Thursday, February 28, 2013

Eurocrash: a national nightmare

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Bankia we are told is a symbol of the Spanish housing and credit crisis. The group was formed in the wake of the financial crisis from seven troubled savings banks - and then evolved into a national nightmare.

And what is a national nightmare today, could become – and most likely already has become – a European nightmare. But then, RBS hasn't done so very much better, declaring a loss of £5.2 billion, although it has managed to keep the pot of gold open, with £600 million bonus payments.

The EU, therefore, has delivered itself something of a publicity coup with its proposals to cap bankers' bonuses - although I defy anyone to show me where, in the legislative proposals, where this appears, much less in the European Parliament response.

But then, so much of this is smoke and mirrors that it is very difficult to find out what is actually going on and, as we know, the media don't ever bother trying. They just vomit out the latest press releases.

I am not even sure that the EU has the legislative competence on this issue, and is trying it on to see how far it gets. In this, there is an amount of complicity with (some) Member States, who are happy to see the EU take the flak, saving them having to face down their own rapacious bankers.

But, for the ordinary man who sees banking losses multiply, while their thieving corporates make no efforts to retrain their own greed, this becomes the ultimate populist issue – a wonderful irony for a construct which publicly deplores populism.

All of this though, allow the likes of the BBC to keep attention focused away from the main issue, which is that this current round of legislation is the implementation not of EU proposals but of the Basel III agreement, covering up the failures of the previous rules.

Keeping the public "debate" focused on bonuses is a wonderful way of distracting the "man in the street", but the greater effect of the rules – insofar as they are capable of being understood – are virtually escaping public scrutiny.

The net effect, then, is to have disasters like Bankia, and more like them to follow, which eventually leads to real suffering by real people, while the corporate swindles go on unchecked, and the thieves in suits strut their stuff.

It is a while since I used the catch phrase: "and the reason we should not rise up and slaughter them is?" Answers on a postcard please … but I suspect the Post Office will not get rich on the proceeds.


Horsemeat fraud: more adulteration emerges

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The "little England" media seems largely to have abandoned the horsemeat fraud story, even though results from European testing are pouring in, leaving Le Figaro to exclaim, "European supermarkets flooded with horse meat".

"Fraudulent products", says the paper, have been found on the shelves of all the major chains of distribution in Europe. And, while the scandal has ballooned to more than 20 countries to date, the list of distributors and brands involved also grows.

One of the latest brands to be caught out is the Panzani group, the global past specialist which announced yesterday it had found traces of horsemeat in ravioli made by a French supplier and that the products had been withdrawn in France.

But, as the finding multiply more information emerges on the scale of the adulteration and the complexity of the supply network.

The Panzani ravioli, for instance, was manufactured by William Saurin. The company's ambition, it tells us, is "to offer the best products available to all and for all the family", with recipes "tasted and re-tasted by our team of experts in culinary arts before marketing to achieve culinary excellence".

It turns out, though, that to achieve its "culinary excellence", the company sourced some of its meat from the Dutch company Windmeijer Tradng BV. This had earlier been associated with rogue trader Jan Fasen, of Daarp Trading fame, who had used one of the company's cold stores in the Dutch city of Breda, storing horse meat which had been supplied to the Spanghero cutting plant.

The Dutch prosecutor has now started a criminal investigation into the affairs of Windmeijer, the second company to have attracted this sort of attention. The first was the Willy Selten plant in Oss, Netherlands, which was accused of mixing horsemeat and beef and selling it on as pure beef, after a raid on 15 February.

Those two cases, no doubt, are going to run and run. In the meantime, we also have a report fromPortugal, with the authorities seizing 79 tons of beef containing horsemeat. We hear also that 19,000 food packs, "such as lasagne, hamburgers, canneloni and meatballs" have been removed from retail and distribution outlets.

Also, beef lasagne containing horsemeat has been discovered in Hungary, according to Gyorgy Pleva, Director of Hungary's National Food Chain Security Office. This does not seem to be a new contamination episode though, as the lasagne was imported into Hungary by the Danish company Nowaco and produced by the Luxembourg-based firm Tavola, the subsidiary of Comigel which produced the product for Fundus.

What is certainly a new episode, though, is a report from Latvia. The Food and Veterinary Service has established suspicious activities with horsemeat at several Latvian slaughterhouses and companies. It has been established that 416 horses were slaughtered in Latvia in 2012, including 272 at an AIBI slaughterhouse.

Their meat, it is reported - amounting to 203 horses - was supplied to meat-processing company Forevers and it is "already clear" that AIBI horsemeat was labelled as beef in nearly all cases. There have also been violations established at three other slaughterhouses and a meat supplier.

Nor have the Swedes finished yet, as IKEA has decided to withdraw its wiener sausages from sale after tests found "indications" of horsemeat. The company is removing the sausages from sale in Britain, France, Spain, Ireland and Portugal after tests confirmed "a few indications of horsemeat".

Russia is also getting in on the act, complaining that a shipment of 20 tons of hot dogs "tainted" with horsemeat had been exported from Austria by the Landhof company in Linz. The Russian Federation is now considering taking unspecified "protective measures". Unlike the cases elsewhere, the sausages were labelled not as pure beef but as containing only pork.

