Escalating Legal Risk for Senior Management

Detail shot of a meeting roomIf you are a senior executive in the food business, you are now in the business of managing food safety compliance and risk.  This means garnering a good understanding of why food safety is important to your business, how you can mitigate or eliminate food safety risks, and how in doing so your food safety program will provide a return on your investment.

Since 2013, the Justice Department has won convictions or guilty pleas in four criminal cases against food companies or the executives that ran them. All of the cases fell under the 1938 Federal Food, Drug and Cosmetic Act.   The law makes it illegal to manufacture, introduce into commerce, deliver or receive any adulterated food item.  A food is considered adulterated not only if it contains a substance that is harmful to health, but also if it has been prepared, packed, or held under unsanitary conditions that could allow it to become contaminated.  By contrast, that is roughly the same number of convictions or guilty pleas as the agency landed under the same act in the 24-year-period from 1988 through 2012.

Two Very Well Known Groundbreaking Prosecutions in the Industrygavel on stack of documents on white background

One is the 76-count indictment against executives with Peanut Corporation of America (PCA), which was at the center of a 2009 Salmonella recall.  Stewart Parnell–the former Peanut Corporation of America owner was convicted for knowingly shipping Salmonella-contaminated peanut butter from his Georgia plant.  Age 61 at the time of conviction, he received a 28-year (virtually a life) sentence in prison for his crime.

The second was the prosecution of two executives from Jensen Farms responsible for a 2011 Listeria outbreak linked to cantaloupes.  The outbreak killed 33 people and sickened 147 in 28 states.  In this case and others, federal prosecutors use a little-known rule known as the Park Doctrine, which allows for criminal prosecution even if the official had no actual knowledge of or participation in the specific offense.  The Jensen Farms case is also noteworthy in that it also set precedence for retailer liability, given Walmart’s out of court settlement with the victims in the case.

It’s Now More Important Than Ever to Ensure Your Supply Chain is Safe  

Brand with lockTake the time to meet with your food safety personnel to review policies and procedures, and look for gaps.  Underscore the need for documentation, as it will be key to proving actions that were taken should you wind up in court.  The bottom line for minimizing food safety risk in your food supply chain is to not trust, but verify.

The Risks Are Worse Than You Think

Our studies show among suppliers new to ReposiTrak…

65% of Certificate of Liability Insurance is Missing or Expired
Nearly 11% of insurance minimum requirements were not met
36% of Hold Harmless Agreements are Missing or Expired
75% of Required Third Party Audits are Missing or Expired
29% of suppliers’ letters of continuing guarantee are missing or expired
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