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In the world of honey, it's not all sweetness(Chicago Tribune (KRT) Via Acquire Media NewsEdge) Jun. 8--252 Think "honey," and words like sweetness and purity come to mind. But the recent arrests of two Chicago-area executives shine a light on alleged honey trade practices that seem far from pure. The executives, from a prominent honey importer based in Germany, are accused by federal authorities of what's been called "honey laundering." They allegedly disguised imported Chinese honey as Eastern European honey, an attempt to escape hefty anti-dumping duties aimed at China. To make matters worse, federal authorities claim some honey imported by their firm was contaminated with chloramphenicol, a banned antibiotic that has troubled China's huge honey industry in the past, long before recent scares over tainted Chinese products. Honey laundering and contaminated honey have occasionally gone hand in hand. And while suspicions of honey laundering have dogged the industry for years, they rarely surface in the courts as they did in Chicago two weeks ago. "What everyone suspected is that Chinese exports have been shipped through other countries," said Kim Flottum, editor of Bee Culture, a trade publication. In the honey world, "this is big--it's one of those 'it's-about-damn-time' stories." In late May, Magnus von Buddenbrock and Stefanie Giesselbach, both employees of Alfred L. Wolff Inc., were arrested by U.S. Immigration and Customs Enforcement agents. They have been accused, though not formally charged, of conspiring to illegally import honey from China. Giesselbach told Customs agents she was aware Alfred Wolff had been "transshipping" Chinese honey--importing it as if it came from another country--since before she and von Buddenbrock joined the company, according to the complaint. Giesselbach, Wolff's national sales manager, also said they learned of the transshipping while being trained, the complaint says. Both started working in Wolff's Chicago office in late 2006, according to the complaint. Company officials also were advised that one honey shipment was tainted with a banned antibiotic, but they sold it anyway, the government claims. And a confidential informant who formerly worked for Wolff told Customs it is "common knowledge among [Wolff] executives" that imported honey was frequently contaminated with banned antibiotics, the complaint says, though no illnesses occurred. Von Buddenbrock, general manager of Wolff's Chicago office, "denies he violated any laws of the United States," said his attorney, David Bennett. Jim Marcus, Giesselbach's attorney, noted his client hasn't been formally charged and declined further comment. Giesselbach was arrested as she was about to board a flight to Germany, where she was to move into a new post at Wolff. Both she and von Buddenbrock have been detained at the Metropolitan Correction Center but are expected to be released soon on bond, their lawyers said. Alfred Wolff Inc., noting that the case "is an ongoing legal matter," declined to comment. Major importer Hamburg-based Wolff is a branch of Wolff & Olsen, a family-owned company that dates to 1901. The Olsen branch makes women's clothing; the Wolff branch makes and trades food ingredients and has been importing honey since 1948, according to its Web site. Wolff has a "leading position in the honey market," the site says. The federal government claims that since 2005 Wolff has imported nearly $30 million in honey through its Chicago office. At least 60 percent of the honey consumed in the United States is imported, according to the National Honey Board, a marketing arm of the honey industry. China, the world's largest honey producer, has traditionally been the biggest source of honey coming into the U.S. "China is the 500-pound gorilla [of the honey industry] without a doubt," said Bee Culture's Flottom. But unlike in the U.S., China's honey business is dominated by small-time, hardscrabble beekeepers who may have as few as 5 to 10 hives. "Beekeepers in China aren't rich. They're dirt poor for the most part," Flottum said. In 2001, the federal government found that the Chinese honey industry was dumping its product in the U.S. at unfairly low prices, hammering U.S. honey producers in the process. So, an anti-dumping duty, a complicated fee set by the U.S. Department of Commerce, was slapped on Chinese honey imports. Antibiotic found A year after the new fee was set, U.S. Customs found chloramphenicol in shipments of Chinese honey. So did regulators in Canada, Europe and Japan. Chloramphenicol is an antibiotic used to keep bees and other animals free of disease. It has been long banned in the West for animal use because it can cause aseptic anemia, a rare but potentially fatal blood disorder. The U.S. and European Union temporarily blocked Chinese honey imports, and China itself then banned chloramphenicol in food production. Since then, antibiotic-tainted Chinese honey has been less of an issue, according to an executive at a big U.S. honey producer and an official at the U.S. Food and Drug Administration. But the same can't be said for honey laundering, say honey industry producers and observers. They say importers have had more of an incentive to illegally transship honey since late 2006, when the payment process for anti-dumping duties was changed, they say. Since then, honey importers have effectively had to put up more money to Customs as sort of a down payment on anti-dumping duties. Before that, the payment was low enough that importers could easily skip out on paying the duties entirely. Indeed, a Government Accountability Office report this spring attributed most unpaid U.S. anti-dumping duties to China. And the report specifically named honey as a problem commodity, saying $43 million in honey-related anti-dumping fees had gone uncollected from 2001 through 2007. And that's just losses from duties on imports that come in legally from China, but whose importers skip out on payments. It's not clear how much money is lost from illegal transshipments, but it could be substantial. Illicit honey shipping is a global affair. Last fall, three people and two companies in Australia were found guilty of fraud in what that country's Customs Service called an "elaborate international import/export scam involving 1.7 million liters of honey." Australia's Customs Service said the companies claimed their honey was imported to Australia from Singapore, though it was actually from China. They then shipped it to the U.S., claiming it was Australian honey, which is not subject to anti-dumping duties. Russia may be increasingly used as a transshipping point for Chinese honey imported illegally into the U.S., honey industry executives say. Russian honey imports, also not subject to anti-dumping duties, have been soaring. According to Honey Board statistics, which come from U.S. Customs, exports of Russian honey jumped from 130,000 pounds in 2003 to 3.2 million pounds in 2005 and to 7.3 million pounds in 2006, the latest data available. Yet Russia uses most of the honey it produces and isn't known as a major exporter, said Richard Adee, head of South Dakota-based Adee Honey Farms, one of the nation's biggest honeymakers. The U.S. honey producers' theory on Russia would get a boost from documents in the case against the Chicago-based Wolff executives. Giesselbach told a Customs agent that the Chinese producer that Wolff worked with shipped drums of honey to Russia, according to the criminal complaint. A honey producer in Russia would then stuff the Chinese product into a shipping container with Russian honey. The container would be labeled as if all of its contents came from Russia. Traced to China In February, Customs agents in Chicago tested nine containers of honey--worth $310,000--that had been imported by Wolff from Russia. Honey's origin can be detected by the presence of soil residue. Through a lab analysis, Customs found that three of the nine containers of Russian honey came from China. Ukraine also allegedly functioned as a transshipment point for Chinese honey being imported by Wolff. Meanwhile, a $98,000 shipment of honey described as Polish--and tainted with chloramphenicol--was actually from South America and possibly China, the complaint said. Giesselbach also told a Customs agent that she was trying to decrease the amount of Chinese honey shipped into the U.S. Some in the honey industry see the arrest of the Wolff executives as a harbinger of a bigger crackdown on honey-transshipping. Said Bruce Boynton, head of the National Honey Board, "It signals to us that [Customs] is looking closely at it, and that people had better be careful about how they conduct their business." [email protected] To see more of the Chicago Tribune, or to subscribe to the newspaper, go to http://www.chicagotribune.com. Copyright (c) 2008, Chicago Tribune Distributed by McClatchy-Tribune Information Services. For reprints, email [email protected], call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA. |