ANALYSIS:Two Irish-based companies have escaped with relatively light fines after a criminal investigation of their role in a food scare. But one, pharmaceutical giant Wyeth, is facing substantial demands
THE ERRORS which resulted in the fines imposed yesterday on pharmaceutical giant Wyeth and one of its contractors caused a massive food scare in the EU almost a decade ago and temporarily devastated the Irish pork trade.
In 2002, Ireland had barely recovered from a damaging outbreak of Foot and Mouth when a new crisis broke that further damaged its reputation among food producers.
In May of that year farmers in the Netherlands noticed their pigs were having fertility problems. Investigators found the problems arose from the a synthetic hormone, medroxyprogesterone acetate, or MPA, which was found in the pigs’ kidneys and then in their feed. MPA is used in humans as a contraceptive and hormone replacement.
As alarm spread among consumers and pork sales were seriously affected, the scare widened and 11 EU states were hit.
Although the problem was eventually narrowed down to 27 farms, 55,000 animals were slaughtered and half of the country’s 7,000 pig farmers had to close their businesses temporarily.
Tests quickly established the problem originated in Ireland. All the affected animals had received a feed additive produced in Belgium using waste sugar water shipped from the Republic. This waste was incorrectly classified as non-hazardous.
The waste water came from US pharma giant Wyeth’s factory in Newbridge, Co Kildare, where it was used to sugar-coat contraceptive pills. It was released to the Dublin-based waste management company Cara Environmental Technology for disposal.
Cara supplied the water to a now bankrupt Belgian company, Bioland, which sold it as treacle to Dutch feed compounders. Irish pork exports recovered but the investigation into the causes of the scare dragged on.
The Environmental Protection Agency found the waste from Wyeth was correctly classified for export from 1997 to 1999. Shipments to Bioland started the following year but two different streams, containing non-hazardous and hazardous materials, were shipped together and jointly, and incorrectly, classified as green waste. This classification meant no notification was needed for export.
The EPA found that the decision to classify the sugar solution containing MPA as “green waste” was incorrect, and its reclassification led to the waste being exported without notification to the competent authorities in Ireland or in Belgium.
In 2003, it sent a file to the DPP and a year later, the National Bureau of Criminal Investigation began its investigation. Wyeth challenged the EPA’s prosecution in the High Court in 2008 but lost and the criminal case has taken over six years to complete.
The case is one of the first of its kind to be taken under environmental legislation which provides for massive fines – up to €12.7 million – on conviction. Under the strict liability provision applying under such legislation, the prosecution was not required to prove intent for the release of hazardous material into the food supply chain.
In July, Wyeth (now owned by another US pharma giant, Pfizer) and Cara pleaded guilty in Dublin Circuit Criminal Court to a number of charges relating to their waste management practices. Wyeth pleaded guilty to shipping waste out of the State without a certificate and to disposing of or recovering waste materials by means of a company which was not an agreed hazardous waste contractor.
Cara pleaded guilty to four counts of shipping waste out of the State without a certificate. Both companies agreed to contribute to the cost of the State’s prosecution of the case. They will be greatly relieved that the fines ultimately imposed are at the lowest end of a very long scale.
The affair has also seen fines handed out in the Netherlands, while in Belgium the two owners of Bioland received suspended sentences for their roles in handling the waste that ultimately ended up in the animal food chain.
The fines imposed by the Irish court in response to guilty pleas by both companies will be closely watched by a variety of interests who are seeking compensation for losses caused by the feed contamination.
Wyeth, in accounts filed with the Companies Registration Office, says a Dutch company, Schuurmans Van Ginneken (SVG), originally sought compensation for €131 million for the contamination and disposal of up to 26,000 tons of molasses contaminated with MPA and for compensation for its customers.
In 2008, SVG particularised its losses at €27 million, plus legal fees, according to company documents. Wyeth has provided the Dutch company with bank guarantees for €34 million as security for the amounts claimed.
Cara, in its most recent accounts, says it is vigorously defending charges of negligence and breach of duty by SVG and believes it has no liability to the Dutch company. SVG is now known as EDF Man Liquid Products. Productschappen Vee, the Dutch meat and livestock board is also suing Wyeth for €8 million in the Netherlands but a spokesman said its case was on hold until the Irish proceedings were completed.
“ The fines imposed by the Irish court in response to guilty pleas by both companies will be closely watched by a variety of interests who are seeking compensation for losses caused by the feed contamination
