[Jason Gayle, Lydia Mulvany and Monte Reel | December 15, 2016 |Bloomberg]
From the air, the Pearl River Delta in southern China’s Guangdong province resembles a mass of human cells under a microscope. Hundreds of thousands of tiny rectangular blocks, all of them shades of green, are clustered between cities and waterways. Livestock pens are scattered among the thousands of seafood farms that form the heart of the country’s aquaculture industry, the largest in the world.
Beside one of those fish farms near Zhaoqing, on a muggy day in June, a farmhand wearing a broad-brimmed straw hat hoses down the cement floor of a piggery where white and roan hogs sniff and snort. The dirty water from the pens flows into a metal pipe, which empties directly into a pond shared by dozens of geese. As the yellowish-brown water splashes from the pipe, tilapia flap and jump, hungry for an afternoon feeding.
Chinese agriculture has thrived for thousands of years on this kind of recycling—the nutrients that fatten the pigs and geese also feed the fish. But the introduction of antibiotics into animal feed has transformed ecological efficiency into a threat to global public health.
“We cannot trace if the shrimp is coming from Thailand or from China or from other countries. We cannot trace”
At another farm, in Jiangmen, a farmer scatters a scoop of grain to rouse her slumbering swine, penned on the edge of a pond with 20,000 Mandarin fish. The feed contains three kinds of antibiotics, including colistin, which in humans is considered an antibiotic of last resort. Colistin is banned for swine use in the U.S., but until November, when the Chinese government finally clamped down, it was used extensively in animal feed in China. Vials and containers for nine other antibiotics lie around the 20-sow piggery—on shelves, in shopping bags, and atop trash piles. Seven of those drugs have been deemed critically important for human medicine by the World Health Organization.
The overuse of antibiotics has transformed what had been a hypothetical menace into a clear and present one: superbugs, bacteria that are highly resistant to antibiotics. By British government estimates, about 700,000 people die each year from antibiotic-resistant infections worldwide. If trends continue, that number is expected to soar to 10 million a year globally by 2050—more people than currently die from cancer.
In November 2015 scientists reported the discovery of a colistin-resistant gene in China that can turn a dozen or more types of bacteria into superbugs. Since then the gene has been found in patients, food, and environmental samples in more than 20 countries, including at least four patients in the U.S. Food, it now appears, can be a crucial vector. “People eating their shrimp cocktails and paella may be getting more than they bargained for,” says Dr. Martin Blaser, a professor of microbiology and an infectious diseases physician at New York University Langone Medical Center who chairs President Barack Obama’s advisory panel for combating antibiotic-resistant bacteria. “The penetration of antibiotics through the food chain is a big problem.”
Research has found that as much as 90 percent of the antibiotics administered to pigs pass undegraded through their urine and feces. This has a direct impact on farmed seafood. The waste from the pigpens at the Jiangmen farm flowing into the ponds, for example, exposes the fish to almost the same doses of medicine the livestock get—and that’s in addition to the antibiotics added to the water to prevent and treat aquatic disease outbreaks. The fish pond drains into a canal connected to the West River, which eventually empties into the Pearl River estuary, on which sit Guangzhou, Shenzhen, Hong Kong, and Macau. The estuary receives 193 metric tons (213 tons) of antibiotics a year, Chinese scientists estimated in 2013.
The $90 billion aquaculture trade accounts for almost half of all seafood harvested or caught, according to the United Nations. China supplies almost 60 percent of the global total and is the biggest exporter. U.S. food regulators have known about the country’s antibiotic problem for more than a decade. The Food and Drug Administration intensified its monitoring of imported farm-raised seafood from China in the fall of 2006 and found a quarter of the samples tested contained residues of unapproved drugs and unsafe food additives. The following June an import alert was applied to all farm-raised shrimp and several other kinds of seafood from China, allowing the agency to detain the products at port until each shipment is proved, through laboratory analysis, to be untainted.
But antibiotic-contaminated seafood keeps turning up at U.S. ports, as well as in restaurants and grocery stores. That’s because the distribution networks that move the seafood around the world are often as murky as the waters in which the fish are raised. Federal agencies trying to protect public health face multiple adversaries: microbes rapidly evolving to defeat antibiotics and shadowy seafood companies that quickly adapt to health regulations to circumvent them, moving dirty seafood around the world in much the same way criminal organizations launder dirty money.
