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Trade in fake products is rising as European gangs seek out opportunities

Food labs fight organized crime

by Jamie Doward and Amy Moore

The Observer

At first glance the sprawling campus amid glorious countryside looks an unlikely base from which to wage war against Italy’s most feared crime organization, the ‘ndrangheta.

And yet the laboratories of Campden BRI, once part of the University of Bristol and now a major research hub, are, in their own quiet way, playing a vital role in tackling organized crime.

The laboratories are not conducting forensic tests on specks of blood or splinters of bone. Rather, they have been contracted by the government’s Rural Payments Agency to carry out chemical tests to establish the purity of olive oil — which, since March, has been subject to new EU regulations designed to ensure that consumers get what they believe they are paying for.

This is bad news for the ‘ndrangheta and other organized criminal gangs, which for decades have been assiduously passing off inferior olive oil and oil from other vegetable sources as the premium extra virgin variety.

According to the European parliament’s food safety committee, olive oil is the product most at risk of food fraud, and the rewards for adulteration of it are substantial. Cheap pomace olive oil — extracted from olive residue using chemicals — sells for 32 pence (55 cents) per 100 milliliters, compared with £1.50 ($2.50) for extra virgin.

“Olive oil is a valuable commodity and fraud is on the increase,” said Dr. Julian South, head of chemistry and biochemistry at Campden BRI. “Food authenticity continues to be a high-profile issue, and the testing of olive oils is taking place in all European Union member states.”

Jenny Morris, principal policy officer at the Chartered Institute for Environmental Health, acknowledged that olive oil is ripe for fraud.

“A lot of people buy virgin olive oil,” she said. “They like the fact that it is high quality and they are prepared to pay a premium. If you are a criminal and you get hold of some oil, not necessarily olive oil, you can color it green with a bit of chlorophyll and make a lot of money out of it. Because of its distribution, it is sometimes hard to track.”

Bogus honey, vodka

But many other products are almost as vulnerable to criminal adulteration as olive oil.

Other popular and lucrative frauds include diluting honey with cheap sugar syrup, passing off methanol as vodka, mixing inferior rice with premium basmati and switching cheap fish such as catfish with expensive alternatives like haddock.

It certainly beats mixing cocaine with bulking agents like talcum powder — an activity that is far riskier than corrupting the food chain, according to experts.

“At the moment the risks for criminals operating in this field are low because they are not routinely coming up against trained and organized professional investigators,” Gary Copson, a former London Metropolitan Police detective and adviser to the government’s Elliot review into food chain integrity, told a parliamentary committee earlier this year.

“While there is excellent work being done by trading standards, it is generally focused at a lower level. They don’t have the capacity to work at the higher level that we have seen and suspect is in the background,” Copson said, according to Environmental Health News.

The Elliot review, which is due to report by early June, will help to highlight the extent to which organized crime has penetrated food distribution networks.

This became apparent during the horse-meat scandal last year and was confirmed in February following the launch of Operation Opson III, an Interpol campaign that seized more than 1,200 tons of fake or substandard food and nearly 430,000 liters of counterfeit drinks.

Almost 100 people were arrested or detained in 33 countries, while officers impounded more than 131,000 liters of oil and vinegar, 80,000 biscuits and chocolate bars, 20 tons of spices and condiments, 186 tons of cereals, 45 tons of dairy products and 42 liters of honey.

The largest amounts of foodstuffs that were seized were in the fish or seafood category — including 484 tons of yellow-fin tuna.

Some of the frauds uncovered in the operation came straight from the pages of bad novels.

Investigators discovered an organized crime network in Italy behind the manufacture and distribution of fake champagne.

Materials to prepare 60,000 bottles, including fake labels, were seized following raids on two sites, with three people arrested and 24 others reported to the authorities.

In Bangkok, the Royal Thai police raided a warehouse and recovered more than 270 bottles of fake whisky, as well as forged stickers, labels and packaging.

Officials in the Philippines seized nearly 150,000 fake stock cubes, while French police identified and shut down an illegal abattoir on the outskirts of Paris.

In Spain, 24 people were detained for illegal work and immigration offenses after investigators recovered 4.5 tons of snails that had been taken from woods and fields.

