Bloomberg News

Wal-Mart Reassigns China Manager Same Week as Donkey-Meat Recall

January 08, 2014

Wal-Mart Store

Signage for Wal-Mart Stores Inc. is displayed at one of the company's stores in the Luohu district of Shenzhen. Photographer: Brent Lewin/Bloomberg

The Wal-Mart Stores Inc. (WMT:US) executive who oversaw food safety in China was reassigned the same week the company announced fox DNA was found in meat sold as donkey in stores there.

Rob Chester, who had been the chief compliance officer for Wal-Mart’s China operations, will oversee store-level compliance in the U.S., according to an internal memo reviewed by Bloomberg News. The Jan. 3 announcement was made five days after Chinese regulators flagged the donkey-meat issue and a day after Wal-Mart publicly acknowledged it.

Chester’s transfer was a promotion that had been in the works for months and was unrelated to any specific issues in China, David Tovar, a Wal-Mart spokesman, said in a telephone interview. The fact that the announcement came days after the donkey meat recall was coincidental, he said.

The world’s largest retailer said last week that it withdrew all products from a local vendor after fox DNA was found in meat samples that had been tested. Wal-Mart said it will begin its own DNA testing of meat it sells in China and compensate customers who bought the tainted meat. Donkey is considered a delicacy in China.

In a nation where food scares are common, Wal-Mart is trying to lure customers with a promise that it sells only high-quality products. Last year, the chain said it would invest about $16.5 million over three years to upgrade food safety in China by adding a mobile food-inspection program and increasing supplier training.

In the memo to employees, Greg Foran, chief executive officer of Wal-Mart China, said Paul Gallemore, currently chief compliance officer of the company’s India operations, will replace Chester in China.

Public Face

Chester didn’t respond to e-mailed requests for comment.

In China, he had been the public face of Wal-Mart’s food-safety efforts.

“As a global retail company, Walmart knows that we share social responsibility for public health,” he said after Wal-Mart won a food safety award in 2012, according to Wal-Mart’s China website. “Integrity and compliance are always Walmart’s top priority. We try to find ways to improve standard of store food safety and supply chain management to guarantee our commitment of food safety and public health to customers.”

On Jan. 6, Chinese regulators said the donkey contamination stemmed from Wal-Mart’s failure to properly inspect products purchased in China, according to the state-owned radio broadcaster.

China has vowed to crack down on food-safety violations as contamination of a range of companies’ products from baby formula to mutton has sparked consumer outrage. Shanghai police last year busted a ring selling fox and mink meat as mutton, leading the government to order local authorities to tighten scrutiny of the production and sale of meat products.

Pork Arrests

In 2011, police arrested Wal-Mart workers in the southwestern city of Chongqing amid a probe of allegations the retailer mislabeled ordinary pork as organic. The employees were later released. The incident forced the company to close its stores in the city for about two weeks and pay fines.

The Bentonville, Arkansas-based retailer is closing less profitable stores and revamping business units in China amid increasing competition from regional rivals Sun Art Retail Group Ltd. (6808) and China Resources Enterprise Ltd. (291) Wal-Mart also has been battling setbacks in emerging markets such as India, where last year it ended a six-year partnership with billionaire Sunil Mittal.

To contact the reporter on this story: Renee Dudley in New York at rdudley6@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net


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