a decision through. Given that the potato variety in question has undergone 13 years of testing since its first submission, this analogy might be better applied to the lumbering decision-making process in Europe rather than this final decisive move by the new commissioner.
At the root of this issue is consumers' wariness about GM foodstuffs and GM organisms in general. Consumers genuinely do not see the worth of GM products, which is why there is a need to move beyond crops that confer benefits to industry and growers alone towards second-generation GM that produces added health and nutritional benefits for consumers.
Hans Kast, president and CEO of BASF Plant Science, is on record as saying that the Amflora potato could potentially earn European farmers an extra €100 million annually. The company has also pointed out that it is losing between €20m and €30m in licence income for every lost cultivation season.
Perhaps I'm being presumptuous, but I can't imagine many Irish or European consumers lying awake at night worrying about lost revenues for BASF. What Irish consumers are interested in, however, are real and tangible benefits from their foods.
In a survey in 2005 by Ireland's Agriculture and Food Development Authority, 42% of consumers questioned indicated that they would consider purchasing a hypothetical GM-produced yoghurt if it had anti-cancer properties. In the same study, 44% of consumers said that they would use a GM-produced dairy spread if it had anti-cancer properties.
"Second generation" GM crops also have a role to play in developing countries, with the development of fortified foodstuffs such as "golden rice" to counteract malnutrition. A new variety of Golden Rice has been engineered to produce even more pro-vitamin A to combat vitamin A deficiency.
Undoubtedly, some British and Irish consumers, in common with their European counterparts, are reluctant to consume GM crops and see them growing in their countries. The focus of industry on benefits to the grower and seed producer rather than on consumer-centred benefits will prolong this reluctance and hamper the innovation in our food and agriculture industries that is so badly needed.
Eoin Lettice is a lecturer in the department of zoology, ecology and plant science at University College Cork, Ireland. He specialises in the control of plant pests and diseases
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