The firm said failure to take reasonable measures to prevent supply chain fraud may constitute ‘risk of harm’ in a court of law.
Following the horsemeat scandal in 2013 in Europe, new requirements related to food fraud were included in Issue 7 of the BRC Global Standard for Food Safety and the Global Food Safety Initiative (GFSI) will include fraud mitigation requirements in its guidance document this year.
Reduce fraud exposure
Leatherhead said manufacturers and retailers must reduce potential exposure to fraud by conducting vulnerability assessments and introducing proactive measures to counter risk.
Professor Tony Hines, director of regulatory and crisis management at Leatherhead Food Research, recommended that senior industry professionals make it their business to drive due diligence regimes and fraud mitigation strategies.
“Senior managers and directors have a personal duty of care to reduce exposure to fraud since it can be clearly associated with causing harm or risk of harm. That means insisting on greater transparency and traceability to identify weak points in the supply chain, then implementing proactive control measures to curtail the threat.”
Hines told FoodQualityNews that the guidelines mean there is an increased role and responsibility of senior managers and directors.
“The guidelines point to the bigger you are as an organisation the more you are expected to be in a position to implement robust food safety.
“Companies with a multi-million turnover are expected to have the necessary tools in place for supply chain management and be able to understand and continuously assess and review.”
Intelligence in the supply chain is often based on historical issues, he said.
“Countries need to tidy up their act. The intelligence cycle starts by gathering information and shaping policy around it. That intelligence from the supply chain can be based on historical issues and when it comes to a commodity from a certain country, you may choose not to use it anymore as the risk assessment says it is not worth it so you get it from somewhere else.
“BRC version 7 indicates the food industry and retailer response to events in 2013 but it is a bit too soon for much feedback from audit findings. Many companies are audited by the BRC, most food manufacturers need to be to supply retailers, and they are going through vulnerability assessments.”
Hines said supply chain risk was to differentiate between vulnerabilities in the non-HACCP camp and those covered by HACCP systems.
“Chemical and microbiological non-conformities, pesticides and veterinary drug residues are under HACCP. Non-HACCP is a history of dilution, substitution, adulteration or production without licence.
“We can’t crystal gaze but we can look backwards. There is always potential, in my opinion, to copy something that has happened before by someone. We are on the lookout for it now in the UK but something like horse meat substitution could be happening in other places. It is an old adage but if the price is too good to be true it probably is.
“If you turn the clock back 20 years, a HACCP plan was your due diligence and now it is your HACCP plan and vulnerability assessments.”
Law firms provide analysis of guidelines
K&L Gates said the guidelines use turnover as the starting point for calculating fines and sentencing ranges are set according to culpability.
“For example, a company will be assessed to have had a very high culpability level where it has been in deliberate breach of, or had a flagrant disregard for, the law; a low level of culpability is where the failings were minor and occurred as part of an isolated incident,” said the law firm.
“In the worst case scenario, where an organisation with a turnover of £50 million or more is convicted of corporate manslaughter and is found to have acted in deliberate breach of or in flagrant disregard of the law, the organisation may be fined up to £20,000,000.
“An individual director found guilty of “consent, connivance or neglect” in relation to the breach of his duty under the Health and Safety at Work Act 1974 may receive two years imprisonment.
“They send a message that health and safety and food hygiene should be a priority for all boardrooms and, if directors are not taking these areas of corporate governance seriously, they may face prison and their companies may face heavy fines.”
Law firm Eversheds said the guidelines covers offences including placing unsafe food on the market, inadequate traceability, food recalls and withdrawals, failure to adopt systems based on HACCP principles and misleading consumers through labelling, advertising and presentation of food.
“A key change in the guideline is to the list of mitigating features which now excludes any evidence that the business or individual has effective food safety and hygiene procedures in place or evidence of any steps taken to remedy the problem.
“Therefore where a business may have fallen just short of establishing a due diligence defence; evidence of its systems and procedures will no longer be considered a mitigating feature.
“The guideline is arguably cynical; it is based on the premise that dutyholders will take health and safety and food safety more seriously if the penalties are higher.
“Those organisations that react to the guideline and bring it to the attention of senior managers will most likely be those that have robust procedures. Those organisations that are ignorant of the guideline will be in for an unwelcome surprise.”