Cheesed off! How the grate cheddar heist demonstrates why food businesses need to take steps to tackle food fraud in their supply chains

The loss of premium cheddar cheese to scammers highlights the prevalence of food crime in the UK. Suzanne Gallagher discusses its implications and why food businesses need to take stock. 

The big cheese

On 25 October, an artisanal cheese distributor confirmed that it was working with the Metropolitan Police Service after falling victim to an elaborate scam which had resulted in the loss of 22 tonnes of clothbound cheddar. The crime involved a fraudulent buyer posing as a legitimate wholesale distributor for a major French retailer. Over 950 wheels of cheese were delivered before the fraud was discovered. The victim, a Borough market based dairy, is calling on cheesemongers around the world to contact them if they suspect they have been sold the cheese which comes in 10kg or 24kg formats. 

When news of the theft broke, celebrity chef Jamie Oliver took to Instagram to ask his followers in the food and catering industry to alert the relevant authorities if they heard anything about 'lorryloads of very posh cheese' being offered 'for cheap' where the origin of the cheese was unclear. He advised cheese enthusiasts to be wary of suspiciously large quantities of premium cheddar on the black market, to remember, 'if the deal seems too gouda to be true, it probably is!' He speculated as to what may happen to the cheese -  'Are they going to unpeel it from the cloth, and cut it and grate it and get rid of it in the fast food industry, in the commercial industry?' 

Food fraud

Jamie Oliver is right; food businesses need to remain vigilant as acquiring and processing the cheese might cause them more problems than they can stomach. All food businesses are subject to complex regulations, peppered with criminal offences and laden heavy with sanctions for non-compliance. At the top of the food chain sits the Food Safety Act 1990 ('FSA') and with it comes liability for criminal offences where there is evidence of improper handling, labelling or sourcing of foodstuffs. It is an offence under section 15 of the FSA to sell, offer or expose for sale food with a label which falsely describes the food or is likely to mislead the purchaser as to the nature or quality of the food. Anyone attempting to offload the cheese by misleading a purchaser about where the cheese came from could find themselves under investigation for this offence. 

Another apex predator that food businesses implicated in food fraud investigations need to consider are offences found in the Fraud Act 2006. It is an offence to dishonestly make a false representation with the intention of financial gain for oneself or another. A representation is false if it is untrue or misleading, and if the person making the representation knows it to be untrue or misleading. 

Acts and omissions

Regulations that could be deployed against a distributor or retailer dealing in the cheese are the Consumer Protection from Unfair Trading Regulations 2008/1277 ('CPTUR'). A trader is guilty of an offence under these regulations where he engages in a commercial practice which is a misleading action or a misleading omission. 

A commercial practice is a misleading action if it contains false information and is therefore untruthful or if it or its overall presentation in any way deceives or is likely to deceive the average consumer. A commercial practice is a misleading omission if, in its factual context, the commercial practice omits material information. A failure to provide clear information on where the cheese came from may constitute a misleading action or misleading omission. 

CPTUR provides a due diligence defence. The defence applies where the trader proves that the offence was committed because of a mistake, reliance on information supplied by another person, the act or default of another person, an accident, or another cause beyond their control. They must also show that they took all reasonable precautions and acted with due diligence to avoid the offence. 

Clean cheese

Those who are dealing in the cheese are also at risk under the Proceeds of Crime Act 2002. From a money laundering perspective, the 22 tonnes of cheese can now be described as 'criminal property'. Food manufacturers, distributors and retailers who conceal, disguise, convert, transfer or export the cheese, commit offences under section 327. Those who facilitate the acquisition, retention, use or control the cheese by or on behalf of another person commit offences under section 328 and those who acquire, use or process the cheese commit offences under section 329. For liability to arise, a person must know or suspect that the property is a benefit of someone’s crime (that it is the stolen cheese).

Section 329 (acquiring, using or possessing) contains an exception that if adequate consideration is given for the criminal property, then there is no offence. However, there is no similar exception in sections 327 or 328. If a food business buys the cheese for a fair value, they will not commit any offence under section 329, but can they nevertheless commit an offence under section 327 when they incorporate (or process the cheese) into another product and sell it on to their customers. The employees of the food business and its advisers who are arranging the purchase may also be committing an offence under section 328, even though adequate consideration is paid.

A recent Court of Appeal Decision R (on the application of World Uyghur Congress) v National Crime Agency confirmed that paying adequate consideration for criminal property does not cleanse the property of its criminal nature. Those handling the cheese anywhere in the supply chain are therefore likely to be committing criminal offences. 

Conclusions

In light of these events, food businesses, distributors, exporters and others should reflect on the processes that they have in place to monitor their supply chains. To mitigate potential criminality and money laundering risks, businesses will need to consider promptly whether to take delivery of goods that are suspected to be tainted, or to apply to the National Crime Agency for a Defence Against Money Laundering in respect of those goods. Processes should be in place to ensure such concerns are quickly escalated.

When considering whether the contractual terms they have in place with their suppliers allow them to reject delivery of goods, food businesses should also bear in mind that any discussions with suppliers about why goods are being rejected will need to be carefully managed. There may be a risk of ‘tipping off’ or prejudicing an investigation by law enforcement, which can itself, in certain circumstances, amount to a criminal offence. These considerations extend beyond this one case study example currently hitting the headlines, as the recently published 2024 Food Crime Strategic Assessment estimates the total annual cost of food crime in the UK is between £410 million and £1.96 billion. All of the above are serious offences that attract long custodial sentences. For most small and medium sized food businesses in the UK, intentionally or inadvertently getting involved in this might be biting off more than they can chew.