Snow Brand Food Co. admitted Wednesday that it misidentified Australian beef as domestic to take advantage of a government subsidy introduced after the mad cow disease outbreak.
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| Shozo Yoshida |
Tokyo-based Snow Brand Food, a subsidiary of Snow Brand Milk Products Co., asked warehouser Nishinomiya Reizo in October for permission to allow it to secretly repackage the Australian beef it was storing into boxes labeled as domestic meat, according to Yoichi Mizutani, the president of the warehouse firm.
Tons of the beef went into the pipeline for receiving money under the government program to buy up domestic beef in storage and incinerate it as a measure against mad cow disease.
Snow Brand Food also asked the warehouse firm, based in Nishinomiya, Hyogo Prefecture, to keep its employees away from the warehouse while Snow employees repackaged the meat, Mizutani said.
He said that because Snow Brand Food is an important client, the request was granted and documentation for the beef was changed.
Yoichi Mizutani, president of warehousing firm Nishinomiya Reizo in Hyogo Prefecture, tells reporters that Snow Brand Food asked the company to allow it to secretly repackage Australian beef as boxes of domestic meat."I asked Snow Brand Food later to stop these procedures on the phone," Mizutani said, "but the firm declined."
Hyogo Prefectural Police have opened an investigation into the case.
Snow Brand Food President Shozo Yoshida claimed Wednesday the wrongdoing was solely the decision of the manager of Kansai Meat Center, a beef-processing subsidiary in Itami, Hyogo Prefecture.
During a hastily arranged news conference, Yoshida offered an apology and said the manager was worried about accumulating beef stockpiles after Japan's first case of mad cow disease was confirmed in September, triggering a sharp drop in the price of beef products.
Yoshida tried to protect Snow Brand Milk Products, the parent firm, in front of reporters by repeatedly saying, "The wrongdoing was done by Snow Brand Food alone."
However, he admitted the scandal is another blow to the Snow Brand group, saying, "From consumers' viewpoint, it is the same Snow Brand group. . . . We will try to regain consumer trust."
The Snow Brand group has been struggling to improve its image since July 2000, when some of its processed milk products caused Japan's worst food-poisoning outbreak.
Nishinomiya Reizo sources said several Snow Brand Food employees visited the warehouse on Oct. 31 and repackaged about 13.8 tons of Australian beef.
Snow Brand Food then asked a cooperative association to purchase the beef under the government's emergency beef policy, the sources said, adding that the beef is still stored at the warehouse.
As part of measures to relieve dairy farmers, retailers and wholesalers affected by weakened demand for beef, the government launched the beef-backlog emergency-storage project, under which industry groups could use government subsidies to purchase domestic beef to be incinerated at a later date. The program covered domestic beef processed before the government launched a nationwide blanket inspection of beef for mad cow disease on Oct. 18 .
Under the plan, 12,600 tons of beef were purchased for incineration by the farm ministry at the government's expense.
The Australian beef was imported at a price of 700 yen per kg, while under the subsidy program, the government's purchase price is 1,060 yen, Snow Brand Food officials said.
Snow Brand Food applied for 14.6 million yen in subsidies and has received 9.6 million yen, the officials said.
The cooperative association that purchased the beef in question plans to ask Snow Brand Food to return the money.
The Agriculture, Forestry and Fisheries Ministry is looking into the case, but an official said it is impossible to verify the origins of all the meat in Japan's warehouses.
Nishinomiya's public health center conducted an on-site inspection Wednesday morning at Kansai Meat Center.
Snow Brand Food was established in 1950 with processed food products accounting for about 86 percent of its business. It has about 2.17 billion yen in capital and posted annual sales of about 90 billion yen in the business year ended in March 2001.
Responding to news of the scam, Prime Minister Junichiro Koizumi said, "It is regrettable (that such a thing has happened). What matters here is the morality of the firm's management."
Earlier in the evening, Chief Cabinet Secretary Yasuo Fukuda said the case could exacerbate the lingering public distrust of beef sold in Japan and cause further trouble for the beef industry, which has already suffered heavily from the mad cow scare.
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