Over the past year, scientists have tracked the spread of colistin-resistant bacteria throughout Asia, Europe, and the Western Hemisphere. In May the first report of an American infected with a colistin-resistant superbug was announced. More U.S. cases were reported in June and July. By August researchers were announcing that American patients had been infected with a strain of bacteria that had developed resistance to colistin and carbapenems, another type of antibiotic often used to treat patients in hospitals with multidrug-resistant infections.
Initially, the resistant bacteria from breeding grounds such as China were believed to spread mostly by international travel. Michael Mulvey, head of antimicrobial resistance at the National Microbiology Laboratory in Winnipeg, Manitoba, was among the first to realize that seafood could also be a vector. In 2015, Mulvey’s lab secured funding for a study that enabled him and his colleagues to run a test for carbapenem-resistant bacteria on 1,328 samples of seafood collected from Canadian retail outlets from 2011 to 2015. Eight, or 0.6 percent, tested positive; all came from Southeast Asia. The findings meant that some of the planet’s most difficult-to-treat bacteria could be lingering in people’s refrigerators or on their kitchen countertops. “We are trying to make the case right now that it’s there, it’s in our seafood,” Mulvey says.
Since the early 1990s, the average amount of shrimp Americans eat annually has doubled, turning what was once a specialty dish into the country’s single most popular seafood. As recently as the 1980s, most of the shrimp consumed in the U.S. was raised domestically, primarily off the Gulf Coast. From 1990 to 2006, shrimp import volumes doubled. They’ve since leveled out at roughly 1.3 billion pounds annually, and today about 90 percent of the shrimp eaten in America comes from abroad. China’s share of imports touched an 11-year high in 2003 at 16 percent of the market. (It’s now 5.6 percent.) In 2004, the U.S. Department of Commerce announced a 112 percent tariff on Chinese shrimp, effective 2005—a response to complaints of domestic producers that insisted Chinese suppliers were selling seafood below market prices. In 2007 came the import alert.
Malaysia jumped in to pick up the slack. In 2004 imports of Malaysian shrimp rose tenfold, according to U.S. government figures. They remained elevated for a decade, peaking at about 5 percent of the market in 2008 and 2011.
There’s reason to doubt that all that Malaysian shrimp is Malaysian. Ronnie Tan, vice president of Blue Archipelago, Malaysia’s largest seafood producer, says that depending on the year either three or four shrimp producers—including his own company—operate in the country. Malaysia produced about 32,000 tons of shrimp in 2015, he says; about 18,000 tons were consumed domestically, and about 12,000 tons went to Singapore. That would leave little legitimate Malaysian shrimp to go to the rest of the world. Yet according to U.S. Department of Agriculture figures, imports from Malaysia during the past decade have exceeded 20,000 tons a year on average.
It’s a mystery that may be explained, at least partially, by examining the business practices of Jun Yang, a Chinese-born entrepreneur based in Texas. Homeland Security Investigations, a part of U.S. Immigrations and Customs Enforcement, first knew him as a honey broker. The agency arrested him in 2012 (then unarrested him so that he could cooperate with the investigation, then arrested him again) and charged him with making false claims about the honey he was selling. It was harvested in China but was passed through Malaysia, where it acquired Malaysian certificates of origin. This illegal transshipping, as the maneuver is called, allowed him to avoid paying almost $38 million in antidumping duties. The investigators untangled a network of shell companies that seemed designed solely to deceive U.S. regulators. In November 2013, Yang was convicted and sentenced to three years in federal prison.
The investigators also determined that Yang’s main business wasn’t honey—it was seafood. His company brokered shrimp for a Houston company called American Fisheries. At the time of Yang’s first arrest, some of the shipments were still in cold-storage facilities. The feds required him, as part of his cooperation, to send samples to a laboratory for analysis. Five shipments tested positive for nitrofurans, a class of antibiotics banned in the U.S. Those tainted shrimp were eventually destroyed. All the tainted shipments had been labeled as products of Malaysia.
Despite Yang’s cooperation with the government in the shrimp investigation, his information wasn’t used to make a case. But American Fisheries itself may have provided a way to track the apparent transshipping scheme. In May 2013, American Fisheries sued Yang, saying it had received only $6.1 million of the $12.1 million Yang owed it for 74 shipments of shrimp, weighing as much as 28,000 kilograms (62,000 pounds) each, from June 2011 to January 2012. That case, still pending in Texas, as well as Yang’s countersuit against American Fisheries, has uncovered a trove of documents that detail how a Shanghai-based company hatched a plan to get its Chinese-farmed shrimp into America.
