Peanut Company Files for Bankruptcy

Survey finds one in three people are not confident in food safety system.

February 13, 2009, 3:58 PM

Feb. 13, 2009— -- Capping an action-packed week in the investigation of a widespread salmonella outbreak, the peanut company at the heart of the examination has filed for bankruptcy.

Peanut Corp. of America's Friday bankruptcy filing came after the list of recalled peanut products grew even longer Thursday night, when the company announced it was recalling all products shipped from a second of its plants. Of three plants owned by the company, both its Blakely, Ga., and Plainview, Texas, facilities have found evidence of possible salmonella and unsanitary conditions.

The Plainview plant had a long list of customers that, at one point, did business with the facility, including big names, such as Abbott Laboratories, Frito-Lay, General Mills, Kellogg and Whole Foods. Some 1,900 products now grace the list of one of the largest food recalls in U.S. history.

"The news from Texas state health officials of conditions at PCA's Plainview plant is alarming," said Rep. Bart Stupak, D-Mich., in a statement Thursday night. "I am pleased Texas officials have taken immediate action to recall every product ever produced at the facility."

"More alarming is the concern that there could be hundreds or even thousands of food processing facilities operating in this country that have never been inspected by the FDA, just as this plant has been doing since March 2005," said Stupak, who serves as chairman of the panel that examined the issue Wednesday.

According to a survey released Friday, many Americans are confused about what products the peanut recall includes. A study released by the Harvard School of Public Health found that one in four Americans mistakenly thought big brand names of peanut butter were already included, though they are not. The study also found that one in three are not confident that the food service industry and government inspectors can keep food safe.

Brand name peanut butter is still said to be safe for consumption, whereas smaller peanut butter brands and a variety of other products containing peanuts, from crackers and candies to ice cream, have been recalled.

Shoppers can learn which products are still safe by examining the list of recalled products on the Food and Drug Administration's Web site.

The salmonella outbreak has resulted in 600 illnesses and an estimated nine deaths believed to be linked to bad peanuts.

This week, lawmakers and victims' families expressed their anger over the outbreak and questioned the ability of the the food industry and the government to keep products safe.

Truck drivers, too, have started to blow the whistle. First reported by ABC TV affiliate WHAS 11 in Louisville, Ky., the driver of a truck traveling from Texas to Georgia said that along the way, packages of peanut paste burst in the back of his rig. After shoveling the paste out and putting it in barrels, the shipment was rejected at one Georgia company, but the Peanut Corp. of America signed for it and accepted the delivery.

Peanut Co. President Takes the 5th

On Wednesday, Peanut Corp. of America President Stewart Parnell appeared before lawmakers on Capitol Hill, but refused to answer questions posed by a congressional panel.

Parnell repeatedly told lawmakers, "I respectfully decline to answer your question based on the protection afforded to me under the United States Constitution."

Though Parnell did not speak out, family members of victims who attended the hearing said his e-mails -- released by the panel Wednesday -- spoke volumes. The company e-mails, obtained by the House panel, suggested the Peanut Corp. of America allowed peanuts, that it knew could be tainted, to leave the plant.

In one e-mail to health officials, Parnell communicated the dire need "to turn the raw peanuts on our floor into money" during the growing recall.

"I didn't think I could possibly get more outraged than I already am about how this happened, but I have to tell you it's really reached another level after seeing e-mails and comments from Mr. Parnell, no excuses," said Jeffrey Almer, whose 72-year-old mother died just before Christmas.

"This company cared more about its financial bottom line than it did about the safety of its customers," said panel chairman Rep. Henry Waxman, D-Calif.

Lawmakers also said the broader food safety system needs fixing.

"We appear to have a total systemic breakdown, with severe consequences for hundreds of victims, for which we need explanations," said Stupak.

Rep. John Dingell, D-Mich., said to FDA food safety director Stephen Sundlof, "Either you don't have the resources, or you are incompetent to do the job you're supposed to do -- which conclusion am I to arrive at?"

"I would hope the former," Sundlof replied.

One major consumer group also took the agency to task.

"It is unacceptable for corporations to put consumers' health at risk, and then simply declare bankruptcy and go out of business when they get caught," stated Jean Halloran, Director of Food Policy Initiatives at Consumers Union, publisher of Consumer Reports. "We must have an FDA that can oversee food processors so that unscrupulous behavior can be detected, prevented and deterred."

Lawmakers examined the issue the day after the company's subsidiary in Plainview announced it, too, would temporarily close its doors after lab tests detected the possible presence of salmonella. Officials said samples taken last week from the Peanut Corporation of America's plant in Plainview were 99 percent positive for salmonella, though those tainted products did not make it to consumers.

On Monday of this week, the FBI raided the Blakely, Ga., facility as part of the ongoing criminal investigation into the peanut recall.

The Peanut Corporation of America's third plant, located in Suffolk, Va., was inspected by the FDA Jan 26. The FDA took samples there that came back negative.

ABC News' Lisa Stark and Brian Hartman contributed to this report.

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