Bad Meat, Big Money

Bad MeatA package of frozen pork produced in Brazil, found in a canteen of Zhytomyr Oblast school photographed in April 2013, one month after it was banned in Ukraine. Businesses in Ukraine have been buying meat from companies abroad that have been guilty of selling unsafe meat to Eastern Europe.

That includes meat from a plant in Bad Bentheim, Germany, where ARD German television found formers workers who say were ordered to mix spoiled ground meat, essentially waste product from other plants, with fresh meat. Meat from this company was sold into Eastern Europe including Ukraine by the plant’s owner, Trinity Gmbh, a company in Lower Saxony which boasts on its website that it is the “masters in meat processing.”

When workers complained about what was going on, they say they were fired and then threatened.

“One ton of bad meat is mixed with three tons of normal meat,” the workers told the ARD reporters. “They say they were forced to mix spoiled ground chicken with fresh ground chicken.”

The story offers a glimpse into practices in the meat-import business, which in 2013 totaled US$ 629 million in Ukraine. And that’s just the number for the “legitimate” meat importers business—it doesn’t include smuggled meat. An investigation by reporters for the Organized Crime and Corruption Reporting Project (OCCRP) indicates that meat is being trafficked into Ukraine, just like illegal weapons and drugs.

Trinity’s website, in addition to pages in Dutch, English and German, has a Russian language version apparently in attempt to reach the clientele from that region. It worked for Ukraine as there are dozens of permits for meat imports from this company to Ukraine in the register of documents of the Ukrainian Ministry of Health.

For example, the Kharkiv Meat Processing Plant bought chicken from Trinity in 2010 till 2013.

The Kharkiv plant did not produce a well-known brand of meat, nor did it have a website; when reached on the phone they replied that the workers were no longer working there and shortly after talking to OCCRP it went out of business in December of 2014. But the Kharkiv plant did have a powerful co-owner: Volodymyr Skorobahach, a member of the Kharkiv City Council. Skorobahach is a former member of the ruling Party of Regions, then the ruling party of Ukrainian President Viktor Yanukovych, who as of December 2013 owned almost third of the company’s shares and was its top manager.

In addition, Skorobahach headed the Young Regions group in the Kharkiv City Council, a group founded at the urging of Vitaliy Khomutynnik, a Member of Parliament and former chairman of the Youth of the Regions of Ukraine Union.

Skorobahach and his colleagues were willing to found the group for Khomutynnik, who not only led the youth wing of the Party of Regions, but also from 2007 chaired Parliament’s Committee on Taxation and Customs Policy.

Under Skorobahach's leadership, in 2012 the Kharkiv Meat Processing Plant became one of the largest importers of meat to Ukraine, according to an official reply from the State Customs Service.

Seven months after Ukrainian President Viktor Yanukovych fled to Russia, after months of public protests commonly known as EuroMaidan, the plant was no longer working. In December 2014 the court ruled that the company went bankrupt.

There might be questions about the meat Kharkiv was buying from Trinity. According to ARD report, Friedrich Titgemeyer, then professor of Microbiology at the Münster University of Applied Sciences, tested Trinity Gmbh meat and discovered a host of problems. "We have found a lot of microbes - especially intestinal bacteria. We have found things that can make us sick,” including samples containing decomposed fats indicating the meat was spoiled.

After the German TV report was aired last spring, the Trinity Gmbh factory was investigated by prosecutors. According to Carolin Castagna, public prosecutor with Oldenburg Prosecutor’s Office, the investigation is currently in progress against an executive of meat processing plant charged with violations of the German Food and Feed Code.

But even as its Ukrainian partner, the Kharkiv Meat Processing Plant, was closed, others that were working alongside it still exist.

VEK Kharkiv Ltd., founded in 2007, and Interopt-Import Ltd., founded in 2012 and in the process of liquidation as of Jan 30, 2015, have the same phone numbers and (until 2011) shared the same leadership director as the Kharkiv plant, Volodymyr Vovk. And they continued as latest June 2014 to import thousands of tons of meat into Ukraine.

According to the customs data for January 2013 through June 2014, obtained by OCCRP, VEK-Kharkiv imported 7,200 tons of Brazilian meat products with a declared value of US$14.7 million. But meat from overseas, it turns out, can also be problematic.

