The Secret Ingredient: Improving Your Food Fraud Prevention Planning

Welcome to the first edition of our bi-monthly newsletter – specifically focused on the prevention and protection against fraud for the food sector. As a professional within the food industry you will be aware of the growing concern and complexity of law around adulterated food and the impact this is having on both businesses and consumers. In each issue we provide articles to assist with your fraud prevention planning, advice on protecting brand integrity and recommendations to improve quality control – all from a legal perspective. While you are welcome to unsubscribe at any time we hope you will look forward to our monthly newsletters where we share our legal insight and experiences on the issues currently affecting our clients in your market.

Holding your supply chain to account

A recent analysis conducted by The Guardian found that 36% of more than 9000 seafood samples from restaurants, fishmongers and supermarkets in more than 30 countries were mislabelled often resulting in the consumer paying a higher price for low value and sometimes endangered and/or illegally caught species. In the UK, it was discovered that 55% of fish labelled “snapper” by fishmongers, supermarkets and restaurants was in fact a different species. A 2018 study found 38 different species being passed off as snapper in nearly 70% of samples from across the UK. Some of these species were identified as threatened reef-dwelling species.

What can you do to prevent your business falling victim to mislabelling within its own supply chains?

Firstly, it is important to carry out a risk assessment of your own supply chains. Most businesses in the food sector will utilise a food fraud vulnerability assessment tool to identify potential food products that are susceptible to fraud and to assess all potential vulnerabilities to fraud in their supply chain. The National Food Crime Unit (NFCU) has recently developed a Food Fraud Resilience Self-Assessment Tool which can be completed anonymously and can assist in identifying risks and areas for improvement. Secondly, carry out due diligence on your suppliers. This may feel difficult if it is an established relationship but any supplier should not be resistant to ongoing due diligence if they understand why you need to do it. If you have not already done so it is important to carry out a thorough due diligence process (for example, checks on a supplier’s financial and trading history, the experience of those running the supplier business etc.) so you can be sure that you and your supplier are aligned in terms of ethics and food integrity issues. Thirdly, build in rigorous checking and testing of products received. Ensure that products have the correct documentation, and that they are what they say they are. And finally, ensure your supply contracts contain warranties and indemnities designed to protect your business in the event that it falls victim to mislabelling or other food fraud such as food adulteration or substitution. These clauses allow for easier claims in litigation to be pursued but also demonstrate to regulatory bodies the steps you are taking to maximise your efforts with suppliers to ensure food safety.

Counterfeiting: what to do if your brand is the target

Earlier this year it was reported that a number of UK convenience stores had sold counterfeit wine to consumers who had alerted authorities due to its funny taste. The affected supermarkets in Sutton Coldfield and Hastings were found to have been selling counterfeit Yellow Tail and Blossom Hill wines. One store had its liquor licence suspended for three months, and the other store had its liquor licence revoked as a result. It is not known whether the stores had knowingly purchased the counterfeit wine or whether they too had fallen victim to food fraud as there were traceability issues affecting the investigations.

Counterfeit goods, particularly food and beverage products, can have a profound impact on consumer trust and brand value. Consumers may reject brands caught up in counterfeiting through fear of ill-health, allergic reaction and in rare cases, death. The Consumer Goods Forum has recently reported that 39% of consumers would no longer trust brands with fake products.

What can your business do to protect its brand from counterfeiters?

Ensure the security of your manufacturing processes – from recipes to label designs you need to be sure that all such information is kept confidential. This may mean restricting those employees who can access such information (coupled with heightened confidentiality clauses in their contracts) and ensuring that security of data storage and IT systems is both robust and up to date.

Consider whether your products can be improved, in order to make it harder to imitate. For example, could wine bottles be issued with bar codes, watermarks or seals to indicate a genuine product.

Ensure all intellectual property rights relating to your brand and products are properly registered and protected so that the appropriate enforcement action can be taken where such rights are infringed by counterfeit goods. Check supply and distribution channels to ensure that those partnerships are operating to your own standards of ethics and integrity.

Gain employees’ trust and loyalty by setting standards internally, acting with integrity at all levels of the business and rewarding ethical behaviours. Much of this is about creating the right culture. Your employees are your eyes and ears, and therefore employee morale and engagement is hugely important in protecting your brand and reputation if you have employees who are committed to your business.

Act quickly if counterfeiting is discovered. Swift legal action is important to protect brand and retain consumer confidence. Communicate clearly with consumers with information on where the counterfeit goods have been sold, how to differentiate between the counterfeit product and your genuine product and what action you are taking.

When corporate policies are simply not enough

In February 2021, news broke of a federal class action lawsuit filed in the US courts against the world’s biggest chocolate companies, Nestle, Cargill, Mars, Mondelēz, Hershey, Barry Callebaut and Olam. The class action is being brought on behalf of eight Malian young men who managed to escape back to Mali after being trafficked as children and forced to harvest cocoa in Cote D’Ivoire. The lawsuit has opened up fresh debate on whether these companies should be held responsible for child slavery on the African farms from which they buy most of their cocoa. On 17 June 2021, the US Supreme Court ruled that the allegations made in an historic action brought against Nestle and Cargill under the Alien Tort Statute did not sufficiently touch and concern the territory of the United States, despite finding that major operational decisions made in the United States supported the system of child slavey harvesting cocoa in Cote D’Ivoire.