Landhof tells us that the entire production chain, "works with the HACCP concept, which deals specifically with the hazard and risk analysis". The products are tested for their hygienic condition and chemical composition in the in-house laboratory,. The very strict Austrian Food Codex guarantees the consumer with additional top quality.

Back in Britain, seven councils have withdrawn certain meat products from schools and care homes after Swansea council said its own test found horsemeat in products supplied by Welsh Bros Ltd of Newport. The company said it was shocked and "had been let down by a non-Welsh firm".

Welsh Bros is another one that tells us they operate a fully documented Food Quality and Safety system, using HACCP principles where they "identify possible hazards with our products and processes" and "put controls in place to ensure safety is maintained". Their measures, they say, "are regularly monitored and information documented". This system is under constant review to identity where any improvements are made.

They go on to say that all carcasses are purchased from licensed and approved suppliers. "Specifications are agreed so that the correct product is always supplied to us" and "these specifications are verified via goods inwards checks which are conducted by our Technical Manager upon receipt to deliveries".

“Inferior product”, they claim, "is rejected and retuned (sic) to supplier with only products which have the quality we demand passing these important checks".

Thus we come to the NFU conference in Birmingham, were farmers were said to be angry, withplatitudes flying about buying more British produce and preventing "another horsemeat-style scandal".

The trouble is, as we see from the European Parliament, there is still no real understanding of what has happened. MEPs are calling for more meat tests along the food chain, but felt that the issue was one of "labelling and traceability".

They cannot seem to get to grips with the idea that we are experiencing criminal fraud on a massive scale, and all the labelling in the world will not make it better. Weeks into this "scandal" and we are really not much further forward. The entertainment is set to continue.


Wednesday, February 27, 2013

Food fraud: "what's in your fish fingers?"

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From 1,247 identified samples of fish purchased from retail outlets in the United States, 33 percent (401) were mislabelled. That has been the finding of a survey on seafood fraud by the conservation group Oceana (full report here), which has been running in the US press for the last few days.

Inevitably, papers such as the New York Times are drawing comparisons, this paper telling its readers that: "Many Europeans are fretting these days over horse meat, and whether it might have adulterated their shepherd’s pie. Over here, it's all about the red snapper".

Surveys previously of one kind of fish had found mislabelling rates of 25 to more than 70 percent for commonly swapped species such as red snapper, wild salmon and Atlantic cod. And in this survey the most commonly sampled fish, snapper and tuna had the highest mislabelling rates (87 and 59 percent, respectively), with the majority of the samples identified as something other than what was purchased.

Halibut, grouper (not the Lib-Dem variety), cod and Chilean seabass were mislabelled between 19 and 38 percent of the time, while lower levels of mislabelling were noted among salmon (7 percent) and sole (9 percent).

Some mislabelling, says Oceana, may result from human error in identifying fish or their origin. More often, it is driven by economic gain, as when a cheaper or more readily available species is substituted for one that is more expensive, desirable or in limited supply.

This type of fraud, it says, not only cheats the consumer, but it also hurts honest fishermen and seafood suppliers who play by the rules. Mislabelling can also provide cover and profit for illegal or unregulated seafood, and the fraud can also have serious health consequences when mislabelled produce masks undeclared allergens, contaminants or toxins.

Reinforcing the assertion that this is not a victimless crime, Reuters joined in with a report that Interpol had launched a global crackdown on illegal fish catches worth up to $23 billion a year.

The agency also made comparisons with "Europe's scandal of horsemeat sold as beef", with Interpol declaring that: "The last decade has seen an escalation of trans-national and organised criminal networks engaged in fisheries crime". Interpol's head of its Environmental Crime Programme, David Higgins, described the crime as covering everything from illegal financing to mislabelling.

Interestingly, the project, with an annual budget of €300,000, is part-funded by the Pew Charitable Trusts and the Norwegian government. Says Anthony Long, head of the Pew's global campaign to end illegal fishing, "One fifth of the fish that come out of the water are believed to be illegal, unreported or unregulated".

A study published in 2009 estimated illegal fishing was worth between $10 billion and $23.5 billion a year, so part of the current plan is to set up a new fisheries crime working group.

Interpol's David Higgins also thinks consumers should be more demanding, partly because Europe's meat scandal has exposed how easily horsemeat can be passed off as more expensive beef. "Can the supermarket vouch for where the fish has come from?" he asked, then posing another question: "what's in your fish fingers?".

He may well ask. But according to the little Europeans, the answer is more labelling - presumably so that we can have still more mislabelling.


EU politics: money down the drain

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Last year, the National Audit Office was reporting that the Rural Payments Agency, which administers EU farm subsidies, had incurred penalties as a result of weaknesses in management and administration to a total value of £590.4 million since 2008-2009, including provisions for an estimated £125.4 million in penalties which had not yet been finalised.

Then, yesterday we learned from the BBC that the European Commission has ordered the return of £85m for failing to comply with rules on agricultural payments. Again, this is the result of "weaknesses" in processing applications for funds and on-the-spot checks.

