Not always what it says on the tin: Legitimate business and the dynamics of food fraud

by | Jan 5, 2017 | Food Fraud | 0 comments

Dr Nick Lord is part of a major ESRC-funded investigation into instances and opportunities for fraud within the UK food system. Here, Nick reports back on the key findings of the study and the changes of approach that government and law enforcement need to make if they are to fully understand  and meet the challenge of food fraud in Britain.

  • Food fraud is often a product of legitimate actors in the food system
  • Focusing on the organisation of frauds, rather than organised criminals, is key to understanding food fraud
  • Criminal opportunities often arise as a result of dysfunctional markets

Our research into food fraud funded by the Economic and Social Research Council and the Food Standards Agency is now coming to an end. The aim of the research was to better understand the challenges to the food system, with a particular focus on analysing the nature, organisation and regulation of fraud within the market. As we begin to conclude our research, an important and recurrent theme relates to the central and necessary involvement of legitimate food businesses and actors in the incidence of food frauds.

Recognising food fraud as a product of legitimate food system actors

Despite food fraud having a long history, it is a concept that has not gained currency as a major global policy issue and remains poorly conceptualised. Back in 1950, Frank Hartung, a US sociologist, published a study examining violations in the wholesale meat industry, and concluded that it was businesses well established across different levels of the sector committing these violations. But this line of inquiry has not since featured prominently in discussions of food fraud in academia, policy or practice.

Our research indicates that a wide range of motivated, ‘entrepreneurial’ actors with varying levels of reputability and legitimacy can be implicated in food frauds including large, global corporate and industry players, middle range businesses in food production as well as rogues at the lower end of the legitimate food system.

Where food frauds are pre-planned, we see activities or schemes set up from the start with the intent of defrauding victims. Where they are intermediate, we see people who start out obeying the law but consciously turn to food fraud later. We also see slippery-slope food fraud, where deception spirals, often in the context of trying, whether absurdly or over-optimistically, to ensure that a business does not go bankrupt or cease trading.

The key point is that food fraud in the UK always involves, at some stage, a necessary role of legitimate food system actors, whether as direct perpetrators, or as facilitators. We need to understand how and why such legitimate actors become involved in fraud, and the conditions that shape how these behaviours are ‘organised’ over time.

The ‘organisation of food frauds’, not ‘organised crime and food fraud’

Instead of the focus on legitimate market actors, we see food fraud presented as a problem of ‘organised crime groups’, criminal ‘gangs’ and criminal ‘enterprise’ involving actors (all usually foreign) who are outside of the otherwise well-functioning UK food system. This theme is commonly seen in prominent media reporting, in the discourse of governmental and regional organisations such as the EU, and also in the body of academic research concerned with identifying foods that have been adulterated.

However, contrary to these conceptions, our research has indicated that there appears to be no consistent pattern of the involvement of ‘organised crime’ in food fraud in the UK. The National Food Crime Unit (NFCU) also made clear that their ‘gathered intelligence has not evidenced a substantial role for organised crime within food criminality’ (NFCU, 2016: 22). Yes, food frauds are organised, in some cases very well, but the actors involved are not those Mafia-type criminals we see in popular media.

Focusing on the ‘organisation’ of the frauds allows us to circumvent the conceptual problems of narrowly defining what food fraud is, or focusing on who the offenders are. Instead, a more interesting line of inquiry is to consider the dynamics of how opportunities emerge within legitimate markets and legitimate business settings and cultures.

For instance, the occupational and organisational settings of actors working in the food supply chain can create cultures where certain deviant behaviours are institutionalised and normalised in order to achieve organisational cultures and goals. Employees are socialised into these settings and they may experience organisational pressure to go along with fraud for fear of losing their job; this provides a believable rationalisation for them.

Understanding the relationship between networks of those legitimately placed within the food industry and acting fraudulently and the market for adulterated food product is poorly evidenced and under-theorised. This research gap is problematic. We must understand these dynamics.

The food system and markets as providing opportunity

Analytically, we must move away from restrictive and ill-defined notions of ‘organised crime’ and instead consider the conditions and factors that shape why food frauds are organised in the way that they are, and why certain actors would become involved in them. This implies recognising structural, organisational and cultural drivers that shape individual behaviour under particular conditions.

In this sense, our research indicates that the food system itself can by dysfunctional as fragmented markets and uneven trading relations create opportunities for frauds and generate pressures for various supply chain actors. The corporatisation and commodification of the food industry has shaped these dynamics, as has inadequate state regulation and public enforcement of unfair practice and deviance across the system.

In all cases, criminal opportunities arise under conducive conditions as part of legitimate actors’ routine behaviours. It is these dynamics and the very nature of their occupations and business environments that provides opportunity for fraud. These actors have various motivations, not just economic. Sometimes these actors make the most of these opportunities and they can easily conceal and disguise any fraudulent behaviour behind their daily, routine business practices – the market is ‘ready-made’ for such concealment as a lack of credible regulatory oversight is evident.

So what does this mean for food fraud policy and research?

Large corporations increasingly dominate the food industry and are able to shape market dynamics, such as the nature of contractual practices and supply relations, in their favour. This creates stress across the sector, particularly at the lower end of the market. The food system needs to change.

First, state authorities must move away from the preoccupation with pursuing ‘bad guys’ that exist out there somewhere, intent on permeating the food system with their criminal enterprise. A more coherent approach would be to re-focus attention and resources towards the role of legitimate actors across all levels of the food system in frauds.

Second, instead of focusing on small businesses further down the chain, political attention needs to be placed on the dysfunctional aspects of the food system in the UK itself. To engender behaviour change, those dominant corporations could be made legally, not just morally, accountable for failing to prevent frauds within their supply networks.

‘Big business’ will be resilient to this, but we see increased accountability as facilitative of good business practice, not burdensome.

This blog post was first published by policy@manchester and is taken from the following article: Lord, N., Flores Elizondo, C. and Spencer, J. (2016) ‘The dynamics of food fraud: the interactions between criminal opportunity and market (dys)functionality in legitimate business’, Criminology and Criminal Justice, Online First. 

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