Malicious contamination and product extortion are perhaps the most financially damaging incidents a company can face. Few crimes are so easy to commit, yet so seriously endanger public safety and threaten such commercial damage.
Probably the best known case of product contamination, involved the deliberate lacing in the US of Johnson & Johnson’s best selling headache remedy Tylenol with cyanide in 1982. Seven people died as a result of taking the contaminated capsules. Despite the introduction of tamper-evident packaging, several more deaths occurred in 1986 due to the consumption of cyanide-laden analgesic products.
Notwithstanding being hailed as a classic example of successful crisis management, the Tylenol incident, for example, cost the company US$150 million post tax at the bottom line. It is generally accepted that the 1982 Tylenol crisis propelled this crime into the international arena, motives of the perpetrators being as varied as the acts themselves.
The proliferation of product tampering and extortion in the US since 1982 is mirrored in the UK and Europe, where such events continue to plague food and drink industries.
Australian companies have also experienced several high-profile product extortion and contamination incidents. In 1985, Masterfoods recalled tens of thousands of Mars and Snickers bars following extortion threats.
The contamination of Garibaldi meat products with E.coli bacteria in 1995 resulted in the death of a four-year old girl and more than twenty people being hospitalised. The company is no longer in business.
In 1997 a number of poisoned Arnott’s biscuits were sent to the company in an extortion bid. The total cost of the product recall has been estimated at $22 million.
In the UK several incidents have been given considerable publicity, such as the contamination of baby food and pet food with razor blades, glass shards and caustic soda; and threats to poison such diverse products as chocolate, meat pies, yoghurt, toothpaste, poultry and shampoo, etc.
Extortionists have admitted responsibility for contaminating such things as oranges and milk with non-toxic dyes. Animal liberation groups have a preference for salt that produces an unpleasant taste without any ill-effect to consumers. One animal rights group claimed to have adulterated several Mars bars with rat poison, by inserting notes to that effect beneath the packaging. This incident cost Mars nearly £3 million in lost sales.
More recently a person stood trial for sprinkling peanuts around a bakery with the intention of contaminating goods. The bakery was closed for three days to remove all traces of peanuts. The closure and cleanup is believed to have cost the firm £1 million.
In 1996, extortionists threatened to poison food sold in stores throughout Europe, with deadly snake venom, against a huge demand payable in diamonds. Another departure from the introduction of the usual contaminants has recently included the use of the AIDS virus in threats against companies. In the mid 1990s, the first cases of E.coli being used as a weapon in extortion were apparently reported. Other bacteria and emerging infectious diseases will constitute numerous other food contamination problems.
It is important to understand the difference between the two forms of criminal product contamination. In a case of deliberate tampering, a product will have been contaminated or made to appear so, by the perpetrator, without any demand for money. No contact with the threatened company is required and success depends upon adverse media exposure.
The incident may be a sinister and potentially devastating extension of an employee’s disgruntlement or the activity of a saboteur outside the workplace wishing to violate the integrity of a target’s product between manufacture and retail purchase.
Product extortion is a form of blackmail, whereby a criminal deploys threats or deeds in order to compel his victim to comply with a financial demand or other imposition. The threat or deed is the deliberate contamination of a company’s products. In this case, the extortionist does not seek publicity, in fact far from it.
Motives and Methods
Police describe the typical offender as being male, Caucasian, aged 35-45, operating alone or with one accomplice, without previous convictions or criminal connections, non-violent, intelligent and well-educated. Statistics indicate that 25% of criminal tampering incidents are perpetrated by disgruntled employees. Sadistic amusement, political or financial gain, challenge, pursuit of grievance, disreputable competition, excitement – many and varied are the motives for product contamination.
The methods used are as equally diverse. In the majority of cases, products are bought or stolen from retail outlets and contaminated before being returned to the shelves. Other incidents suggest tampering could occur at the point of production or during distribution.
It is a crime that feeds on itself and one incident can trigger a rush of copycat cases.