I suppose, considering what we have had to pay previously, this should be considered an improvement, although of the £357 million demanded from 22 Member States, the UK is being called upon to pay the largest amount. Next on the list is Italy, having to pay back £41.6 million, even if it is doubtful whether the money will ever get to Brussels.

However, £85 million is still a lot of money and we are not so flush that we can afford to give it away. The one thing you can be sure of though is that no one will be fired, no one will even be censured and, if there is any shortfall to be made up, the taxpayer will pick up the bill.

That is one of the joys of working in government. You can pour zillions down the drain and nobody thinks any the worse of you, even when the EU is the beneficiary. Should thee or me commit such a heinous crime, however, we would never hear the last of it.

Perhaps we should all apply for jobs with the Rural Payments Agency – we could hardly do worse than the present incumbents.


Tuesday, February 26, 2013

German politics: Merkel goes gay

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It isn't only Mr Cameron who is having trouble in his party with gay marriage. German chancellor Mrs Merkel seems to be having similar ructions with her own CDU.

According to Handeslbaltt, there are increasingly hostile noises coming from senior party members. Most voluble of these is Saxony CDU parliamentary leader Steffen Flath, who is also a member of the "conservative network" in the Berlin district.

He is warning against Merkel's proposal to grant to full equality to same-sex partnerships. He concedes that the CDU should continue to develop as a people's party, and to take note of social changes. But, he says, "that does not mean that you have to run after every fashion or equal to the general zeitgeist. This is especially true for a conservative party like the CDU".

Flath is calling on Merkel to focus on the core values of the CDU. "Only in this way can the trust and credibility that the party has lost be recovered," he adds.

Berlin is an awfully long way away, and even more so in political terms. As far as the parochial British media goes, it could be light years away. Yet, in Flath, we could have a British Conservative talking. The response from some of the knights of the shires has essentially been in the same terms.

Doubtless, there are senior German politicians asking the same questions of Merkel that have been posed about Cameron – as to why she is prepared to put herself out on such exposed limbs, in support of this minority cause, which is causing so much trouble.

Of course, it makes sense when the European (i.e., Council of Europe) dimension is factored in, but since the various national media still live in their own tiny bubbles, very few are joining the dots. Nevertheless, the spell cast by "Europe" does seem to trump all other considerations, causing politicians to lose all sense of their core values.

If only we could discover what it is that exercises such a grip on the minds of our politicians, we could then use it to our advantage and make them work for us once more.


Horsemeat fraud: gibberish but very little action

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While the Italians were trying to work out whether they had a new local government, or not, the business of their real government went on in Brussels, not least with the Agriculture Council meeting.

Here, the repercussions of the weeks of publicity over horsemeat were felt, with the "colleagues" obsessed with imposing new labelling requirements in the hope that somehow, miraculously, they would cure the problems arising from a single market in meat and meat products. 

In this, we have an encapsulation of the entire European Union experiment, which makes the whole issue so rewarding for study. Faced with trying to defend the indefensible, and to make the unworkable work, the "colleagues" retreat to their fantasy world, ending up bickering about the minutia of labelling, to the extent that the Austrians wanted the life history of every morsel of mince on their packs. 

Particularly aggressive, though, were the Poles, denying everything, and complaining that their industry had been unfairly pilloried. Then, this morning, up pops Polish Radio, pinning some of the blame for horsemeat burgers in the Czech Republic on a company called FVZ Deli Meat, Poland. 

Some of the aggravation may stem from last year when it emerged that a criminal ring had sold road salt to bakeries and meat-processing plants. 

Prague banned Polish salt imports in March 2012, followed by a range of food products but then, six months later, Czech alcohol was banned across the region after there had been dozens of deaths as a result of drinking fake spirits tainted with methanol.

The Czechs were forced to halt exports to Poland and Slovakia, but Warsaw and Bratislava maintained their own bans well after the Czechs implemented a new system to control quality, in a move analysts suggested could be motivated more by opportunist protectionism than public health concerns.

The last thing we want is to be caught up on these disputes and in the good old times, we here would just shut out the cowboys until they had sorted themselves out. Now our ministers have to waste their time in Brussels, listening to the fantasy outpourings of the "colleagues" who have very little grasp of the issues. 

Only the Danes, it seems, had the sense to recognise that new labelling would not have the slightest effect in preventing fraudulent meat adulteration.

So it is that we are locked into this unreal system, while the likes of Mr Cameron tell us how important it is to be on the "top table" in Europe, when the only reward for that is a great deal of gibbering and very little sensible action. We wold be better off burning the table and banning the burgers.


EU politics: coming our way soon

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We saw recently in Die Zeit the concerns over Roma immigration. And now we have Die Welt recording how appalling conditions from eastern slums have suddenly moved to within a few metres of the German welfare society. "As worlds collide, integration comes to its limits", say the local police and security sources in North Rhine-Westphalia.

Currently, there are an estimated 209,000 Romanians and 121,000 Bulgarians living in Germany, although how many are Roma is not known. Thousands more from southeastern Europe arrive every month and some cities have reported a six-fold increase since the two countries became EU members.