It has long been known that cocoa supply chains are vulnerable to unethical practices and human rights abuses, yet the issue of child labour is worse now than when it first hit headlines in 1997. Almost all of the companies involved in the US lawsuit have made various historical pledges to eradicate child labour in the supply chain and have explicit policies against it. Why then is there still widespread child labour in the production of cocoa?

There is often a disparity between corporate policies and corporate actions by management conscious of pressure to achieve targets. Policies can be seen by some as merely a box-ticking exercise which are then forgotten when negotiating deals in the real world. For example, the difference between policies and action in the cocoa bean trade would be to ensure that the price paid per tonne of cocoa beans meets the minimum threshold to ensure that cocoa bean farmers receive a living wage.

It is only this that will ensure farmers can afford to pay their employees rather than exploiting children who very rarely receive a wage.

In addition, companies purchasing cocoa beans could ensure traceability of the cocoa beans purchased through to the farm(s) on which it was produced. This would ensure that the purchaser can have visibility in respect of its suppliers ensuring that they are meeting standards in terms of labour and conditions for employees. Currently, companies have no way of knowing which farms their cocoa beans have come from.

This visibility in the supply chain is increasingly vital in the food industry in circumstances where consumers are demanding greater transparency and accountability in respect of where their food comes from. It is essential to ensure that your suppliers match your own position on matters of ethics, human rights, quality and sustainability. In short, policies are not enough…. you need to go one step further to ensure that you and your suppliers are delivering on those policies.

Turning a blind eye…

Globalisation of the food industry has provided organised crime groups (“OCGs”) with a multitude of opportunities to infiltrate and exploit legitimate supply chains.

There are numerous examples of OCGs extorting funds from legitimate local food industries, for example, the fate of the avocado farmers of Mexico has been well-publicised. The global consumer demand for the avocado has made it an extremely lucrative crop and a magnet for established drugs cartels.

A similar pattern emerges wherever you have a localised produce that is in high demand or rural areas under the influence of OCGs such as the Calabrian region in Southern Italy. There, the Calabrian Mafia is known to launder money by buying land, harvesting crops and opening restaurant chains. OCGs see an opportunity to either make legitimate money to fund their criminal activities, or to hide ill-gotten gains through legitimate supply chains and businesses.

Having a business caught up in such activities will no doubt lead to some bad press and whilst that may not be good news for revenues, there are far wider implications if you find that you or your business are unwittingly caught up in organised crime.

Proceeds of crime

A growing focus on preventing the facilitation of economic crime outside of the UK’s regulated sector (i.e. financial institutions and those industries which traditionally handle client money such as solicitors) means that unregulated companies need to acknowledge and address the risks of money laundering and terrorist financing within their sector. As the risk of criminal enterprise within the food industry is so well-publicised, businesses need to be more aware than ever of the risk of criminal offences taking place within supply chains, and of their own role in the facilitation of such activities.

Money laundering is the act of processing the proceeds of criminal conduct in order to disguise their unlawful origin. In the UK, under ss.327 – 329 of the Proceeds of Crime Act 2002 (“POCA”) it is an offence to conceal or remove from the UK the proceeds of crime, to enter into an arrangement with knowledge or suspicion of the use of the proceeds of crime, and to use or possess the proceeds of crime. The wide scope of these offences means that you do not need to be directly involved in the original crime to fall foul of the legislation, albeit all of these offences require knowledge or suspicion of money laundering. In addition, there are reporting offences, which include prejudicing a money laundering investigation.

Ensuring funds do not fall into the hands of terrorists is also a key focus for the UK government, and s.19 of the Terrorism Act 2000 (“TA”) contains a duty to report suspicions that an offence has been committed (see ss.15 – 18 of TA) if such information comes to a person in the course of a trade, profession or business, or in the course of their employment.

A possible defence to these offences includes making an “authorised disclosure”. Outside of the regulated sector, an “authorised disclosure” would involve submitting a Suspicious Activity Report (“SAR”) to the National Crime Agency (“NCA”) and awaiting consent to proceed before engaging in the activity which you anticipate may result in an offence being committed.

The consequences of falling foul of this legislation are far-reaching inflicting both economic and reputational damage. A person or corporate entity guilty of one of the principal offences under POCA may face 14 years imprisonment or, in the case of a corporate body, an unlimited fine. A failure to disclose suspicions under s.19 TA attracts up to 5 years’ imprisonment or an unlimited fine. In addition to this, there is a risk of significant reputational harm, and furthermore, a business caught up in money laundering may find its financing options and arrangements are also impacted.

Fighting Fraud for the Food Sector

What makes Tenet different is that we are a specialist compliance, investigations and litigation law firm.

We focus on responding to fraud and financial crime compliance for our clients across the UK and overseas.

Our experience and sole focus is our expertise of dealing with a range of financial crime and fraud issues and applying that detailed and experienced knowledge to certain sectors, including food.

Our approach has been recognised in our speaking at Food Fraud conferences and commentating in publications such as New Food and Food Science & Technology.

If you have any questions or would like more information about the articles in this newsletter or about the work we do, please get in touch, we would be happy to help.

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Esther Phillips –

Arun Chauhan –

Contact details

Phone: 0121 796 4020


Fax: 0843 216 4240


Tenet Compliance & Litigation Limited
10th Floor, Lyndon House, 62 Hagley Road, Birmingham, B16 8PE


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