Blowing the Whistle on Wrongdoings

Image Credit: © arahan – Fotolia.com

Editor’s Note: This is the second in a three-part account of a 2008-2009 nationwide food safety crisis.

Hugh Parnell Sr. founded Peanut Corporation of America (PCA), originally named Parnell’s Peanuts, in Gorman, Texas during the late 1970s. The company provided its products to bakeries and manufacturers of candy, ice cream, and snacks, and also directly to consumers. The company caught the eye of the FDA in 1990 when the agency found that PCA was distributing peanuts with unacceptable levels of aflatoxins—a potential risk to public health caused by mold that grows in nuts and seeds. Two years later, the American Candy Company sued PCA for lost inventory that included nuts because PCA falsely claimed that its product was free of aflatoxins.

In 2000, Hugh’s son, Stewart Parnell, who owned a peanut plant in Blakely, Ga., decided to purchase the Gorman facility and within three years of ownership, he successfully tripled PCA’s revenue. By 2005, Stewart Parnell was able to add facilities in Suffolk, Va. and Plainview, Texas. However, his success hit a roadblock in January 2006 when Nestlé completed an onsite audit of PCA’s Plainview plant, giving it a “Does Not Meet Standards” score on nearly all 40 inspection areas.

An Eyewitness in the Plainview Peanut Plant

Several months after it failed the audit, PCA hired Kenneth Kendrick to serve as its assistant plant manager at the Plainview plant.

“When I was working there, [PCA had] nothing that resembled a quality assurance program,” says Kendrick. “I came from a lab testing background in the meat industry. I thought there would be regular testing, like in the meat industry…”

Kendrick claims he immediately observed numerous problems in the plant, including rat infestations and roof leaks, both of which triggered his concern for feces in the product. According to Kendrick, “particularly with water leaking off a roof, bird feces can wash in and drip onto the peanuts.”

A second Nestlé audit was scheduled for July 2006, but Kendrick commented to his plant manager that there was no way Nestlé would certify PCA with all its issues. As a result, Danny Kilgore, operations manager from PCA’s facility in Georgia, flew out to the Plainview plant two days before Nestlé’s second audit to allegedly hide the problems.

“Kilgore, Parnell, and everyone else in the plant were frantically patching holes in the walls, hiding roof leaks, pumping water out of the basement, and cleaning out mice traps (so the pest control guy would have a lower count),” according to Kendrick. In addition, Kilgore had Kendrick rewrite the food safety and quality assurance policies as Kendrick recalls, “at the time, nobody at PCA knew any of the Salmonella standards as they applied to peanuts.”

PCA began recalling its products in January 2009, which were ingredients in more than 3,500 foods produced by numerous companies.

While the second audit resulted in notations of “Much Improvement,” the plant still did not pass Nestlé’s inspection. Kilgore suggested to Kendrick that, in lieu of a third audit, Nestlé might look at improvements made after the July 2006 audit and approve PCA as a supplier. According to Kendrick, Kilgore insinuated that “microwaving the test sponges used for monitoring dangerous pathogens might gain better results and if PCA gained Nestlé’s business, [Kendrick] might get a raise in pay.”

Nestlé never did business with PCA; however, Frito-Lay and Kellogg’s did purchase large amounts of peanuts from the company. These and other smaller companies decided to purchase products from PCA based upon inspections conducted by a third-party auditor that gave PCA the highest possible rating.

From an Eyewitness to a Whistleblower

By late 2006, Kendrick claims he sent numerous anonymous emails and letters to the Texas Department of State Health Services and to companies that purchased products from the Plainview plant, but he never received a response. Then, after only a few months on the job, Kendrick left his position with PCA because as he put it, “I knew it was a train wreck and something unethical and bad was about to happen.”