Goodman firm says horse meat crisis has changed it for the better

ABP Food Group says business grew by €100m despite the scandal

Mon, Jan 13, 2014, 01:00

It’s fair to say that ABP Food Group does not court publicity. Before the horse meat scandal, the average man on the street would have been hardpressed to tell you anything about it. He probably wouldn’t have known that it is the biggest beef processor in Britain and Ireland, or that it employs 8,000 people around the world.

But when you mention its chairman, Larry Goodman, everyone nods. When ABP found itself at the centre of the horse meat controversy this time last year, the Goodman connection was highlighted more than once.

ABP’s chief executive, Paul Finnerty, acknowledges the interest in the empire of the media-shy 76-year-old. “At the beginning of the crisis, ABP was very much in the spotlight and that’s not a situation that we, as a company are used to. We are a low-profile business. We work business to business, not business to consumer,” he says.

When the Food Safety Authority of Ireland tests found 29 per cent horse DNA in the meat of a frozen burger made by ABP’s Silvercrest plant in Ballybay, Co Monaghan, he instantly knew it would be an “enormous” story.


Action stations
He first heard about the scandal on the evening before it became public. “I got a call driving home, at about 7.30pm, to say we had a problem.” A team worked through the night to assemble the facts and reported to him at 7am the next day. Action was swift. All product was withdrawn from the market and staff were suspended.

He says ABP never knowingly processed product that contained horse meat. “We said that on day one . . . And that was subsequently validated by all the investigations that were done by Government authorities and by reviews by our customers. While we got it wrong in Silvercrest, we were also the victim of a fraud here, a fraud that was subsequently shown to have been perpetrated on the industry as a whole across Europe.”

The frozen burger business at Silvercrest and its sister plant, Dalepak, in Yorkshire was only 5 per cent of ABP’s total turnover, so protecting ABP’s much more valuable fresh beef business was the biggest concern. “We opened our doors across the group to our customers to say this was essentially a Silvercrest-related issue and that the fresh [beef] business was not affected. We were subject to thorough examination and in tandem with all of that we made very significant changes.”

ABP announced the sale of Silvercrest to Kepak in April and it is now known as Kepak Ballybay. Dalepak is now ABP’s sole frozen burger site. “We did lose custom arising out of Silvercrest,” Mr Finnerty says. “But today, when you factor in the customers that migrated from Silvercrest over to the UK, we are now producing the burgers for five of the top seven retailers in the UK out of that facility.”

While ABP won back most of the burger contracts it lost, it didn’t regain the contracts with Tesco and Burger King. Kepak won the Burger King business while Tesco introduced a new version of its Everyday Value burger in September, made with Republic of Ireland beef by Eurostock Foods in Northern Ireland. Nevertheless, ABP still works with Tesco “across multiple other product areas”.


Meat traders
Since the crisis, ABP has stopped buying product from meat traders. “We only buy from sites that are producing the product. And we’re only buying now from sites that we’ve audited ourselves.”

ABP is also rolling out the DNA swabbing of every animal processed in Ireland, in partnership with IdentiGen , the company that found horse meat in burgers in the initial tests. “I believe we’ll be a world leader with this, as a large-scale business,” he says.

Despite the turbulent year, ABP Food Group’s business grew by €100 million compared with 2012. “We had a problem. We’ve dealt with it as best we can. We’ve put very significant changes in place and we’ve moved on.” In the midst of the crisis, a customer called to offer new business. “That’s when you know who your friends are,” he says. “You don’t forget calls like that.”


Financial toll
The company took a hit in the crisis but he’s not saying how hard that hit was. “Was there a financial cost arising out of Silvercrest? There was, but we’re not going to be drawn into what that was.” Looking back now, he believes ABP got “a very hard time” in the media. “At certain times there was a suggestion that we were guilty until proven innocent.”

But given the revelations from the beef tribunal in 1994, did he not expect people to take an interest when they heard about a scandal involving Larry Goodman? Mr Justice Hamilton’s tribunal report found a deliberate policy of evading income tax with the knowledge of Goodman management. It said that while the evidence had established many irregularities and malpractices, it had not established that they were carried out with the knowledge of Mr Goodman and other management figures. But he said they must accept responsibility “for failing to exercise effective control and supervision of the personnel employed by them”.

Mr Finnerty says the tribunal was more than 20 years ago. “There were allegations made in the tribunal and a large number of the allegations were proven to be incorrect.”

He says the tribunal has no relevance “to the vast majority of stakeholders we work with, our customers, our farmer suppliers, our employees. It’s not something that has any real resonance with them. I’m too focused on the business to be getting sidetracked by other people’s views on that front.”


‘Unfair’ reportage
He feels the horse meat reportage that focused on Larry Goodman and his family was unfair. “What was personalised was very unfair. We had a business problem here as opposed to a shareholder problem and we dealt with it as best we could.” Mr Goodman is still actively involved in the business as the executive chairman “but the job of running the business day-to-day is my job”.

Mr Finnerty also says the beef industry has been transformed since the events investigated by the tribunal. “And ABP and Larry Goodman were at the vanguard of that.”

He believes the industry is entering 2014 in good shape. “I think because of the changes we’ve made we are, and will be, a better and stronger business. The long-term future for this industry is very positive.”

Court actions: Reputations in the dock

At the height of the horse meat crisis, when blame was being thrown around like snuff at a wake, it was predicted that the lawyers would be busy for some time to come.

And they are. One such case was settled in September after ABP Food Group took an action against Cheshire-based Norwest Foods for supplying it with beef containing horse DNA.

At the time of the crisis, ABP owned the Silvercrest plant which produced the infamous burger which contained 29 per cent equine DNA relative to meat content. One of ABP’s suppliers was Norwest Foods, which was co-founded by Ray MacSharry Jnr, son of the former EU Commissioner of the same name.

ABP said it had agreed to accept a financial settlement from Norwest but details were subject to a confidentiality agreement. Norwest apologised and said: “Norwest acknowledges that it may have unknowingly and unwittingly supplied contaminated beef products contrary to the terms of Norwest’s contract with ABP.”

ABP is also involved in High Court proceedings against Polish firm Food Service for an alleged breach of contract relating to their supply of beef containing equine DNA to Silvercrest. The Polish company denied the allegations and said it would sue ABP after it had established its innocence.

ABP Food Group chief executive Paul Finnerty said the legal actions were about accountability. “This is not about money,” he said. “For us this is all about reputation and accountability. There is a view expressed in Europe and in the UK that there has been inadequate accountability, that there have been no prosecutions arising out of the source of this problem.”

Asked if any other cases were looming, he said: “We are keeping our position open with regard to one other situation. It comes down to the case and the merits of the evidence that one has.”

Meanwhile, ABP is being sued for alleged defamation by Martin McAdam of McAdam Food Products Ltd. In the High Court proceedings, the Co Monaghan meat trader has claimed that ABP deliberately made “false and malicious allegations” about him and his business to deflect media attention at the height of the horse meat controversy.

Mr McAdam said he did not supply Silvercrest with meat that tested positive for horse DNA. In recent days, he told The Irish Times he wanted to bring the legal action against ABP “as soon as the courts allow, so therefore I hope it could be spring or early summer when case can be heard”. Mr Finnerty said ABP would “vigorously” defend that action. He said ABP had not been sued by any other firm in connection with the horse meat incident.