In 2005, about nine months after the U.S. antidumping tariffs on Chinese shrimp went into effect, a group of seafood executives gathered in a Shanghai conference room. Many knew one another from when they’d all worked for Shanghai Fisheries, a large company overseen by the government. The executives agreed to create a venture that would focus primarily on exporting shrimp to the U.S., despite the new tariff. They would finance and control the company from China, but it would be incorporated in Texas. That was the beginning of American Fisheries.
Some of the same executives also controlled a Shanghai Fisheries subsidiary called Guangzhou Lingshan, a seafood packing plant in the Pearl River Delta, and the plant was buying shrimp. By 2006 the company had purchased 3,000 tons of it from farmers around the town of Da’ao, according to local newspaper reports.
Guangzhou Lingshan built a lab inside the complex to test the quality of its shrimp, and the facility was considered one of the best in the region. Even so, former executives with the company say shrimp tainted with antibiotic traces made it into the company’s stock. “You know what China was like,” says Lv Wei, who worked for Guangzhou Lingshan in the trade department for nine years before leaving in 2013. Almost two-thirds of the shrimp that went through the packing facility ended up with American Fisheries, she says. “They all went through Malaysia.” Shanghai Fisheries declined to comment on Guangzhou Lingshan.
No paperwork connected to those 2011 and 2012 shipments of Malaysian-labeled shrimp indicated they might have originated in China. The certificates of origin were signed by officials at the Penang Malay Chamber of Commerce. On a day in August, a man named Mohd Noordin Ismail sits at a desk in the reception room of the chamber’s offices in the seaside district of George Town. Bespectacled and wearing chunky gold rings on his fingers, Mohd Noordin has a foot-high stack of documents teetering in front of him. He says he’s worked at the chamber of commerce for 40 years, and his duties include signing certificates of origin for products produced in Malaysia and then exported. The certification process, as he describes it, is built on trust. He’s presented with documents provided by exporters, and he rubber-stamps the certificates under the assumption that the documents are genuine and correct. He doesn’t verify their authenticity.
“We cannot trace if the shrimp is coming from Thailand or from China or from other countries,” Mohd Noordin says. “We cannot trace.”
The documents that bear his signature indicate the shrimp sent to American Fisheries was farmed at two Malaysian aquaculture facilities, Chai Kee Aquatic and Aiman Aquatic. But none of the addresses listed on those forms correspond to an aquaculture facility or to a place where shrimp could have been raised. On two separate import documents, the same address is listed as the harvesting site for both Chai Kee and Aiman Aquatic. That address corresponds to a long block of gated residential compounds. No ponds are visible on any of the properties. A woman who answers the door at one of the houses says her son was in the seafood business, but she says no aquaculture facilities could be found on her property or elsewhere in the neighborhood. Another address listed on the documents for Chai Kee doesn’t appear on Google Maps, and neither the local police nor officials at the post office can locate the street named on the forms.
Mohd Noordin says it’s possible the certificates of origin and his signature could have been forgeries and that the forms never passed his desk. Malaysia’s shrimp industry is relatively small, but he says he’d never heard of either Chai Kee or Aiman. Since 2008, when the European Union temporarily banned imports from the country after several shipments tested positive for antibiotic residues and heavy metal content, only a few companies legitimately export shrimp to America, according to Mohd Noordin and others in the industry. Tan of Blue Archipelago says that while he has no direct evidence of transshipping activities, it’s commonly speculated by seafood producers in Malaysia that Chinese producers use Malaysian companies—both legitimate producers and shell companies that exist only on paper—to sneak their shrimp into the U.S.
The American Fisheries court documents suggest the company and its various distributors carefully monitored the status of the shrimp shipments it brought into the U.S. and communicated via e-mail and telephone. Once the shrimp was on a ship bound for America, ownership of the shipment was transferred to a U.S.-registered company called YZ Marine. On paper, the company doesn’t seem connected to American Fisheries and its executives in Shanghai. But the court documents show that Feng Shao, president of American Fisheries, had access to YZ Marine’s bank account and wrote a number of checks on it.
Lawyers for American Fisheries didn’t respond to interview requests for this story, but in court documents related to the Yang suit they’ve denied the company illegally transshipped goods via Malaysia. They’ve acknowledged, however, that the company was fully financed and staffed via China and that its employees worked in Texas on three-month rotations because they lacked long-term U.S. work visas. Court records also show that when one shipment of Malaysian-labeled shrimp arrived in the U.S. at a lighter weight than anticipated, a member of the American Fisheries staff checked with Guangzhou Lingshan—the facility in the Pearl River Delta—to ask if there had been a packing mistake.
