Details emerge in egg case

Thursday, February 16, 2012

by BETTER FARMING STAFF

If one believes a self-described whistleblower suing his former employer for more than $25 million, corruption is rampant in Ontario’s egg industry and consumers are victims of price gouging, collusion and unfit eggs.

The province’s largest processors and its egg marketing board, contend they are victims of a malicious campaign. Despite the whistleblower’s extraordinary efforts over a period of more than three years to drag a wide variety of government agencies into the dispute, the only sign of legal sanction is a contempt of court decision against the whistle blower and that decision is under appeal.

The whistleblower, Norman Bourdeau, London, recently filed more than 1,200 pages of documents with the Ontario Court of Appeal in Toronto. The documents paint Ontario’s supply-managed egg industry as little more than a puppet for L.H. Gray and Burnbrae Farms, the country’s two largest egg graders and marketers.

David Williams, L.H. Gray's lawyer, calls the allegations “nonsense.” Family-owned L.H. Gray has been in business for more than 50 years, and deals with a “prestige A” customer list including Loblaw Companies Limited and Wal-Mart Canada.

“It has done good business. It has good business ethics,” Williams says. “There has been no conspiracy.”

Because of the company's size, inspectors are on site “mostly every day” inspecting their processes. “Who else's business undergoes that kind of scrutiny?” Williams asks.

Bourdeau has provided alleged email transcripts between various L.H. Gray staff and others involved in the provincial egg industry.

Also included are purported grading records and a submission that Bourdeau made last year to the Ontario Farm Products Marketing Commission. (See related story below)

In that submission Bourdeau, a former LH Gray IT manager, claims his former employer illegally sold about $150 million worth of cracked eggs as Grade A. Bourdeau says the eggs were sold to retail, institutional and food service companies.

Bourdeau claims this alleged misrepresentation was condoned by Egg Farmers of Ontario, the province’s egg marketing board.

Bourdeau claims Gray made false reports to Egg Farmers and shared the proceeds of “fraudulent profit” with selected producers, including some with ties to Egg Farmers’ board and administration.

Bourdeau has submitted unauthenticated email transcriptions including:

• A Feb. 9, 2009 exchange between L.H. Gray vice president of operations Scott Brookshaw and Bill Gray, president. In the alleged exchange, Brookshaw states: “I wouldn’t be able to guess at this as it (is) hard to predict these things when you have been shorting the market like we have.”
• Another email on Aug. 28 2009 allegedly from Gray to L.H. Gray employee Mike Walsh appears to reveal a conspiracy to fix egg prices. It states: “I think it is time to tell BBF & N/O (Burnbrae Farms & Quebec egg grader Nutri-Oeuf) that either Monkland (egg grading station in eastern Ontario) comes up or we go down. Which way would you like it & give them 48 hours to decide? Or, just lower our prices to all our large customers tie them up & see what happens.”

Joe Hudson, CEO of Burnbrae Farms, says he was not involved in any negotiations to pressure Monkland grading station to change its prices.

Hudson says that it is “not a normal thing” in the industry for his company to approach L.H. Gray to contact to support price increases in eggs. “That's not a practice in the industry.”

“I don't think we want to carry on any longer with the questioning,” he says. “I don't have a lot of answers for you. The main answer on this thing is there is a lot of questions about egg grading, so on, so forth, and if there's information on gradings, CFIA (Canadian Food Inspection Agency) are the people who set rules and we go by their rules.”

Geoff Spurr, lawyer for Egg Farmers and its general manager Harry Pelissero, declined to comment on the material Bourdeau filed to support his appeal explaining that he didn't know which, if any, material was still protected by the other courts' sealing orders. BF