In the U.K., police seized 17,156 liters of counterfeit vodka, with an estimated street value of £1 million ($1.6 million), worth around £270,000 ($455,000) in duty and value-added tax.

Michael Ellis, head of Interpol’s trafficking in illicit goods and counterfeiting unit, said at the time that the operation would have opened many people’s eyes to the threats posed by organized criminal networks.

“Most people would be surprised at the everyday foods and drink which are being counterfeited, and the volume of seizures shows that this is a serious global problem,” he said.

Cornering the market

But counterfeiting is only one weapon in the criminal gangs’ armory.

In Mexico, a drug cartel known as the Knights Templar has recently been taking over lime farms in an area called the Tierra Caliente.

The cartel now controls a large proportion of the limes exported to the U.S., with the result that prices have tripled. The same group is also seeking to control the avocado trade.

In some cases, the role of criminal networks in the food chain has proven fatal.

More than 40 people were killed by methanol-contaminated vodka and rum in the Czech Republic in 2012.

At least one person has died in the U.K., and trading standards departments have warned there has been a fivefold increase in seizures of counterfeit alcohol since 2009.

Fakes have been found to contain a range of dangerous contaminants, including isopropanol, methanol and chloroform.

The use of the industrial chemical melamine to increase protein in baby milk powder in China in 2008 also resulted in deaths but also, according to experts, proved that criminal gangs are becoming more sophisticated in their use of technology to carry out fraud.

“The most surprising aspect is the ingenuity,” said Stuart Shotton, consultancy services director at Foodchain Europe, which advises the industry on food security.

“You’ve got some very clever people — food technologists; people who are experienced in the industry — who are making decisions and changes on a scientific basis to figure out what they can do to a product to increase its commercial viability.”

Holograms needed?

Shotton said criminal gangs will move into food fraud if they are attracted by one of two factors. “Either a product is high value but low volume and you want to replace certain elements to make more of a profit, or it is low price (but) high volume, where economies of scale dictate that if you can shave a penny off a product and you are selling a million products, you’ve made a substantial amount of money.”

He called on the food industry to learn from other industries, such as fashion brands, if it is going to secure itself successfully against criminal activity. “We don’t have holograms or watermarks — maybe that’s the route we need to start going down,” Shotton said.

However, the full extent to which fraud in the food industry is down to criminal networks is unclear as there is currently a lack of data. Some of the fraud is clearly perpetrated by small-time players rather than organized crime. For example, a London-based importer was recently fined £17,000 ($28,600) after passing off syrup as honey. But even the actions of some small-scale fraudsters can have large-scale repercussions.

“Look at (the red dye) Sudan 1,” Morris said. “It was down to enterprising small-scale producers of chili in Italy realizing that if their powder looked redder they’d get more money for it. So how did they make it redder? They put industrial floor dye into it.”

The Food Standards Agency acknowledges that reports of known or suspected food fraud have steadily risen year after year since the inception of its food fraud database in 2007.

Back then just 49 reports were submitted. Last year the number had increased to 1,538.

A spokesman explained that the most common concern — involving 16 percent of all reports submitted last year — was to do with the sale of “unfit food.”

Counterfeit alcohol, mostly vodka and wine, was the second-largest issue, representing some 14 percent of the reports created.

But the nature of the food industry means frauds can change very quickly.

For clues as to which food groups criminal gangs are considering ripe for future fraud, it may be helpful to look to the U.S., where something called the Pharmacopeial Convention’s food fraud database tracks media reports of food fraud.

Products currently subject to serious fraud include turmeric and chili powder, cooking oil, shrimp, lemon juice and maple syrup.

According to foodqualitynews.com, not one of these was in the top-25 list of food frauds between 1980 and 2010.

‘Think like a criminal’

The Elliot review is expected to recommend that the food industry must “think like a criminal” if it is to thwart criminal activity. This is something other countries have been doing for years.

“Look at the Italians,” Morris said. “They deal with a lot of food crime involving premium products like buffalo mozzarella or olive oil. They ask themselves, ‘Where is the biggest opportunity to make money? Let’s focus there.’

“The only way you are going to head off the crooks is to have an idea of where they are going to strike and target your surveillance resource there.”