Four U.S. executives charged over tainted Chinese toothpaste

March 7th, 2008

Criminal charges have been filed against four executives at two American companies who imported toothpaste from China that contained a poison used in antifreeze, the city attorney in Los Angeles said in a statement.

The chemical, diethylene glycol, which is banned from certain ingestible items in the United States, was discovered in almost a million tubes of toothpaste in May and led to recalls in 34 countries.

The chemical, commonly used in antifreeze and as a solvent, can lead to kidney damage or liver disease.

The toothpaste ended up being distributed in the United States in prisons, luxury hotels, hospitals and discount stores.

It was one of the earliest global alerts to broader manufacturing problems in China that allowed scores of tainted products, including toys, childrens jewelry and pet food to end up on store shelves. The chemical in the toothpaste was used instead of the more expensive chemical glycerin.

The Los Angeles city attorney, Rocky Delgadillo, working with the Food and Drug Administration, on Thursday filed a criminal complaint against two Los Angeles-based importers, Vernon Sales and Selective Imports.

At Selective, Frahad Nazarian, the president, and Yones Ghermezi, the vice president, were charged with two counts of receiving, selling and delivering the tainted products.

At Vernon Sales, Kamyab Toofer, the president, and Pejman Mossayi, the vice president, were charged with 14 counts of receiving, selling and delivering an adulterated drug.

The case is the first instance of criminal charges being filed in the United States against any party in the toothpaste scare and comes after a lawsuit filed in Missouri against an American company that had imported tainted ingredients used in pet food.

“This is just going to keep happening every day,” said Richard Cellini, vice president of Integrity Interactive, a consulting firm in Waltham, Massachusetts.

“Its becoming clear that law enforcement isnt afraid to act.”

The executives are accused of receiving, selling and distributing Cooldent-branded toothpaste containing diethylene glycol.

In May, after federal health officials discovered that tainted Chinese toothpaste had entered the United States, they warned that it would be found largely in discount stores. As it turned out, nearly one million tubes turned up in hospitals, prisons and elsewhere.

At the time, officials of the FDA said that even small amounts of the ingredient had a “low but meaningful risk of toxicity and injury” for children and people with kidney or liver disease.

Much of the tainted toothpaste entered the United States through the port of Long Beach, California.

Selective Imports sold about 78,000 tubes of the toothpaste from December 2005 to May 2007, according to the case.

There have been no deaths reported from the use of the toothpaste made in China.

However, Panamanian investigators have concluded that 174 people were poisoned - and at least 115 died - after using cold medicine imported from China that contained the same chemical - diethylene glycol.

Vernon Sales distributed the toothpaste to more businesses than Selective Imports during the time frame of the city attorneys investigation, a spokesman for the city attorney said.

The executives charged in the case did not return calls for comment.

But Ghermezi of Selective Imports told The Associated Press on Thursday that he did not have “any intention of hurting people” and had not known the ingredients of the toothpaste.

Four U.S. executives charged over tainted Chinese toothpaste

March 7th, 2008

Criminal charges have been filed against four executives at two American companies who imported toothpaste from China that contained a poison used in antifreeze, the city attorney in Los Angeles said in a statement.

The chemical, diethylene glycol, which is banned from certain ingestible items in the United States, was discovered in almost a million tubes of toothpaste in May and led to recalls in 34 countries.

The chemical, commonly used in antifreeze and as a solvent, can lead to kidney damage or liver disease.

The toothpaste ended up being distributed in the United States in prisons, luxury hotels, hospitals and discount stores.

It was one of the earliest global alerts to broader manufacturing problems in China that allowed scores of tainted products, including toys, childrens jewelry and pet food to end up on store shelves. The chemical in the toothpaste was used instead of the more expensive chemical glycerin.

The Los Angeles city attorney, Rocky Delgadillo, working with the Food and Drug Administration, on Thursday filed a criminal complaint against two Los Angeles-based importers, Vernon Sales and Selective Imports.

At Selective, Frahad Nazarian, the president, and Yones Ghermezi, the vice president, were charged with two counts of receiving, selling and delivering the tainted products.

At Vernon Sales, Kamyab Toofer, the president, and Pejman Mossayi, the vice president, were charged with 14 counts of receiving, selling and delivering an adulterated drug.

The case is the first instance of criminal charges being filed in the United States against any party in the toothpaste scare and comes after a lawsuit filed in Missouri against an American company that had imported tainted ingredients used in pet food.

“This is just going to keep happening every day,” said Richard Cellini, vice president of Integrity Interactive, a consulting firm in Waltham, Massachusetts.

“Its becoming clear that law enforcement isnt afraid to act.”

The executives are accused of receiving, selling and distributing Cooldent-branded toothpaste containing diethylene glycol.