Officials in Duisburg, in an internal report of September 2012, offer a troubling assessment. "As long as there is unrestricted immigration and unregulated settlement, the problems are not controllable by the police", they say.

The police in Duisburg have suffered particular pressures. Last year, they recorded some 13,000 staff hours on immigration-related issues, trying to prevent tension escalating. And they have nearly 350 live investigations, mainly for fraud and simple theft.

Officials warn of an additional area of conflict. It is not only the Germans who feel threatened, but Turkish and Lebanese immigrants. Several times the police have had to intervene to break up armed fights.

There was a major confrontation in September 2012, when the police recorded a targeted attack by young men of Turkish origin against young Romanian Roma. The police consider that the ever-increasing and uncontrolled growth of the Roma was the catalyst of this type of attack.

In the UK, Nigel Farage may be over-egging the numbers we can expect from 1 January 2014 but, if this German experience is any guide, he cannot over-exaggerate the problems that will arise from unrestrained Roma immigration.

A potential ally is the head of Dortmund Social Department, Birgit Zoerner. She is head of the German Association of Cities and a member of the newly established federal-state working group on "poverty migration from Eastern Europe".

Her focus, though, is on financial support from the EU – of which Farage would doubtless not approve. The EU can organise bail-outs for banks, Zoerner says, and we now need urgent rescue packages for people. But she also argues for restriction of free movement until the EU is able to control immigrants and manage their distribution.

The current European-led movement, she says, disrupts communities because new immigrants mostly prefer the districts which have already succumbed to major social challenges.

And in a new development, Interior Minister Hans-Peter Friedrich is demanding that the EU make money available for the integration of Roma into their native countries. These people, he says, present schools, municipalities and charitable organisations with unique challenges.

Local governments are complaining that they are now being made to bear the costs of EU expansion, concerns that the federal government in Berlin have thus far ignored.

That presents a somewhat different perspective to the immigration debate. While national politicians parade on the European stage, it is local government – and local taxpayers – who are bearing the costs, as we have already seen with Rotherham. 

EU membership, therefore – always regarded as mainly a national issue – now has an even greater and more urgent relevance to local politics.


Monday, February 25, 2013

Horsemeat fraud: organic eggs – the next instalment

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Played big by the German press is a new food "scandal", this one involving the mislabelling of ordinary battery eggs as organic produce.

The hare has been set running by the Arbeitsgemeinschaft bäuerliche Landwirtschaft, reflecting the German genius for making even a benign producer group sound like a paramilitary organisation. This is the Small Farmers' Association (AbL) who are complaining of a "giant fraud", with large egg packers sending their supermarket customers the right packaging, without too much concern about what is inside it. 

Also being criticised are the "lax EU organic standards", pointing once again to the situation where the EU has exclusive competence in dictating the standards for this fabulous Single Market about which Mr Cameron is so enthusiastic. 

Handelsblatt takes it further, reporting that the "deliberate deception" of consumers is probably "widespread practice", with millions of eggs involved. It also seems to have got the point. The second major labelling swindle after the horsemeat scandal, it says, "casts doubt on the success of food inspections".

Says Federal Consumer Minister Ilse Aigner (CSU), "It's all about checks and here I have to clearly say that the controls for which the countries are indeed responsible have to be carried not just from your desks. One must, of course, be on the ground, looking at the plants".

Oldenburg prosecutor Roland Herrmann agrees that fraud involving the keeping of chickens and eggs is widespread. His authority is investigating some 100 farms in Lower Saxony. 

Profits from illegal substitution are, as one might expect, enormous. As a guide from the UK, Tesco sells a half-dozen "everyday value" eggs for £0.95, compared with £1.70 for free-range and £2.15 for a half-dozen organic eggs. Given that these eggs are chemically indistinguishable – and there is no known test that can identify substitution – the temptation is massive. 

And while this "scandal" is at the moment confined to Germany, anyone who thinks it doesn't happen here is in the land of the fayries. 

Outside one of the largest, prestige egg packers in the country, I've personally seen anonymous shipping containers, stacked full of eggs, unknown to the egg inspector, which are brought out to make up for shortfalls on any one line – irrespective of type. This has been going on for years. 

Egg marketing in Europe is a truly international business, as the consumption cycles in each Member State are slightly different, while egg laying is a constant. You can't switch laying hens on and off like a light switch. 

Thus, there is free trade between producers and wholesalers in different countries, to balance supply and demand. With no cross-border checks, there is ample room for fraud and substitution, and precious little policing. Because the egg regulations are of EU origin, and highly complex, Defra runs its own egg inspectorate, too few in number (and lacking the skills) to be able to detect structured fraud. 

Once again, though, we confront the same problem. Where the value of a product depends not on its intrinsic characteristics but on the paperwork accompanying it, there will always be scope for fraud. And, when the system is governed by Brussels, and the checks are determined by the European Commission, the fraudsters are always going to have an easy time of it. 

That, though, has ministers from 27 Member States in Brussels today discussing more and better labelling for meat products. 

