March 20, 2009

Lawmakers Grill Peanut Manufacturers For Relying On 3rd Party Audit

Democratic members of Congress on Thursday blamed the US food manufacturers who purchased products from the peanut firm responsible for the recent deadly salmonella outbreak.

Kellogg Co, King Nut Corp and Vitamin Cottage Natural Food Markets were all implicated as having not done enough to ensure the safety of the products purchased from Peanut Corp of America, which was linked to the outbreak due to faulty oversight from a third party.

The outbreak triggered a massive outbreak of 3,400 peanut-containing products.

Georgia-based Peanut Corp. of America hired private investigators from a firm called AIB who overlooked certain sanitary issues at its facilities, according to newly released documents from a House Energy and Commerce investigations subcommittee.

"There is an obvious and inherent conflict of interest when an auditor works for the same supplier it is evaluating," the AP quoted Rep. Bart Stupak, D-Mich., chairman of the subcommittee, adding that he referred to it as a "cozy relationship."

After salmonella was discovered at a processing plant in Blakely, Ga., it was also found at a facility in Plainview, Texas that is owned by Peanut Corp. and also inspected by AIB.

"There were some red flags you should have noted," Henry Waxman, chairman of the House of Representatives Energy and Commerce Committee, said at a subcommittee hearing.

"PCA was a bad company and they did bad things, and they were clearly ignorant ... but this indicates to me that Kellogg was pretty sloppy."

David Mackay, chief executive of Kellogg "“ which lost almost $70 million in the recall "“ defended his company's decision to accept the audit report from AIB.

"I think we did everything we could do," said Mackay. "We were dealing with an unethical and dishonest supplier. I'm unaware how you manage for someone who is prepared to put the public at risk."

"I understand our name was on it, but we bought a closed container," said Martin Kanan, president of King Nut. "We have got to start with the manufacturers."

Nestle USA decided to use its own inspectors rather than rely on data from the third party group. Nestle chose to pay for its own audit of PCA in 2002. Investigators found rodent droppings and dead insects. Nestle decided not to pursue a deal with PCA.

"Why didn't you do the same? You all talked about safety as the No. 1 concern. It seems like you passed that responsibility to someone else," Rep. Bart Stupak, chairman of the Energy and Commerce Subcommittee on Oversight and Investigations said to the other firms.

Reuters reported that an e-mail sent from Peanut Corp's auditor, Pete Hatfield, to the manager of the Georgia plant said: "You lucky guy. I am your AIB auditor. So we need to get your plant set up for any audit."

The Blakely plant was given a superior rating.


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