The groups lobbying hardest for intensified scrutiny of imported shrimp and fish are, unsurprisingly, the American producers of seafood. The Southern Shrimp Alliance, a trade organization of U.S. shrimp producers, says the U.S. market is awash in fraudulently labeled and unsafe seafood. “What we have learned is that there are well-developed channels for getting massive amounts of food and other consumer goods into this market while evading U.S. laws,” says John Williams, the organization’s executive director.
Critics of increased inspection say it would cause gridlock at U.S. ports. “Think of all the trucks going by on an interstate, and you have a cop pulling people over for speeding,” says Peter Quinter, a customs and international trade lawyer in Miami. “You can’t pull everyone over. … Hiring more FDA officers is not the answer; it’s like shutting down the highway.”
Arguments of that nature didn’t stop the U.S. catfish industry from successfully pushing for more oversight on imports, a move that could provide a model for shrimp companies. For years the catfish industry argued that the FDA’s testing protocol, which analyzes only 1 percent to 2 percent of incoming seafood, didn’t adequately protect consumers. With the help of allies in Congress, catfish farmers got the USDA to take over import inspections from the FDA. The USDA’s Food Safety and Inspection Service, which will inspect all catfish imports by September 2017, began conducting preliminary, noncomprehensive inspections this spring, and proponents are thrilled by a slew of recent enforcement actions.
In April the FDA issued an import alert that said its district offices could detain and test all imports of shrimp and prawns from Peninsular Malaysia, a region that includes Penang. Malaysia’s Ministry of Health responded by announcing that it would tighten controls at processing plants and assume the authority to issue certificates of origin from chambers of commerce. The U.S. in the past year has started at least two investigations involving Chinese shrimp producers suspected of shipping their seafood through Malaysia, according to a U.S. Immigration and Customs Enforcement official who is familiar with the investigations. Both probes are ongoing.
The FDA alert has virtually halted Malaysian shrimp imports. But that doesn’t mean tainted Chinese shrimp aren’t making it into the U.S. Industry and trade experts say many companies transship Chinese shrimp by following the American Fisheries model, each of them creating disposable import companies that can simply fold, or reincorporate under another name, at the first sign of regulatory scrutiny. Over the years, when Malaysian shrimp exporters were added to the FDA’s “red list”—meaning their shipments would have to be stopped at U.S. ports—the companies didn’t try to clear their names, as companies from other countries did, says Nathan Rickard, an attorney specializing in international trade whose clients include the Southern Shrimp Alliance. They just incorporated new entities with new names to do the same work.
It appears now that dirty shrimp is being routed through different countries. One that might be taking Malaysia’s place as an international transshipping hub is Ecuador, domestic shrimp producers say.
“The import alert was a huge step forward to prevent contaminated shrimp from getting to U.S. consumers, but we have also seen significant shifts in trade patterns indicating new routes and methods for getting bad shrimp into the U.S. market,” says Williams, of the Southern Shrimp Alliance. “As long as there are distributors, retailers, and restaurants that, provided that the price is low, do not know and do not care where their shrimp is coming from, we expect to see shrimp-trade fraud.”
A recent case illustrates the domestic producers’ concerns. Ocean Rancho, a company based in Rancho Cucamonga, Calif., has imported Malaysian shrimp. The company was formed by a man named Kai Hua Tan, an employee of a shrimp-farming company in mainland China called Zhanjiang Newpro Foods. Tan also has links to Tasty Goody Chinese Fast Food, a chain of 11 restaurants in California. In November 2014 the U.S. Department of Commerce said it had obtained documents showing that Zhanjiang Newpro had evaded tariffs using a transshipping scheme. When the company refused to answer questions about its operations during a review, the department imposed antidumping penalties. Ocean Rancho declared bankruptcy and dissolved, citing about $1.6 million in duties owed to U.S. Customs and Border Protection. (Tan didn’t respond to voicemails left at his listed phone number, or to phone calls and e-mails to Tasty Goody.)
Around the same time, a new company, Mita Group, formed. It has the same address and phone number Ocean Rancho used on shipping documents. No one answering the phone there would speak with a reporter. Last year, Mita Group imported at least 700,000 pounds of shrimp—from Ecuador.