Without the first idea of whether they can be enforced, or how, they labour under the illusion that their regulations will actually achieve anything, other than create more and better opportunities for fraud. These people, with the European Commission alongside them, are oblivious to the reality of the world outside their little bubble. 


Horsemeat fraud: expanding the European dimension

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Czech inspectors have found horsemeat in meatballs made in Sweden for IKEA Group, the world's biggest furniture retailer, says Reuters in a report that has catapulted the fraud back into the headlines today.

The Czech State Veterinary Administration reported its findings to the EU's Rapid Alert System for Food and Feed (RASFF), after its inspectors took samples for DNA tests in IKEA's unit in the city of Brno from a product labelled as "beef and pork meatballs" (87%).

IKEA, according to other press reports, has said that the meatballs were made by the Familjen Dafgård group, located in central Sweden, a firm which claims to put a "lot of love and care" into its products (as well as horsemeat). 

However, the family Dafgård is not alone. The Czech inspectors also found horsemeat in burgers from Poland labelled as "beef pre-fried burger" supplied to the food trader and distributor BidVest in the Czech Republic. 

The IKEA suppliers have not yet disclosed the source of their meats, but in the "beef pre-fried burger", we have another finger pointing at Poland. This link is being pointed up by Die Welt and others, although information on origin is no proof of complicity in fraud. This we saw with the Romanian link. 

Nevertheless, as the days pass, we are getting the full flavour of the European dimension of this fraud. So far, we have information of adulteration events in Ireland (several), the UK (two), Germany (two or three), Luxembourg (one), France (one or possibly two), Italy (possibly one) and now Denmark and possibly Sweden, with persistent but unproven claims of Polish involvement. 

The little Englanders of the media are still keen to plant their Union Jacks on the issue, making mischief on the FSA and other local matters, but the facts demonstrate that this is a pan-European failure, with the EU's regulatory system at the heart of it. 

Not only does the media seem to be having difficulty with this, they are also still using the phrase "food chain", when "network" would be much more appropriate. 

Thus we have a Swedish furniture shop in the Czech Republic selling meatballs which were also on sale in Netherlands, Belgium, Portugal. They were made by a completely different firm in Sweden, although they were claimed to be "IKEA food", and were made from ingredients supplied by other companies (as yet undisclosed, but which could be anywhere), all to a common regulatory standard decided in and enforced from Brussels. 

What is fascinating to see, though, is that FAK notes that IKEA's food sales worldwide amounted last year to €1.3 billion, making it a major food retailer in its own right. 

Yet, despite the value, and the prestige of the brand name, this firm – along with many others – have put their trust in the Brussels regulatory system and ended up selling adulterated foods. UKIP should be having a field day.


Horsemeat fraud: regulatory aftermath

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As the "colleagues" assemble in Brussels today to discuss measures to deal with the horsemeat fraud, we see the effects of the media treating this as a food scare rather than massive international fraud exploiting failures in the EU's regulatory system.

Instead of a widespread, international police investigation, to track down the criminals in a multi-million pound fraud, we are entering what is more like the classic final stage of the scare dynamic, the so-called "regulatory aftermath", with the politicians braying for more legislation to fix the problem.

In this case, they are calling for "speedier action on introducing country-of-origin labelling for processed beef and other meat products" – or so says the loss-making Guardian, as if putting different labels on packs is somehow going to prevent fraudsters adulterating the food which goes into the packs.

Meanwhile, the sainty, law-abiding Danes have discovered that one of their own has been doing naughty things.

Hårby Slagtehus, a slaughterhouse in the Jutland town of Skanderborg, we are told, can expect to be reported to the police by the nation's food authorities, Fødevarestyrelsen, after it sold packs of mixed meat without indicating which meat was part of the mix. The food authorities said that there could be horse, beef and ham mixed together in the packs.

Hårby Slagtehus maintained that the restaurants it supplied with meat were aware that the meat, which the slaughterhouse sold under the labels of 'pizza meat' (pizzakød) and 'formed beefsteak' (formede bøffer), could contain horsemeat.

Fødevarestyrelsen went to six customers of the slaughterhouse and all said they thought they were purchasing beef. A control team took a total of nine samples from the six restaurants and found traces of horse DNA in three of the tests, traces of pig DNA in one sample and a combination of horse and pig DNA in five of the samples.

But while the Danes are putting their hands up – albeit to minor infractions – the Poles are rejecting allegations that they are involved in the scams.

Agriculture Minister Stanislaw Kalemba claims that: "Poland is so far clean as a whistle. Poland is off the hook", stating that nationwide inspections have failed to find existence of horse in beef products.

He also takes a pop a the Sunday Telegraph for claiming that "Polish authorities" suspect that horses are being used in a form of money laundering, noting that no official from Poland is quoted as saying so. Kalemba says that the original allegations coming from Ireland were "unfair" and that "there are at least a dozen countries in Europe and South America under suspicion" of adulterating beef with horse. 

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Back in Britain, the Daily Telegraph is getting excited over a report from Paul Smith, a retired auditor of food safety standards, that there is a "massive failure" of retailers to monitor their suppliers and have their meat inspected at "appropriate intervals".

