Stavtrend: a cautionary tale of organic fraud

A Slovak trader sent 2,000 tonnes of what was assumed to be conventional wheat to Germany via Italy. Analysis of the case reveals that the organic control system works, but that things can nevertheless go wrong.

The Bioland-certified farmer and cereals trader Klaus Engemann works closely with Slovak organic farmers whose grain he imports for the German market. In the summer of 2016 he noticed the Slovak transport companies that he used  to take organic wheat to Germany scarcely had any vehicles available. Engemann investigated and found that large consignments of organic wheat were being transported to Italy. “We established that such large volumes could not possibly come from Slovakia and in August we informed the Slovak control organisation Naturalis,” Engemann explains.

Naturalis had certified the organic trader in question, a company called Stavtrend, and it began investigating. It told Engemann the wheat came from Romania and that the necessary transport certificates were in place, adding that they would contact the Romanian control authority in order to check whether the wheat had in fact been produced there by Romanian farmers.

The control organisation given in the documentation of the Romanian producers was ICEA Romania, a branch of the well known Italian certifier ICEA. But when Naturalis tried to cross-check it got no reply, says the head of ICEA Jarmila Drobna. ICEA Romania had ceased operating during 2016 after it received a warning from the Romanian authorities on account of its inadequate controls in the Agrocov fraud case,

With the help of the Slovak and Romanian organic authorities Naturalis quickly discovered that the control organisation BioAgriCert was now responsible for the producers named in the documentation. Its response came by return of post, says Jarmila Drobna: “The Romanian suppliers said they had not done business with Stavtrend  and that the documents sent for the check have been forged.” She adds that “on 17 October 2016 we asked Stavtrend to stop all transactions and to let us have the documentation.” Because Stavtrend supplied little information when two inspections were carried out, Naturalis cancelled its certification of this trader on 25 November 2016.

Scammed by his partner

“For us that was the end of the matter,” says Klaus Engemann. So he couldn't believed his eyes when he got a message in mid March 2017 from his Italian business partner Agricola Grains stating that it had sold him 1,700 tonnes of wheat from Stavtrend. “We've been trading with Agricola Grains  since 2009, and we visit them twice a year and have a good look at their suppliers. We had an agreement that we would receive only Italian goods and goods from Romanian farms with which Agricola has direct contact. We had samples from the consignments checked by  ABCert  and they have always been OK.”

Engemann is furious that his Italian partner substituted wheat from Slovakia. The consignments were sent from 21 July to 12  October 2016, in other words when there were still certificates for transports from Romania. “The goods have not lost their organic status,” says Engemann. But even if the authorities subsequently declare the wheat was not organic, it wouldn't matter because it went to a customer who processed it into gluten and starch that was presumably consumed long ago. The same applies to the products of four more German processors who last autumn received a total of around 250 tonnes of wheat from Agricola Grains.

The Italian company has been trading exclusively organic grain and fodder since 1991. On its wewbsite it promises 100 percent traceability along the production chain. A month after making an enquiry, organic-market.info received a reply from Agricola Grains that ignored the issue of how purchasing large volumes of grain from an unknown Slovak firm can be reconciled with its quality promise.

Buy a firm, trade suspicious goods, sell the firm

The firm Stavtrend  first appeared on the organic grain market at harvest time in 2016. A new company offering such large volumes should have set the alarm bells ringing – plus the fact that it doesn't make much business sense to transport Romanian grain first to Slovakia and then to Italy. According to the Slovak register of companies, Stavtrend was founded in 2004 with the stated purpose of the business being the installation and servicing of electrical equipment.

In March 2016 the two firms Alfapack (managing director Andrea Zanini) and Pulmomed (managing director Luca Zanini) bought Stavtrend for 33,200 euros and changed its business activity to trading in agricultural and forestry products. Luca Zanini was the managing director. After its organic certificate was withdrawn Zanini sold Stavtrend at the beginning of 2017. How anyone can do business worth millions of euros with a company of no standing and devoid of expertise in the organic grain trade is a mystery understood only by Agricola Grains.

Another unresolved issue is why it was three months before Agricola Grains informed its customers. Jamila Drobna from Naturalis writes that the control organisation Naturalis informed the Italian trader in November that organic certification had been withdrawn from Stavtrend and that in December the Slovak control authorities had sent information to ICEA Italy, the Italian control organisation with responsibility for Agricola Grains. She also says that her control organisation, together with the Slovak organic authorities, wanted to visit Stavtrend again on 14 December but they were not allowed to enter the company's site.

Since then, the company has broken off all contact with the control organisation and the organic authorities. Finally in February 2017 the police and the public prosecutor in Slovakia and  Romania started investigating the case. “At the moment, we can't say who perpetrated fraud and forged documents or where the goods that were sold actually came from,” says Drobna. On 20 March Naturalis posted a warning on its website reporting that the organic certificate had been withdrawn at the end of November. During November it had already entered Stavtrend in its list of decertified companies.

Because the Stavtrend documentation – if it exists at all – is with the police and since the organic  controllers have no access to it, the total volume of goods the Slovak trader put on the market remains unclear. The documents, that cross-checking with BioAgriCert showed were forgeries, referred, according to Naturalis, exclusively to the goods traded with Agricola Grains. People working on the case assume that the volume of goods was much higher than the 2,000 tonnes of wheat that ended up in Germany. On 17 November 2016 the case was registered on the  EU database OFIS, where control organisations keep a record of suspected fraud. The entry refers to wheat, maize, soya and sunflowers.

Comment: The chain breaks at its weakest link

We can draw a number of conclusions from the Stavtrend case:

The organic control system works: within a few days a Slovak and a Romanian control organisation discovered the fraud with forged documents and informed other people who needed to know.

A chain is only as strong as its weakest link: Stavtrend exploited an opportunity only because Agricola Grains as the trader did not have a proper look at this new supplier.

Reaction could be swifter: it was December when the control authorities and the control organisation in Italy were in the picture, but it was  the middle of March before Agricola Grains had to inform its customers and the Italian organic authorities told their German colleagues what was going on.

The database bioc.info, where many German and international control organisations enter their certificates, shows that it's possible to act more quickly. Every registered user is informed in real time as soon as an organic certificate is withdrawn from a controlled company.

Police work obstructs organic controls: when the the police and state prosecutor start investigating, the control organisation and the organic authorities no longer have access to the documents and data of the suspected company. So, dealing with a case from the organic point of view has to wait until an investigation report is available – and that can take time.

It's all been eaten: they often don't manage to keep suspicious goods from entering the market even when a case is quickly exposed. So, after the event, it's all the more important to analyse what happened and what action was taken in order to find out where there are still sticking points.

Leo Frühschütz