Ken’s blog post about taking the time to figure out what insurance limits are right for you resonated with me as I was reading about the plea agreement in the melamine pet food debacle.  This was the likely last act in a tawdry story of greed and fraud that led to the deaths of thousands of cats and dogs and placed nearly every pet owner in fear.  Stephen S. Miller and Sally Qing Miller, owners of ChemNutra, Inc., pled guilty to two misdemeanors in federal district court on June 16, and the prosecutors have recommended two years of probation and fines of $5000 for each of the Millers and a $25,000 fine for the company.  The Chinese companies indicted at the same time remain outside the reach of the U.S. justice system. 

Pet food companies had previously settled with pet owners for $24 million.  That settlement was presumably funded by insurance, and according to one news report, ChemNutra contributed to the settlement in some way (more contemporary news accounts differ).  Menu Foods, the pet food supplier in the eye of the storm, sued ChemNutra and acording to a news report at the time:

Menu Foods, which is based in Canada, acknowledged that it has been using wheat gluten from two suppliers in the United States and Europe for many years, but had not experienced any problems until it also started buying the ingredient from ChemNutra.

"Last fall, (Menu Foods) added a third supplier, ChemNutra, and the issues we have experienced date to that time," the spokesman said.

I have been unable to find more about Menu Foods’ lawsuit, but it is unlikely Menu Foods was made whole for all of its damages.

What has been alleged is a scheme by the indicted but unpunished Chinese companies, Xuzhou Anying Biologic Technology Development Co. and Suzhou Textiles, Silk, Light Industrial Products Arts and Crafts I/E Co., to use melamine to fraudulently increase the apparent protein level of wheat gluten.  This in turn led to pet deaths

Bryan has previously blogged about EMA,. or economically motivated adulteration.  And Ken listed among his five New Year’s Resolutions

  • Review and Revise Supply Chain Agreements,
  • Reassess Suppliers; and
  • Increase Scrutiny Against Fraudulent Imports

This is of course excellent advice.  I would simply add another one: 

  • Recognize the Legal System Can Only Do So Much

By all accounts, the Chinese suppliers were fooling everybody:  Chinese authorities, U.S. authorities, the importers and everyone who bought from them.  ChemNutra may have had a great contract with them, placing on them the duty to comply with all laws and the duty to indemnify ChemNutra if anything went wrong.  Menu Foods, in suing ChemNutra, which was a new supplier for it, indicated it had the same provisions in its contract.  The other pet food manufacturers, distributors and retailers in the chain down to the ultimate pet owners–as well as owners of animals raised for food who had to destroy poultry and livestock that may have ingested melamine, to keep it out of the food chain–all may have had great contracts, too. 

They were all, however, left holding the bag for the wrongs of people who were beyond the reach of the law.  The Millers’ guilty plea indicated that they continued to deny any intentional wrongdoing and the government apparently didn’t believe it could prove otherwise.  The lesson, then, is, as Ken suggested at the end of last year, know your supplier, know their supplier, visit plants, check out food safety programs, and avoid doing business with people you can’t check out.