Had the paper been reading this blog (and the Booker column), they would have already known this. We had, after all, written on 8 February (our very first piece on the current crisis) that the supermarkets operate what is known as "plausible deniability". As long as they have the paperwork to say they are in the clear, they are happy, we wrote.

Needless to say, in recounting Smith's "evidence" - which takes the form of a written statement to the Commons environment committee - the Telegraph omits any mention of the European Union, despite it having exclusive competence in food law.

Smith is cited as saying: "The whole system is a disgrace and in need of total review", and that he has spoken out to help bring about "appropriate changes so as to ensure the horse meat incident and related incidents do not reoccur".

But, since we have yet to work out the detail of what has been going on, with all sorts ofcomplexities and inconsistencies, we really should be focusing on the investigation - whence, of course, it will fall to the EU to take action. 

As it stands, the "colleagues" seem to be rushing to slam closed the wrong door, long after the horse has been slaughtered. But then, you cannot expect them to admit their own failures.


Horsemeat fraud: criminality and confusion

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A rather lightweight girlie piece in The Sunday Telegraph yesterday devoted nearly 1800 words to stream-of-consciousness mush about Polish horses.

The only useful information could have been covered in an article a fraction of the length, pointing to what appear to be over-generous prices paid for horses on the hoof. An old mare, it was claimed, had been sold through the Skaryszew market for 7,000 zloty, equating to about £1,400 or €1,700. We were further told that the farmer selling the animal expected 5,000 zloty. 

Journalist Claire Duffin thus asserted that the farmer was paid almost £3.40/kg for his horse – close to €4/kg. Yet, she wrote, the most expensive horse meat, from foals, fetched only £2.40/kg (€2.75/kg) in Italy, where the animals are mostly slaughtered. 

By contrast, in the UK, unwanted horses which end up in the food supply, can – according to one horse charity - be sold for £100 or less, making slaughter a lucrative proposition in the UK. 

On this basis – and with the help of the World Horse Welfare charity – Duffin concluded that "a more sinister set of suspicions hang over the whole horse trade in Poland: that it is a front for crime". The charity, and the Polish authorities, suspect that the horses are being used in a form of money laundering. 

Horse selling is a trade that has been going on a long time. In February 2000, the BBC reported on it, using Compassion in World Farming (CIWF) to claim that about 100,000 horses a year were exported by road to Italy, mainly from Poland and Lithuania, and about 7,000 donkeys, most of them from Romania. 

The movement of horses, Duffin tells us, creates a convenient paper trail for gangs to "clean up" dirty money. By exaggerating the value and number of horses moved, they can explain the existence of large amounts of cash gained from less legitimate enterprises. Paying farmers "slightly over the odds" for their animals is, then, a small price compared with the potential profits. 

It would have helped here if we actually had the comparator, in order to understand what we are dealing with.. Duffin's data seems thin, and she could be getting her information from something likethis site, which offers an untypically low figure for meat, from France in 2004. We don't really get an idea of what is involved. 

Currently, it seems, trade prices for Romanian carcase meat can be €3.50/kg. Frozen Polish (boneless trimmings) can be bought for €4/kg, but there have been reports of sales at as little as €2/kg. 

Doing our own calculations, meat yield from a horse may be less than 40 percent of live weight. Thus, to cover a price on the hoof of €4/kg, boneless meat would have to average at least €10/kg - to which must be added transport and processing costs. Duffin and her sources are thus right to be suspicious of the prices paid in Skaryszew market, especially if meat is being sold at €2/kg. 

There is another oddity about the Polish market though, which Duffin does not discuss – the fact that almost its entire legitimate horsemeat export volume was sold to Italy. According to Eurostat, of the 13,016 tonnes exported by Poland in 2010, valued at €34,625,817, 12,988 tonnes went to Italy. In 2011, the Polish exported 12,598 tonnes, valued at €35,299,856. Of that all but ten tonnes ended up in Italy. 

What is not explained is why so much is trade is done with Poland. The next largest trading partner is Spain, from which Italy takes 3.8kt. Belgium supplies 3.7kt, while France sends 2.6kt. Romania sends a mere 1.7kt. 

As to the statistics for Italy as a whole, home meat production (2011) was recorded (by Eurostat) as 24.5 kilotonnnes (kt), with imports of 27kt. A negligible 1.7kt of exports are recorded, making total home consumption in the order of 51kt, over 60 percent of total EU consumption. What goes into Italy seems to stay in Italy, in a market that worth about €100 million at wholesale prices. 

However, both the Observer and the Daily Mail assert that Polish and Italian "mafia gangs" are involved in the trade. 

If this is the case, it may well be through unrecorded trade, a situation which is compounded by the poor state of official statistics. Not only do there seem to be significant differences between Eurostat and FAO databases, which ostensibly measure some of the same things, there also seems to be a mismatch (in Italy at least) between datasets on domestic meat production and number of horses slaughtered. 

Italian data, for instance, has 67,000 horses slaughtered in 2010, producing 17.9kt of meat (carcase weight – 178,827 metric quintals), as opposed to the figure of nearly 25kt meat, offered by Eurostat (equivalent to 34kt carcase weight - nearly double that recorded). 

