Cliquey meat dept kept scam quiet

February 4, 2002 The Daily Yomiuri (Tokyo)
The clannish way in which the meat business department at Snow Brand Food Co. was run ensured that illegal practices such as the recent relabeling scam, in which foreign meat was disguised as domestic meat, were never exposed.

According to sources, some staffers at Snow Brand Food, including meat appraiser and negotiator Tetsuaki Sugawara, 47, the former head of the Kansai Meat Center, a branch of Snow Brand Food, created a secretive group that made it difficult for wrongdoings to be detected.

A joint investigative team comprising officers of the Hyogo, Saitama and Hokkaido prefectural police and the Metropolitan Police Department strongly suspect the company's meat department systematically acted in a fraudulent manner by relabeling foreign beef as domestic beef to obtain state subsidies from a buyback scheme after the company's business suffered in the wake of the nation's first case of bovine spongiform encephalopathy, or mad cow disease.

Investigators who spent about 11 hours searching the company's headquarters Saturday intend to analyze documents they seized to clarify the full scope of the relabeling scam. "Those who can't distinguish the quality of meat can't work in the meat business department. It takes about 10 years to acquire such abilities," an employee of the company said.

The company's meat business department comprises about 20 staff members at its headquarters and about 60 at its four meat centers nationwide, including in Hyogo and Saitama prefectures. The meat business department is in charge of procuring pork for making ham and sausages and buying and selling domestic beef and pork.

The meat centers affiliated with the department are in charge of buying and selling beef, pork and chicken.

"The meat business department was a place in which outsiders could not interfere. We could not know at all what the department was doing. We thought of the department as if it was a totally different company," another company employee said.

For example, when procuring raw materials for ham and sausage from overseas, those in charge have to be well-informed about foreign exchange systems, U.S. grain, which influences prices of worldwide agricultural products, and world prices of carcasses.

In addition, when buying domestic beef, they are required to appraise the meat quality at a glance and have good negotiating skills when dealing with farmers and meat processors.

A company employee said, "It's necessary to distinguish between foreign and domestic beef by smell." Because this is a difficult technique that takes much practice, the department itself was in charge of personnel matters, without the direction of the company headquarters.

A former employee said the head of a different department was once dispatched to the meat business department. However, because of the way meetings were conducted, he complained that the goings-on in the meat business department made no sense to him at all.

The meat business department was seen by the company as a heavy burden because meat prices fluctuated widely and profit margins were small.

In fiscal 2000, a food-poisoning case occurred at Snow Brand Milk Products Co., hitting Snow Brand Food hard. Sales fell by about 14 billion yen to 90.3 billion yen. The company has suffered even more since September as beef sales dropped due to the mad cow disease scare.

To cut costs, the company restructured in October to integrate the procuring and selling sections.

Explaining the background to the scam, another employee said: "To compensate for losses, the department was trying to earn as much profit as possible by changing documents identifying the source of the products to those unaffected by the disease. At that time, the restructuring took place, so I assume the department was pressured further to make profits."

Former Snow Brand Food President Shozo Yoshida, 58, who quit to take responsibility for the scam, said at a press conference on Jan. 29, "The meat business department has a closed nature that is different from other parts of the company." Old meat

Most of the imported beef ordered to be relabeled to that of domestic origin by the Kansai Meat Center had been processed about two months before, it was learned Saturday, and most of the meat's quality guarantee has almost expired.

The meat had been considered unsold due to the mad cow disease scare, and the quality guarantee of some of the meat will expire by the end of the week.

The Hyogo Prefectural Police Headquarters suspects the center, fearing rapidly increasing stocks, sold old meat to the Japan Ham & Sausage Processors Cooperative Association under the cooperatives' buyback scheme.

The largest batch of the imported beef that was disguised as of domestic origin was about 6.6 tons packed in Australia on Sept. 5. The quality guarantee expiry date designated by the Australian producers organization was Nov. 21. About 1.2 tons of beef had an expiry date of Nov.

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