It is not only malicious contamination or extortion threats that can damage a company, and necessitate a product recall. A food recall is essentially an action taken to remove from distribution, sale and consumption, food which may pose an unacceptable safety risk to consumers. A recall emanating from accidental or environmental contamination during the manufacturing process or whilst the finished product is in transit, may equally excite media interest and erode public confidence. Accidental contamination may include the existence of harmful microorganisms, harmful chemicals, physical matter, such as wood, glass and metal and undeclared allergens such as peanuts, wheat products and colours.
FSANZ has been collecting recall data since 1990, when during that year, 18 recalls were recorded. From approximately 1998 the number of food recalls per year has increased to an average of 60.
The FSANZ Food Safety Standard 3.2.2, Food Safety Practices and General Requirements requires all food businesses to have a food recall procedure in place.
Under the Trade Practices Act, heavy penalties can apply to any business that fails to perform a mandatory food recall when needed.
Failure to notify the Minister responsible for Consumer Affairs of a mandatory product recall situation and/or continuing to supply goods subject to a compulsory product recall can result in heavy fines.
The extent of the damage caused by an actual or threatened contamination depends as much on the company’s response to the incident, as on the severity of the threat. Business disruption to some extent is inevitable, but if the immediate response is incorrect or inadequate, the problem will widen and lead to:
- Product recall and production costs
- Adverse publicity
- Intense outside interest
- Loss of consumer confidence
- Litigation costs
- Redundancies and cessation of trading
Experience and case studies have shown that the management of events and the resolution of a crisis are eased if certain information has been gathered, and decisions made, prior to, rather than during an incident. This allows all attention in the event of a crisis to be concentrated on the immediate issues. There is no substitute for advance preparation.
Action taken in the first 24 hours will influence the ultimate impact of an incident. An effective response to an incident relies on a number of elements both proactive and reactive, including risk assessment, crisis management planning and training. Risk assessment is the cornerstone of any security system, and the correct balance of physical and procedural security measures against the perceived threat should be achieved.
Precautionary systems that guard against product contamination, for example, must initially be considered at the manufacturing site itself, and should include:
- Physical perimeter controls
- External and internal access control
- Personnel management procedures
- Intruder detection and surveillance systems
Advance preparations for handling product contamination incidents should include:
- Establish incident management team
- Individual responsibilities of team members, deputies and contact details
- Recall plan
- Incident control centre and support facilities
- Recall insurance
- Independent scientific product analysis support
- Specialist advice, crisis PR and legal support
Training should include table-top simulations based on appropriate scenarios; media handling training for press conferences and interviews; instruction for staff who open mail or receive telephone calls; and employee security awareness training.
The New York Times, 4 December 2010
The Food Cycle: Recall, Forget, Repeat
Surveys show that Americans are concerned about food contamination, but experts say that recalls have only a short-term effect on consumers.
“We don’t see food leaving our diet because of safety issues,” said Harry Balzer, vice president of the NPD Group, the market research firm. After a recall, “habit always drives us back to that place where we were.”
An analysis of spending on recalled products shows that consumers do eventually return to buying the products. However, the time it takes for them to resume normal buying habits depends on the product.
When spinach was recalled in 2006, consumers took over a year to return to previous spending patterns. But after recent recalls of peanut butter, beef and eggs, customers came back in a matter of weeks.
One explanation for this is that eggs are a staple; nearly 9 in 10 Americans say they eat them. By contrast, only 5 in 10 Americans say they are spinach eaters. After the spinach recall, 10 percent of spinach eaters said they were unlikely to eat spinach again. In contrast, 3 percent of egg eaters said they would stop purchasing eggs.
Consumers also seem to be tuning out information on recalls. Researchers at the Food Policy Institute at Rutgers found only 6 in 10 people take the time to look for problem products at home.
Stores like Costco are also trying to help consumers fight recall fatigue by contacting them if they bought a recalled item.
Congress has taken action as well. Last week, the Senate passed food-safety legislation intended to improve safety standards and give the government the power to order recalls.
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