LARRY Goodman's beef empire is potentially facing multi-million euro lawsuits from Tesco and Burger King in the wake of the horse meat in burgers controversy as the battle to save the Silvercrest plant and 112 jobs in Ballybay, Co Monaghan, continues.
The possible litigation will centre on alleged breach of contract over guarantees it gave the two multinationals that all its burger ingredients were Irish or British.
Last week, Agriculture Minister Simon Coveney, still incensed over the reputational damage caused to the Irish food industry by the scandal, told the All-Party Committee on Agriculture: "I suspect legal cases and litigation over compensation will be pursued at the end of this process."
Tesco's group technical director Tim Smith has issued a withering assessment of what happened. "The evidence tells us that our frozen burger supplier, Silvercrest, used meat in our products that did not come from the list of approved suppliers we gave them. Nor was the meat from the UK or Ireland, despite our instruction that only beef from the UK and Ireland should be used in our frozen beef burgers. Consequently we have decided not to take products from that supplier in future. We took that decision with regret but the breach of trust is simply too great."
In an exclusive interview with the Sunday Independent, Mr Coveney said the discovery of horse meat in burgers manufactured in Silvercrest created "an intensive focus" on how the plant was managed and operated.
"Tesco and Burger King wanted answers in terms of exactly how things were done and when it came under the microscope the management practices at Silvercrest were found to be very poor. That whole breach of trust – where they said they were producing all-Irish or British products they were contracted to do for Tesco and Burger King but were not – was as damaging to Silvercrest as the actual horse meat controversy.
"What made me angry and what still frustrates me is that Silvercrest is the largest manufacturer of burgers in Ireland and the UK and arguably the largest in Europe and which was and is a major part of the Irish food industry infrastructure in terms of burger meat. Customers like Tesco and Burger King are very large customers of Ireland as a whole, and the facts are that contracts were in place and had very clear instruction in terms of the use of certain Irish- or British-sourced ingredients.
"Those contracts were not respected and that has resulted in a breakdown in trust between Ireland's largest beef company and two very significant customers of theirs. That is not a good thing and should not have happened. It is no secret that I was very annoyed and very disappointed that this was allowed to happen."
Last Thursday, the horse meat in beef controversy took another twist when Britain's Food Standards Agency ordered all British companies to test their processed beef products in the next week after analysis of lasagne made by Findus found up to 100 per cent of the meat in one sample came from horses. The British agency's chief, Catherine Brown, said it seemed likely to have happened through deliberate fraud or other criminal activity, rather than mistaken contamination.
The agency tested 18 processed lasagne dishes made for Findus by the French firm Comigel in Luxembourg and found 11 of them contained between 60 per cent and 100 per cent horse meat. Findus began withdrawing lasagnes in 320g, 360g and 500g sizes from shops last Sunday.
The lasagne at the centre of the controversy was also on sale in Ireland. In a statement, the Food Safety Authority of Ireland (FSAI) said Tesco withdrew the product from its Irish shelves last week, but did not inform the FSAI.
Irish consumers are being advised to check if they have purchased this product and if they have, not to eat it, but to return it to the point of purchase.
The chief executive of the FSAI, Professor Alan Reilly, said the horse meat controversy was now a Europe-wide problem: "It's not just confined, as we thought initially, to Ireland. This has spread to France, to Luxembourg, to the UK, Poland is involved and the Netherlands. So it really is a Europe-wide problem that we have."
Dr Patrick Wall, UCD's associate professor of public health said: "Beef sells for around €4 a kilo while horse meat costs no more than 90 cent. So what we are seeing here is fraud on an absolutely huge scale."
A spokesman for Aldi said: "Following an alert from our French supplier, Comigel, Aldi immediately withdrew its Today's Special Frozen Beef Lasagne and Today's Special Frozen Spaghetti Bolognese from all its stores including Ireland.
"Tests demonstrated that the withdrawn products contained between 30 per cent and 100 per cent horse meat."
Aldi is testing the products for the presence of phenylbutazone otherwise known as "bute" a commonly used equine medicine. Horses treated with it are not allowed to enter the food chain.
The French Ministry of Agriculture has announced that it will be investigating. A spokesperson said they consider the issue a matter of criminal fraud. Scotland Yard in Britain has also launched a major investigation.
It now appears as if the FSAI random check to see if horse meat was present in burgers which began last November has lifted the lid on what appears to be an international food scandal where horse meat is being widely used in processed beef products.
We now know, four weeks after it was announced that there was horse meat in Silvercrest burgers, that the equine material came to Ireland labelled as being of Polish origin in big frozen blocks of what is coyly referred to as "frozen beef trimmings".
These beef trimmings are the bits and pieces of the carcass that remain when the prime cuts are removed.
As Mr Coveney put it to the Oireachtas meeting last week: "It is basically the cheap meat that does not have a market of itself."
The beef trimmings are pushed together and then traded as an ice block of product and kept in storage at a minimum of -20C. The frozen blocks arrive at the plant in refrigerated trucks and are kept in storage to be used in the burger-production process. The product is then lifted out in blocks and placed in mixing bins. All the ingredients are mixed up in a frozen state and are never thawed out.
When they are completed the burgers are placed in a deep freeze, this time to -50C which stops them sticking together. They are then packaged in groups of six.
The frozen blocks of beef trimmings are subject to a grading system which influences the price. In the case of the product that came from Poland it was labelled in Poland 80/20 – 80 per cent visible lean meat to fat.
