How a Chilean raspberry scam dodged food safety controls
In January 2017, Chilean Customs inspectors acted on a tip from a whistleblower: The country's prized crop of raspberries was under threat. Inspectors raided the offices of Frutti di Bosco, a little-known fruit trading company on the second floor of a tower block in downtown Santiago.
The files, company data and sales records they seized revealed a food trading racket that spanned three continents. At its heart was a fraud centered on raspberries. Low-cost frozen berries grown in China were shipped to a packing plant in central Chile. Hundreds of tons of fruit were repackaged and rebranded by Frutti di Bosco as premium Chilean-grown organics, then shipped to consumers in Canadian cities including Vancouver and Montreal, according to documents prepared by Chilean Customs as part of its investigation. The agency calculated that at least $12 million worth of mislabeled raspberries were sent to Canada between 2014 and 2016.
Much of that product, the documents showed, came from Harbin Gaotai Food Co Ltd, a Chinese supplier. Canadian health authorities later linked berries from Harbin Gaotai to a 2017 norovirus outbreak in Quebec that sickened hundreds of people. Canadian authorities issued a recall on Harbin Gaotai berries coming directly to Canada from China dating back to July 2016.
What they didn't realize is that Harbin Gaotai raspberries had also entered Canada through a backdoor during that period in the form of falsely labeled fruit shipped from Chile by Frutti di Bosco.
The scheme, pieced together for the first time by Reuters, lays bare the ease with which mislabeled, potentially risky products can be slipped past the world's health and customs agencies, even as authorities across the globe scramble to ensure foods entering their countries are free of a new scourge - COVID-19. Harbin Gaotai did not reply to requests to comment for this report. Frutti di Bosco's owner, Cesar Ramirez, who was convicted last year in Chile for falsifying export documents to facilitate the scheme, declined to speak with Reuters. His attorney declined to comment.
Reuters examined thousands of pages of legal filings, investigation documents and trade records obtained through freedom-of-information requests in Chile and Canada. Reuters also spoke to more than two dozen people with knowledge of the case, including the manager of a fruit-packing house that uncovered the deception. Pulling off the fraud was relatively simple, the investigation revealed. The Canada-Chile trade pact, which came into force in 1997, allows exporters to self-certify the provenance of their goods, trade experts said. The agreement allowed the mislabeled berries to enter Canada tariff-free, evading a 6% levy slapped on the same fruit imported directly from China, Chilean Customs documents show.
More lucrative still, conventional fruit represented as "organic" could fetch premium prices, piggybacking on Chile's reputation for safety and quality. Documents certifying the fruit as organic were faked, customs inspectors found. Chile's export fruit industry, alerted by Customs to the whistleblower complaint in late 2016, immediately grasped the potential fallout for the $7 billion sector, according to correspondence obtained by Reuters under Chile's Transparency Act.
The southern hemisphere nation stocks grocers in the United States, Canada and Europe with grapes, cherries, blueberries and raspberries in the northern winter. If word got out that Chile's fruit was not what it purported to be or worse still, if someone got sick it could tarnish its hard-won image. "This situation could generate serious problems for the food industry in our country," Ronald Bown, head of the Chilean Fruit Exporters Association, wrote in a Nov. 15, 2016 letter to Customs obtained by Reuters. He asked the agency to investigate the whistleblower's allegations and warned of "the closing of markets" to Chilean fruit.
Bown confirmed writing the letter and repeated the same concerns when approached by Reuters on July 30. Chile did not notify Canada that anything was amiss, however, according to Canadian officials. An alert failed to materialize even after Ramirez, Frutti di Bosco's owner, alleged he had colluded with the buyer of the fruit - Montreal-based Alasko Foods Inc - to ship the illicit products to Canada, according to Chilean investigation records.
Canada's food inspection agency said it is now investigating the matter after contacted authorities there for this story. Alasko denied wrongdoing. The company is insolvent and entered into receivership last month, according to documents filed Sept. 10 in Quebec Superior Court by financial consultancy Raymond Chabot, Inc, the courtappointed receiver. Raymond Chabot declined to comment.