Syngenta Accused Of Racketeering

Syngenta Accused Of Racketeering | corn-conspiracy-940-450x300 | Agriculture & Farming Business Economy & Business GMOs Organic Market Classifieds
(Original photo by Bob Coleman)
By: Jan Cottingham | Arkansas Business

At least a dozen Arkansas farmers have joined hundreds of farmers in 19 other states in almost 800 lawsuits against Swiss seed maker Syngenta over genetically modified corn seed, a case that has been widely reported in the media.

But one of the lawsuits, filed on behalf of two Newport farms, contains a previously unreported twist: an allegation that Syngenta, a global agribusiness, has engaged in a criminal conspiracy to contaminate the U.S. corn crop to force China, other nations that buy U.S. corn and U.S. farmers to accept genetically modified corn.

The suit, field by the Emerson Poynter law firm, which has offices in Little Rock and Houston, alleges that Syngenta violated the Racketeer Influenced & Corrupt Organizations Act, or RICO, which is usually used to fight organized crime.

Emerson Poynter filed the class-action suit in January on behalf of Kenny Falwell and Eagle Lake Farms, farming operations in Newport. It, like at least eight other lawsuits against Syngenta over its genetically modified corn seed, was filed in U.S. District Court for the Eastern District of Arkansas.

These lawsuits joined hundreds of other lawsuits filed by U.S. farmers since the fall against Syngenta, the Swiss developer and marketer of seeds and agricultural chemicals.

The suits claim that Syngenta caused losses of between $1 billion and $2.9 billion to U.S. corn farmers after it sold genetically modified or bioengineered corn seed that had not been approved for use by China, a huge and growing importer of U.S. corn and corn byproducts.

The seed in question is Agrisure Viptera, also known as MIR 162, which has been genetically modified to resist corn pests like earworms and cutworms. The U.S. Department of Agriculture approved the Viptera seed in 2010.

China began refusing shipments of American corn in November 2013 after it detected the GMO (genetically modified organism) trait, and the price of corn and corn byproducts dropped. Even farmers who did not grow the GMO corn experienced losses, the suits say.

Lawsuits have been filed in 20 states, representing 86 percent of the corn planted in the U.S. last year, according to plaintiffs’ lawyers.

China went on to approve Viptera in December, but plaintiffs’ lawyers say the development has little, if any, effect on their case. Scott Powell of Hare Wynn Newell & Newton of Birmingham, Alabama, is one of those lawyers.

China, with its rapidly expanding middle class, has “a voracious appetite for corn,” Powell said, and when it stopped buying U.S. corn, it found other vendors, like Brazil. And once a country finds a substitute vendor for a product, it rarely switches back.

Cargill, ADM Sue

Farmers weren’t the only ones alleged to have suffered. Agribusiness giants Cargill Inc. and Archer Daniels Midland Co. sued Syngenta late last year over the sale of the GMO corn before it had received import approval from China.

Cargill, a top U.S. grain exporter, filed suit in September alleging that it lost $90 million when China rejected corn shipments. “Unlike other seed companies, Syngenta has not practiced responsible stewardship by broadly commercializing a new product before receiving approval from a key export market like China,” Mark Stonacek, president of Cargill Grain & Oilseed Supply Chain North America, said in a company statement. “Syngenta also put the ability of U.S. agriculture to serve global markets at risk, costing both Cargill and the entire U.S. agricultural industry significant damages.”

Seed companies, farmers, grain handlers, exporters and others “have a shared responsibility to maintain and preserve market access when introducing new technology,” Cargill said.

In November, ADM, one of the world’s largest corn processors, also sued Syngenta, which reported sales of $15.1 billion in 2014. “Syngenta chose to sell a corn seed product with traits that were not approved in all major export markets, without undertaking reasonable stewardship practices to prevent the resulting crop from commingling with or otherwise tainting the rest of the U.S. corn supply,” an ADM spokeswoman said.

In response to the Cargill lawsuit, Syngenta said that it believed the lawsuit to be without merit and “strongly upholds the right of growers to have access to approved new technologies that can increase both their productivity and their profitability.” Syngenta maintained that it had been “fully transparent in commercializing the trait over the last four years.”

