Three retailers drop Irish beef baron's firm over horsemeat row

LONDON/DUBLIN Wed Jan 30, 2013 9:38pm GMT

A shopper passes a Tesco supermarket in London October 5, 2011. REUTERS/Luke MacGregor

A shopper passes a Tesco supermarket in London October 5, 2011.

Credit: Reuters/Luke MacGregor

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LONDON/DUBLIN (Reuters) - Tesco, the Co-operative Group and Aldi fired a supplier controlled by Ireland's most powerful beef baron on Wednesday for selling them burgers shown to contain horsemeat.

The three retailers said they would no longer use Irish supplier Silvercrest Foods because of trust issues relating to where products were sourced, following a similar move by Burger King last week.

The world's No. 3 retailer, Tesco, reeling from a wave of bad publicity after the Irish food safety authority discovered a frozen burger contained 29 percent horse meat, said it would continue to buy Irish beef from other ABP companies.

Tesco Ireland said the contract, worth 15 million euros, was a small part of ABP's business and the company also promised to use DNA testing equipment to check the content of products on its shelves.

The move is a blow to Ireland's 2 billion euro (£1.6 billion) beef industry, which had hoped that the discovery the horsemeat came from Poland might limit the fallout.

"We took that decision with regret but the breach of trust is simply too great," Tesco technical director Tim Smith said in a statement announcing the termination of its contract with Silvercrest, a subsidiary of Larry Goodman's ABP Foods.

ABP, Europe's largest beef exporter, tried to deflect blame for the scandal this week after the Irish government announced it had traced the source of the meat to a Polish supplier.

ABP said it had "never knowingly purchased or traded in equine product" but Tesco said it had failed to use meat from a list of approved suppliers and to honour an instruction to source ingredients exclusively in the UK and Ireland.

Speaking at a UK parliamentary committee on the contamination, Catherine Brown, chief executive of Britain's Food Standards Agency (FSA), said the tainted meat product coming from a Polish supplier had been used for a year.

But, Tesco's Smith told the same hearing he believed the problem may have started in May last year. He added that the company is still calculating losses related to the contamination.

BREACH OF CONTRACT

Britain's fifth biggest food retailer, the Co-operative Group said in a statement that it had "delisted" the supplier following the results of tests it ran for horse DNA in 17 burgers in two different products supplied by Silvercrest.

One of the samples tested was found to contain 17.7 percent horse meat, while small traces of horse DNA - less than 1 percent - were discovered in three others. The rest came back negative.

Aldi said in similar statement that it had ended its contract "due to a serious breach of contract by Silvercrest in relation to the agreed product specification".

The damage to Ireland's reputation as a supplier could be hard to shake, analysts said.

"It's a spectacular own-goal for Ireland because it reflects on the beef industry as a whole," said Patrick Wall, lecturer in public health at University College Dublin. "A team is only as strong as its weakest player."

Lidl and Iceland, whose burgers also tested positive for traces of horse meat, were contacted by Reuters, but were unavailable for immediate comment.

THE BEEF BARON

The scandal has revived memories of a government-appointed tribunal in the 1990s finding abuses of European Union beef subsidies at plants Goodman controlled.

The tribunal found that counterfeit stamps had been used in some cases to pass off beef carcases as being of higher quality at some plants controlled Goodman, although it said Goodman himself may not have been aware of the abuse.

Goodman, who declined a request for an interview, has dismissed the tribunal's report as biased.

A well-known figure in Irish business, he has tried to keep a low profile since his ties to prime minister Charles Haughey in the 1980s came close to bringing down the government.

He used ABP to rebuild his empire, which collapsed after a number of disastrous investments in the 1980s and the 1990 Iraqi invasion of Kuwait which left Saddam Hussein's government unable to pay a 170 million pound ($268 million) bill.

(Writing by James Davey, Conor Humphries and Stephen Mangan; Editing by Louise Ireland, Bernard Orr)

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