As Mr Coveney told the Dail Committee: "What we suspect is that the ingredient product [the Polish-labelled frozen beef trimmings] essentially had chunks of horse meat in it which led to high levels of equine DNA in the burgers but in a sporadic way. It is a bit like crumpling up a packet of biscuits. Most of the biscuits are in small pieces but there are also large chunks. In the same ice block one will get trace elements of equine DNA and then suddenly a 75 per cent spike. This suggests horse meat is being added in an inconsistent way which is not good," he said.
The caveat of describing the guilty product as "Polish labelled" is important. Though seemingly improbable, it is possible that frozen beef trimmings labelled from Poland were interfered with or replaced en route to Ireland. That possibility has not been ruled out and is still under investigation. That investigation now involves the gardai as well as the Department of Agriculture inspectorate.
The investigation to identify the source of the high-level DNA finding involved three main components: the taking of samples of burgers and raw materials; analysis of the raw meat ingredients used in particular production batches which were shown to contain equine DNA; and an audit of paperwork held by the company that controls Silvercrest. This was complex. One or more ingredients from 40 suppliers were used in these production batches and ingredients could vary every half hour.
Silvercrest was producing about 200 million burgers a year, though it was capable of producing twice that.
The major breakthrough in pinpointing the source came late on the night of Friday, January 25. Test results received overnight showed a significant positive result – 4.1 per cent – for equine DNA in frozen beef trimmings which were labelled as having been imported from Poland as raw material for the production of burgers at Silvercrest.
Investigators proved these trimmings were used in the manufacture of burgers which the department had found to contain significant amounts of equine DNA. This was the first time there was a direct link between burgers in which a high level of equine DNA was detected and this raw material product. Poland was in the frame, Spain and Holland were in the clear, as was all Irish-sourced product.
Further tests on frozen beef trimmings labelled as being of Polish origin showed positive results of 3.8 per cent, 7.6 per cent, 13.1 per cent and 37.8 per cent. Out of nine samples, five were positive.
The paperwork relating to the consignments indicate that the product was shipped directly from Poland, although in one case the order was made through a trader based in the UK.
Tesco investigations into Silvercrest came to a similar conclusion.
What happened next was that the meat industry in Ireland was alerted and told to check its suppliers.
Late on January 31, Rangeland Foods notified the department that it had suspicions because it used Polish meat products in some of its burger lines sold for export and generally to the catering trade. Rangeland also makes burgers for the Supermac's fast food chain, but no Polish products are used on that particular line of all-Irish beef patties. The restaurant chain's chief executive, Pat McDonagh, assured customers that they had never been sold burgers containing anything but beef. He stressed that apart from "natural seasonings", the only ingredient in the burgers sold by Supermac's was Irish beef, which was fully traceable and approved by Bord Bia.
The Department took samples of the Polish raw material the next day and the results were received early last week Of the three samples taken, two showed a positive result of 75 per cent equine DNA in product described as frozen beef trimmings and labelled as being of Polish origin. None of this consignment was used in the production of burgers and so did not enter the food chain.
The raw material was imported by Rangeland through an Irish meat trader Martin McAdam, who runs McAdam Foods, from Newbliss, Co Monaghan.
He said in a statement that the company "had no awareness or knowledge what- soever" of the possibility of equine content being found in meat products it imported from Poland.
"McAdam Foods states and confirms that any such products were bought and imported on the basis of their being ordered, documented, labelled and understood to be beef, and nothing else," it added.
The company said it was "co-operating fully and willingly with the authorities" and had supplied all relevant labels and documentation to inspectors of the Department of Agriculture and the Food Safety Authority of Ireland.
The Goodman-owned ABP Food Group said that its Silvercrest Foods in Ballybay bought about 170 tonnes of "beef products" from McAdam Foods last year.
"It appears now that, while Silvercrest purchased these beef products in good faith, horse DNA originating in Poland was present in some of these products," it added.
However, McAdam Foods has strongly disputed this claim. It said it supplied only 60 tonnes to Silvercrest. It also stated that ABP would have been entirely aware that the product was sourced from Poland as this was clearly stated on all documentation including the identification of the relevant Polish suppliers via plant number.
Records uncovered by Department of Agriculture showed that Silvercrest Foods also bought products directly from Poland. That means there were three main routes for the Polish beef trimmings that contained horse meat – two from meat suppliers, one based in the UK and other via McAdam Foods of Monaghan, and a third via a direct order from Silvercrest to a company in Poland.
Silvercrest remains in deep trouble and faces possible major litigation based around alleged breach of contract.
The parent company ABP is responsible for 25 per cent of the Irish beef industry and also 25 per cent of Britain's beef industry. It's Europe's biggest beef exporter.
But as a result of the crisis Silvercrest Foods has lost its contracts with Tesco, Aldi and the Co-operative Group in the UK for the supply of frozen beef burgers, as well as that with Burger King.
Mr Coveney is scathing in his assessment of what went on at Silvercrest.
"The way in which the Silvercrest facility had been managed in its relationship with significant buyers of Irish product left a lot to be desired. People involved let themselves
down, let their company down and let the Irish food industry down. It should not have happened. Even with that bad management, the DNA test-ing we introduced uncovered the presence of equine DNA in meat.
"There are other issues around bad management in terms of the contracts Silvercrest had with companies it was supplying that have led to a break in the relationship between Silvercrest and those companies."
He told the Dail Agriculture Committee: "The commentary from Tesco and Burger King in regard to severing ties with Silvercrest were to do with breach of contract, as the company had given an assurance to its customers that it would supply Irish-only beef in those products, but it did not do so, and the consequences of that were clear.
"That is not necessarily illegal. It is important to high-light the difference between the two. One can breach a contract with a customer but that does not mean one is breaking the law from a labelling point of view."