In May, after federal health officials discovered that tainted Chinese toothpaste had entered the United States, they warned that it would be found largely in discount stores. As it turned out, nearly one million tubes turned up in hospitals, prisons and elsewhere.

At the time, officials of the FDA said that even small amounts of the ingredient had a “low but meaningful risk of toxicity and injury” for children and people with kidney or liver disease.

Much of the tainted toothpaste entered the United States through the port of Long Beach, California.

Selective Imports sold about 78,000 tubes of the toothpaste from December 2005 to May 2007, according to the case.

There have been no deaths reported from the use of the toothpaste made in China.

However, Panamanian investigators have concluded that 174 people were poisoned - and at least 115 died - after using cold medicine imported from China that contained the same chemical - diethylene glycol.

Vernon Sales distributed the toothpaste to more businesses than Selective Imports during the time frame of the city attorneys investigation, a spokesman for the city attorney said.

The executives charged in the case did not return calls for comment.

But Ghermezi of Selective Imports told The Associated Press on Thursday that he did not have “any intention of hurting people” and had not known the ingredients of the toothpaste.

Japan names its nominee for central bank chief

March 7th, 2008

TOKYO: The Japanese government on Friday nominated a new chief to lead the nations central bank and steer the worlds second-largest economy through a global credit crisis. But the opposition voiced concerns about the nominees close government ties, raising the risk of a political showdown over the crucial post.

The political wrangling over the nomination of Toshiro Muto - currently a deputy central bank governor - is denting the governments credibility and raising concern about a policy vacuum at a time that stocks are sliding and the economy is slowing. The current governor of the central bank, Toshihiko Fukui, is set to retire in less than two weeks.

The nomination came as the central bank, in Fukuis last scheduled review, left interest rates unchanged at 0.5 percent as widely expected and downgraded its outlook for the Japanese economy.

Muto, 64, was long seen as the governments favored candidate. He was also the pick of financial markets, despite a risk that the opposition, led by the Democratic Party, may veto him.

“There is a 50-50 chance of the Muto nomination going through,” said Masamichi Adachi, a senior economist at JPMorgan Securities.

“Its hard for one to predict whether it can or not, as it is now totally up to the political situation within the Democratic Party.”

Opposition parties can block Muto because they control the Parliaments upper house, which must approve the appointment.

The secretary general of the Democratic Party, Yukio Hatoyama, said his party would set its stance on the nominees on Tuesday and seek a vote on Wednesday, two days earlier than the government had proposed.

If he clears the political hurdle, Muto will take charge of interest rates at a time when Japans growth is stumbling, thanks to the credit crunch that has raised fears of a U.S. recession.

The Bank of Japan, in a monthly outlook report, acknowledged that growth was slowing due to a domestic housing slump and high prices for oil and other raw materials.

“There are many downside risks for Japans economy as well as upside risks,” Fukui said. “We need to guide monetary policy so as not to put Japans economy in dire straits.”

Some economists say Japan, whose economy is second only to that of the United States in size, may already be in recession and the central bank may need to cut its already very low interest rates this year.

Muto is less hawkish on fighting inflation than Fukui, some analysts say, which suggests that he might be more willing to cut rates, although he has voted with his boss at every review since joining the Bank of Japans board five years ago.

Resistance to Muto centers on concerns that he was previously a vice finance minister, a senior bureaucratic position in the administration.

Some opposition lawmakers say appointing such a person would undermine the central banks independence. Economists argue that only fully independent central banks are successful in keeping inflation low and growth high.

“We have been saying at informal meetings that it would be hard to accept Muto if he is nominated,” Kenji Yamaoka, the parliamentary affairs chief of the main opposition Democratic Party, said.

While markets have focused on recession fears in the United States and a sliding dollar, traders say months of political paralysis on a range of issues, including the central bank succession, have weighed on Japanese stocks.

“To look at this on the bright side, a candidate has been put forward who seems to be an entirely reasonable choice,” said Ken Masuda, a senior equities dealer at Shinko Securities. “But he is not the person who is going to drastically change Japan.”

But, he said, “the big worry here was that they wouldnt be able to decide on someone, and that would lead to further selling” of stocks.

The government put forward Masaaki Shirakawa, a former central bank official, and Takatoshi Ito, an academic, as deputy governors.

“Professor Ito has been pretty critical of the BOJ and has been a proponent of inflation targeting, writing a book on the topic,” said a Lehman Brothers economist, Hiroshi Shiraishi. “So it will be interesting how he functions in the BOJ.”

The nominations will be considered by the Parliament next week, and ministers have called for an end to the political row.

“We cannot allow any policy vacuum with the BOJ governor at a time when global economic conditions are unstable,” Finance Minister Fukushiro Nukaga said on Friday.

If a replacement was not found by Fukuis retirement date of March 19, a temporary governor would step in. Analysts said it was unlikely that a stopgap governor would make long-term decisions.