Serhiy Korniychuk, who lives in Ovruch in the Zhytomyr oblast, first learned of a problem from other parents at his childrens’ school, who used to complain about the quality of food in the school cafeteria. “The headmaster replied that the food was fine. We formed a parents' committee to check the products in the canteen ourselves,” says Korniychuk. “We found Brazilian pork that cost nearly Hr 90 ($11.25 at then-exchange rates).”

Pictures of that pork, taken in April 2013-- one month after Brazilian pork was banned from Ukraine after the State Veterinary and Phytosanitary Service found it contained unacceptable levels of bacteria and microorganisms. Nonetheless, Brazilian pork was continued to be delivered to feed children and to medical institutions all over Ukraine.

This case is not unique.

In Crimea in 2013, the Ministry of Health was responsible for selecting food suppliers for medical facilities. While the ministry issued tenders seeking the best combination of price and quality, the process somehow went horribly wrong.

According to Julia Chalova, then-deputy health Minister of Crimea, the tender regulations do not require bidders to disclose the producer of the product being procured. Specifically, they were not obliged to disclose that the pork was produced in Brazil.

Anatoly Bilyi, who in mid-2013 was director of the canteen at the Crimean Tuberculosis Clinic №1 in Kerch, returned from vacation that year to an unpleasant surprise. When he inventoried the warehouse to see what food stores were on hand, he found "150 kg of Brazilian meat plus two briquettes of beef with unclear origin, around 25 kg. It was in plastic, packed like frozen fish, no labels, just pressed meat," he says.

He hasn’t seen any documents for the meat, even though it shouldn't have been accepted from the supplier without documented proof of quality.

Reporters from OCCRP learned that the meat in the Crimean tuberculosis clinic came from the Brazilian company Seara Alimentos Ltda. and was imported by the Ukrainian Imperial Fish Company. This meat was not just undocumented, its packaging had a label in Russian and no corresponding text in Ukrainian, which indicates the meat was likely smuggled into Ukraine.

A popular smuggling scheme often referred to as "interrupted transit," and it works like this: goods that arrive in Ukraine are to be transported to another country, Russia for instance, and so no duty is charged. But on the way to Russia the product is diverted and sold instead on the black market in Ukraine.

Photos of the Brazilian meat packaging were sent to the Ukrainian State Veterinary and Phytosanitary Service. Vitaliy Bashynskyy, the Deputy Head of that service, said that data on the label is not sufficient to determine whether the meat underwent sanitary control.

Oleg Timchenko, who at the time was the chief medical officer of the tuberculosis clinic, found the situation of Brazilian meat in Crimea absurd.

"Doing inventory we saw a pigshoulder from Brazil. Maybe, (the clinic’s meat supplier) has a subsidiary in Brazil,” joked Timchenko. “The meat there is really so cheap?”

Loza, of the Association of Pig Producers of Ukraine, says the way the meat is processed—ground, and hard-frozen in blocks--makes it hard to know what you are dealing with.

“It’s difficult to understand what is there – pure meat, or so-called trimming. And often you get pressed together skin pieces, cartilage, meat and tendons. So, this is what you call trimming, which is actually production waste,” he says.

“It’s also very likely that this deeply frozen meat comes from food reserves. Very likely. But to tell for sure, you need to do special tests on levels of water saturation, because with time water evaporates from the meat texture. But I really don’t think anybody is doing it here.,” says Loza.

Another issue that could affect quality is the fact that those who are importing it are connected to those who are supposed to check it.

Fish Company Imperial, which imported the meat supplied to the Crimean clinic, is part of a group of companies, which also imports fish and vegetables. In 2013 the Fish Company shared a 89 million hryvnia (US$ 10,9 million) credit line from a Kyiv-based bank with three other companies from the group.

In 2014 the bank sued the borrowers for non-payment. One of them - Fruit House Imperial BH –was co-founded in 2007 by Mykola Karpenko, a member of the Odesa Regional Council who until March 2014 combined his parliamentary activities with the work of the Director of the State Research Institute of Laboratory Diagnostics and Veterinary Expertise. This institute is a key research institution in assessing whether food is suitable for importation into Ukraine.

On November 21, Russia’s Federal Security Service detained Karpenko, accusing him of being a “leader of an organized crime group” smuggling meat. The arrest came three days after a Russian Federal Security Service stopped a batch of meat at the border of Crimea, and subsequently discovered thousands tons of meat belonging to the same group at the warehouses in Simferopol, capital of Crimea, and Kerch.