The farmers’ and grain handlers’ lawsuits were consolidated late last month in U.S. District Court in Kansas as a multidistrict litigation assigned to federal Judge John W. Lungstrum.

A team of four lawyers has been named to lead the litigation: Powell; Don Downing of Gray Ritter & Graham of St. Louis; William Chaney of Gray Reed & McGraw of Dallas; and Patrick Stueve of Stueve Siegel Hanson of Kansas City.

‘A Hobson’s Choice’

The lawsuit by Kenny Falwell and Eagle Lake Farms of Newport accuses Syngenta of violations of the RICO statute. Although approved by Congress in 1970 to fight organized crime, it’s been cited in other cases against corporations.

On Thursday, for example, more than 90 landowners and other royalty owners in Pennsylvania accused Chesapeake Energy Corp. and Williams Partners LP of violating RICO by conspiring to restrain trade and engaging in a scheme “to help Chesapeake solve financial problems associated with the massive amount of debt that it incurred in acquiring oil and gas leases at the expense of royalty interest owners.”

The Falwell suit says that trends against GMO products, particularly in regard to the growing Chinese market, threatened Syngenta’s financial and competitive health.

If farmers continued to balk at growing GMO corn, the suit says, “it would weaken Syngenta competitively, reversing its economic growth and momentum and potentially disabling it from recovering the approximately $200 million it had invested in Viptera’s development over a span of five to seven years.”

Therefore, the suit alleges, Syngenta “embarked on a plan to purposely undermine U.S. non-GMO corn growers and those resistant to growing Syngenta’s unapproved genetic corn traits.

“To that end, Defendants engaged in a scheme designed to inevitably taint and contaminate the U.S. Corn supply, effectively causing its economic vitality to be held hostage to MIR-162 trait GMO corn, knowing that the continuous marketing and sale of Syngenta’s MIR-162 trait corn seed would ultimately prejudice and disrupt the U.S. Corn export market and the U.S. Corn commodities market.”

Syngenta knew that it was “impossible” for farmers to keep Viptera corn separate from non-GMO corn, the suit says, and that the U.S. corn supply would inevitably become contaminated.

This situation, the suit alleges, would then present China and other nations importing from the U.S. with “a Hobson’s choice: reject U.S. corn tainted with MIR-162 genetic trait and take a chance on securing other viable trade partners, failing which that nation would risk lacking sufficient corn to feed its people and livestock, or, rather than accept such risk, feel compelled to accept delivery of U.S. Corn.”

There was another goal, according to the lawsuit: to force U.S. farmers to realize that resistance to GMO corn, including Syngenta’s, was “futile and perhaps even economically disadvantageous in the long term.”

This “scheme,” the suit alleges, was carried out by Syngenta and several of its subsidiaries, along with Syngenta CEO Michael Mack and David Morgan, at that time president of Syngenta Seeds Inc., and “a network of independent ‘Syngenta Seed Advisors’” and Syngenta dealers and distributors.

A “Syngenta GMO Corn Seed Enterprise” was formed that contaminated the U.S. corn supply with Viptera corn, the suit alleges. It alleges that the defendants engaged in mail fraud in the marketing of the GMO corn and wire fraud in the dissemination of “false and misleading information and material omissions in public conference calls, press releases, articles and statements published over the news wires and interviews.”

Asked to respond to the allegations of RICO violations, Syngenta spokesman Paul Minehart said:

“Syngenta believes that the lawsuits are without merit and strongly upholds the right of growers to have access to approved new technologies that can increase both their productivity and their profitability. The Agrisure Viptera trait (MIR162) was approved for cultivation in the U.S. in 2010. Syngenta commercialized the trait in full compliance with regulatory and legal requirements. Syngenta also obtained import approval from major corn importing countries. Syngenta has been fully transparent in commercializing the trait over the last four years.”

Powell, who represents other farmers in their pursuit of Syngenta, said he knew of the RICO allegations in the Falwell suit but declined to comment on whether they were likely to be included in the master consolidated complaint, which is being drafted. That complaint is due March 13.


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