Retailers and suppliers must ask tougher questions about their procurement processes if they are to make themselves – and their supply chains – more resilient to food crime, Professor Chris Elliott argues in his post-Horsegate review.

So what are some of the ‘red flags’ companies should be looking out for?

Professor Lisa Jack, an expert in forensic accounting at the University of Portsmouth and an adviser to the Elliott Review, has compiled a list of key indicators of food fraud. 

A selection of these ‘red flags’ are listed below.

They are part of an ongoing project by Professor Jack to categorise warning signs in the supply chain.

None of them are proof of fraud but all should raise questions for investigation, according to Professor Jack.

For further information or to contribute to the project, please contact her on Lisa.Jack@port.ac.uk.

RED FLAGWHY IS THIS A WARNING SIGN?WHAT DOES IT MEAN?
General to all frauds     
Example: Unduly lavish lifestyle of an individual or group Food is generally a low margin, high volume industry.   It may be that the vendor has other sources of income, possibly from organised crime or that an employee is receiving kickbacks or is selling more than reasonable for the size of their business.
Specific to food    
Example: Sudden popularity of food leads to increased demand which is easily met Food takes time to grow and come to market There is a risk that scarce items are being substituted with lower quality or different items.
Specific to supply chains    
Example: equipment seen not normally associated with the company’s business All costs usually have an associated income stream. Indicates that the supplier may be engaged in other activities, perhaps re-labelling or re-packaging.
Specific to data and accounting systems    
Example: unusual payments to customers or suppliers The food industry is complex and has different invoicing mechanisms. Unusual payments can be hidden in a high volume of transactions. There is a possibility that someone is receiving kickbacks for collusion in a fraud.

 

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