It would be easier (although somewhat dishonest) to pick one set of statistics, and stick to them. You get this with newspapers, having The Daily Telegraph report in 2010 what it claims to be the FAO figure of 213,000 horses being slaughtered for food in Italy "every year". Yet the Italian government recorded for 2009 the number of 84,063 – of which 45,757 were imported. 

All the indications are, therefore, that there are significant gaps – or discontinuities – in some of the statistics. 

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Even then, the plot thickens. While the bulk of horsemeat in Europe is processed in Italy, so far, as of yesterday, only one Italian processor has been implicated in the horsemeat fraud. This is the Prima group. From this firm, so far, only about six tons of frozen beef lasagne have been seized.

By contrast, there have been two major units in Germany, with another implicated. This latter unit is the German firm Dreistern Konserven, which produced goulash for Aldi, in which horsemeat was found - and which bought its meat via a dealer from Mipol, a Polish-based firm. There have also been – as yet unproven – links with the Irish horsemeat findings and Poland.

It cannot thus be said that Poland is in the clear, but it also cannot be said that we yet have anything like a clear picture of the horsemeat trade in Europe, nor even the movement of horses.  There may well be Polish/Italian mafia links - but that may not be behind the current horsemeat fraud.

However, there is another dagger at the heart of the EU's Single Market. We are told so much about how much trade is facilitated through this construct, but when a light is shone on just one tiny sector, the statistics fall apart, and the mechanisms of trade are unknown in detail. Neither the European Commission, nor anyone involved in it, really knows what is going on.

Interestingly, there is an EU Agricultural Council today (Monday), at which our own Mr Paterson will be present. The one thing he could demand, rather than more labelling, which might obscure more than reveal, is for the European Commission to come up with a definitive report, with reliable statistics, on how the horsemeat trade actually works.


Sunday, February 24, 2013

Energy: "Only the Tories have a grip on energy"

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In September 2008, we were arguing - with more than a hint of desperation – that the Conservatives needed to address energy policy. And we were not only concerned with the politicians but with the failure of the party generally to take an interest in this vital issue.

An aspect of that failure, we wrote, is the apparent willingness of the party to leave the debate on "fuel poverty" arising from high energy prices to the dysfunctional and increasingly aggressive gaggle of Labour back-benchers and the economically illiterate delegates at the TUC conference, now in full flow – all variously demanding a windfall tax on the energy companies. 

Now, on top of comments from Booker, we have the hypocritical Independent on Sunday whingeing about "successive governments playing politics over energy".

It complains that, over the past decade there have been seven energy secretaries – and at least five white papers – all playing different cards with energy strategy. Thus does it declare: "It's a shameful way to behave and the politicians deserve being trumped for their myopic populism", then arguing:
Its time to take the politics – if not religion – out of energy policy; whether you prefer wind over coal over nuclear has nothing to do with ideology but everything to do with safety, efficiency, cost, as well as sustainability. What we need is an independent commission – headed by someone like Buchanan and experts from industry – to stake out a thoughtful and long-term strategy and stick to it so that businesses can plan for the future.
Meanwhile, the Sunday Express, with its front page lead, finally wakes up to the EU's Large Combustion Plants (LCP) Directive, telling us what we last reminded our readers in November last year, that: "By next March, five of our largest coal-fired plants, capable of supplying a fifth of our average power needs, are to be shut down".

In this blog, we've actually referred to the LCP Directive 31 times, starting in August 2005, strangely enough with a piece headed: "When the lights go out …". And then, we were writing in July 2008about a "politically induced crisis", while in April 2009 we were warning that we were: "Six years away from an energy crisis". That was already after declaring in October 2008 that:
We are going to get power cuts, unless we do something soon. The problem is already on us with the quota limitations on the coal-fired stations imposed by the EU's Large Combustion Plants Directive. Now, we know this is that nasty European Union and we don't like talking about it. But hiding your head under the covers won't make it go away!
But then, after the egregious failure of the Conservatives to address the issues, which we quite deliberately set out for them in August 2008, the Sunday Telegraph is at last on the case.

And what does it tell us? Ah! "Only the Tories have a grip on energy", it proclaims, regaling us with the happy thought that, "The voters of Eastleigh have a splendid opportunity to send a message that green fundamentalism is unaffordable".

Sometimes I do have a little difficulty trying to work out which planet than paper is actually on.


Booker: when the lights go out

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Booker's readers will not be surprised to find him writing in today's column on the media response to that warning by Alistair Buchanan, retiring head of the energy regulator Ofgem.

With the closure next month of five major coal-fired power stations that between them contribute nearly a sixth of the UK's average electricity needs, over the next few years, Mr Buchanan feared we will be dangerously close to not having enough power in the grid to keep Britain's lights on.

Booker, like so many of us, has been trying to explain this for so long that his readers may be weary of it. It was back in 2006 that he first reported on why, within a decade or so, we might see Britain's lights going out.

In fact, as he set out in his book, The Real Global Warming Disaster, in 2009, the writing was already on the wall in the government's energy White Paper of 2003.