Meanwhile, in October of 2014, Ukraine’s appeals court in an ongoing criminal investigation established that four companies from the Imperial group - Trade House Imperial BH, Fruit House Imperial BH, Consulting-South and Viva LTD – were part of a criminal tax evasion scheme. The court ordered the seizing of more than 100 tons of Brazilian pork stored at the group’s warehouses.

Karpenko’s case follows a pattern typical in Ukraine: a businessman becomes a public officer, who controls areas related to his business interests.

Currently, the institute is headed by Volodymyr Zahrebelnyy. However, the switch is unlikely to shake up the industry. According to his official biography, previously Zahrebelnyy was a director of the Yenakiieve Meat Plant. This company was de-facto controlled by former Minister of Agrarian Policy and Food Mykola Prysiazhniuk and Yuriy Ivaniushchenko, a Donetsk-based businessman who admitted being an acquaintance of former president Yanukovych.

In 1996-2003 Prysiazhniuk was director of the British company Reef Holdings Plc., which controlled the Yenakiieve Meat Plant. In 2008, Donetsk Oblast Prosecutor charged that plant with trying to smuggle 25 tons of beef from Brazil, but in 2009 the court closed the case.

Prysiazhniuk, who led the agricultural ministry in 2010-2014, also controlled imports, since the State Veterinary and Phytosanitary Service was under his direction. He was ultimately responsible for deciding whether to allow ractopamine in Ukraine. Banned in Europe, the drug makes pigs leaner but may cause side effects. In the end, Prysiazhniuk did not ban it.

In 2012, according to official statistics of the State Customs Service, two Donetsk companies that share the same address, Ukrprodimport and Doninvest-2010, appeared in the list of the largest importers of meat into Ukraine. They also share the same phone number with another prosperous importer, Vostokimport LLC, that through its former director, Oleksandr Devyatka, works with Ivaniushchenko.

Although Ukrprodimport and Doninvest-2010 are registered in the names of unknown people and are already in the process of liquidation, the third company is better known than the other two.

According to the Unified State Register, Devyatka was the director of Vostokimport. He also headed the Donetsk company East Ukrainian Center for Reconstruction and Development, co-owned by Illia Podtynnyy. Podtynnyy replaced Ivaniushchenko as owner of the company UGK-2000 Plc. in Yenakiievo, in 2012.

At least on one occasion the meat bought by the Donetsk firm was smuggled into Russia, as the price of meat was higher there, and where Brazilian pork is banned for import.

"Raw meat of Brazilian origin was found during a check of four (cars supposed to be hauling) fresh cabbage by the Kaluga Regional Office. In particular, 42 tons of pork… (Some) of the labels had an inscription: "Doninvest-2010 Plc., 14 Adygeiska str., Donetsk". Moreover, cabbage was used as a ‘cover’ product" - extract from the report of Rosselkhoznadzor, the Russian veterinary and sanitary control service. As many former USSR countries are chronically short of domestic meat, not only pork imports are problematic, but poultry as well. The Armenian investigative reporting organization, an OCCRP partner, in 2013 exposed a company connected to the family of Armenian Member of Parliament Samvel Aleksanyan for importing Brazilian chicken into Armenia. As set by an Armenian testing laboratory, the meat of Brazilian company Sadia SA, which was imported through Aleksanyan's company, contained extremely high levels of testosterone.

Tainted meat has found its way into major multinational food chains as well.

"Most of the products used by McDonalds Ukraine Ltd., are produced in Ukraine. We are proud of our suppliers and trust them,” says the website of McDonald’s Ukraine. And yet the Unified Register of Judgments contains a 2007 verdict in which Ukrainian McDonalds received a shipment of 16 tons of frozen chicken from the Brazilian company Sadia S.A.  that had not been stored at the proper temperature.

Asked about previous contracts with the Brazilian factory, the McDonalds' office in Ukraine did not respond. Instead, they said that chicken is supplied to its Ukrainian fast food outlets by the German and Hungarian branches of the international company OSI Food Solutions, which is headquartered in the US state of Illinois.

The German division of OSI Food Solutions buys raw meat at farms located both within the country and abroad, said the official reply from McDonalds Ukraine Ltd.

What countries are being referred to when they say “abroad” is not clear. In July 2014, the Chinese unit of OSI Food Solutions was closed because of alleged supplying spoiled meat through the networks of fast food suppliers. Because of this, McDonalds had to apologize to customers.

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