The Japan Times: Aug. 8, 2002
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The government will file a criminal complaint against a unit of Nippon Meat Packers Inc. if it finds that the firm abused a beef-buyback program by disguising imported meat as domestic, Chief Cabinet Secretary Yasuo Fukuda said Wednesday.

Later in the day, the Agriculture, Forestry and Fisheries Ministry summoned Nippon Meat Packers President Hiroji Okoso for questioning.

The scandal has rocked consumers, investors and retailers, with shares in the company, better known as Nippon Ham, plunging as supermarkets and department stores moved quickly to remove its products from shelves.  The case will likely have a serious impact on the management of Nippon Ham, the nation's largest maker of ham and sausages.

The farm ministry is considering ordering the firm to refrain from selling beef and processed beef products to retailers, ministry officials said.  It is only the latest scandal involving the beef-buyback program, which was created to ease consumer fears after mad cow disease was detected in Japan.

Snow Brand Foods Co., a Snow Brand Milk Products Co. unit, disbanded in April after sales plummeted in the wake of revelations of a similar scam.

"The government will respond to this matter with severe measures, including the filing of a criminal complaint, in the event it is verified that the company abused the official (buyback) program," Fukuda said. "We have instructed the farm ministry to conduct a thorough investigation."  The buyback scheme was introduced following the discovery of mad cow disease in Japan last September. The government paid subsidies to domestic meat processors with stocks of domestically produced beef through an industry body, the Japan Ham & Sausage Processors Cooperative Association, to prevent the beef from reaching consumers.

At a news conference late Tuesday evening, Okoso admitted that its Osaka-based subsidiary Nippon Food Kansai sold 0.52 ton of imported beef to the industry body to take advantage of the subsidies.  Okoso denied knowing about the scam until it was exposed in a recent internal probe. However, farm minister Tsutomu Takebe criticized Okoso because "he did not make clear his management responsibility."

On Tuesday, the ministry received Nippon Meat sales slips attesting to the transactions related to the sales of the imported beef in question, they said.  The scam concerned the subsidiary, which sold 0.52 ton of imported beef along with domestic beef late last year through the parent company to the industry body.

On July 12, Nippon Meat cancelled the sales contract for a combined 1.3 tons of beef, including the 0.52 ton of imported beef, it had sold to the industry body.  All the beef was then incinerated. Nippon Meat allegedly destroyed the beef after it learned ministry inspectors planned to verify the origin of production for all the beef that had been sold to the industry body.

Okoso told reporters that Nippon Meat bought back the beef and incinerated it in accordance with appropriate procedures, denying that the firm meant to cover up the beef mix-up scam.

Meanwhile, Co-op Kobe, a Kobe-based consumers' cooperative of 1.43 million consumers, announced it has decided to stop purchasing fresh meat from the Nippon Meat subsidiary.  "We have taken this action to express our protest against the attitude of that company," a Co-op Kobe official said.  Co-op Kobe purchased a combined 510 million yen of beef and pork in fiscal 2001 from Nippon Meat. The volume accounted for 5 percent of all the fresh meat it purchased in the fiscal year.

Isetan Co., a major operator of department store chain, said it stopped selling Nippon Meat products via its Internet site due to the imported beef subsidy scandal.  An Isetan official said, "We have decided to end the Net sales, because we fear it may cause unnecessary annoyances to our customers due to our inability to provide sufficient explanations to customers through the Internet site." Isetan said, however, it will continue selling Nippon Meat products at its retail outlets.

Meanwhile, Mycal Corp. officials said the firm will stop selling gift packages consisting of Nippon Meat products at its network of 321 retail outlets, including supermarkets.

On the Tokyo Stock Exchange, Nippon Meat shares came under a barrage of selling, keeping the stock at an ask-only 1,253 yen, down 200 yen from Tuesday's closing quote.  No quotation was established for the stock during the morning session because sell orders outnumbered buy orders by 8.2 million shares.