By then, Tony Blair had signed us up to an energy policy centred on building thousands of windmills, fully aware that we would be losing many of our coal-fired power stations due to an EU anti-pollution directive, and that we were unlikely to build any new nuclear power stations to replace those that by now would be nearing the end of their life.

This made a nonsense of Mr Buchanan's claim in a vacuous interview with Evan Davis, on Tuesday'sToday programme on Radio 4, that everything was fine with Britain’s "visionary" energy policy until we were hit by that "financial tsunami" in 2008.

This prompted Mr Davis to comment, "So we can blame the bankers for it, as we normally do". (Nine months earlier Booker had written a column headed, "When the lights go out, you’ll know who to blame" – it wasn’t the bankers.)

The most interesting passage in Mr Buchanan's interview was where he began hinting at what has recently been emerging as a terrifying new element in the Government' s energy policy.

It well knows that electricity from the tens of thousands more wind turbines it hopes to see built in the coming years will cost between two and four times as much as that from conventional power stations. Its solution to this is to rig the market with new taxes and other devices so that this will make electricity from wind farms somehow seem competitive.

This is the infamous "green paradigm". The aim is not to make wind cheaper but to double the cost of electricity from the gas, coal and nuclear power stations that still provide virtually all the electricity we need to keep our lights on.

Around lunchtime last Monday, for instance, National Grid was showing that all our 4,300 wind turbines put together were providing barely a thousandth of the power we were using, 0.1 percent, or a paltry 31MW (as compared with the 2,200MW we can get from a single gas-fired plant).

The harsh fact is that successive governments in the past ten years have staked our national future on two utterly suicidal gambles. First, they have fallen for the delusion that we can depend for nearly a third of our future power on those useless and unreliable windmills – which will require a dozen or more new gas-fired power stations just to provide back-up for when the wind is not blowing.

Yet, at the same time, by devices such as the increasingly punitive "carbon tax" due to come into force on April 1, they plan to double the cost of the electricity we get from grown-up power stations, which can only have the effect in the coming years of doubling our electricity bills, driving millions more households into fuel poverty. 

If our government were not lost in a bubble of complete make-believe, it would keep open those coal-fired power stations the EU is forcing us to close next month (although it may be too late), it would stop subsidising grotesquely expensive wind farms, and it would go flat out to exploit Britain's vast reserves of the shale gas that has more than halved US gas prices in four years.

But we do not have such a government, says Booker. Our lights will go out, our economy will suffer a catastrophe, our bills will double, and tens of thousands more people will die of cold in those freezing winters that our politicians were somehow fooled into believing would never come again.

The bizarre thing is that, according to The Daily Telegraph in May 2010, this wasn't going to happen. But, now it is, the politicians have some explaining to do.


Saturday, February 23, 2013

UKIP: an unhelpful squabble

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From many accounts, Marta Andreasen is an impossible woman, and UKIP is well rid of her. But the fact that she became a UKIP MEP at all is a reflection of how Nigel Farage manipulates the party list to put his own candidates in place – very often in breach of his own party rules.

Nevertheless, when she was first introduced at their conference in Bournemouth, a party activist remembers that Nigel himself introduced her as their new golden girl - the UKIP equivalent of a then ascendant Sarah Palin. How things change.

For what it's worth, my view is that she should never have been included in the list in the first place. Those with longer memories will recall that before Farage found her a home, she had already sought a place on the Tory list, only coming over to UKIP when offered a paid post as its treasurer.

However, one cannot entirely disagree with her analysis of UKIP, when she says that that party has [some] "good people in it at grassroots".  Despite that, she has been at odds with Farage for a long time, having called for his resignation as party leader as early as May 2011. And she is not wrong when she declares that he treats any views other than his own "with contempt".

Andreason saw UKIP as his plaything "to mould and shape in any way he sees fit, regardless of the views of others". Sadly, there is truth in that as well. I myself formed that view long before she joined the party, and very much recognise the validity of her claim that, "Nigel promotes the people who say yes to him and will be grateful for getting the job and will never contradict him".

"Under his leadership - and I have questioned his leadership obviously a number of times – the party has become a dictatorship", she said in an interview earlier this month, adding: "This is a Stalinist way of operating and he doesn't care about the membership or the grassroots…".

Currently, she says about Farage, "His actions, surrounding himself with an old boys' club of like-minded sycophants, are dictatorial, in sharp contrast to those of David Cameron, who has shown he can listen, adapt and do what is right for the country, not just for personal gain".

Responding to her defection to the Tories, Farage says of Andreason, "Having left the OECD, the European Commission and UKIP in unpleasant circumstances, the Conservative party deserve what is coming to them. The woman is impossible".

On the other hand, Grant Shapps, the Conservative chairman, says that her defection is a vindication of Mr Cameron's European policies. Her words on the Prime Minister's record "prove that the Conservatives are the only party who can protect Britain’s interests in Europe". 

Standing back from that, one can only regret - as does Autonomous Mind - that the eurosceptic cause is served so badly by all these shenanigans. We have enough difficulties and hurdles without our own side adding to them.