Exclusive: Chris Lischewski offers a warning to seafood CEOs
Chris Lischewski is the former president and CEO of Bumble Bee Foods. Earlier this month, Lischewski was sentenced to 40 months in prison and given a USD 100,000 (EUR 88,000) fine after a jury found him guilty of conspiracy to fix the prices of canned tuna sold in the United States from 2011 to 2013.
SeafoodSource: Unless your testimony was misunderstood, you swore under oath that you were not part of any conspiracy to fix the prices of canned tuna while you led Bumble Bee. Do you stand by that statement? And if so, is that an indictment of the numerous individuals who swore under oath that you had been a leader in the purported conspiracy?
Lischewski: I did swear under oath that I would tell the truth, which is exactly what I did. Only two witnesses – [Walter Scott] Cameron and [Ken] Worsham – testified that I was a leader in the purported conspiracy. That testimony – given in return for a favorable sentencing recommendation by the government – was false. Shue Wing Chan of Chicken of the Sea testified that he had an unspoken "understanding" with me not to promote aggressively. But he admitted that the "understanding" existed only in his own mind and that I never told him that I shared it. As I testified at trial, whatever may have been in Chan's mind, I had no price-fixing "understanding" with him of any kind.
SeafoodSource: Why do you think the government chose you – and thus far, only you – to pursue criminal charges against?
Lischewski: I don't know and any answer I could give would be speculation. It's worth noting, though, that Chan, CEO of Chicken of the Sea, received amnesty (along with the company and all of its other employees) and StarKist had four different CEOs during the period covered by the indictment – so I suspect that left me as the most inviting target.
SeafoodSource: Can you explain what your main arguments will be in your appeal?
Lischewski: Given my pending appeal, I can’t answer this question right now other than saying a key part of our appeal will be to challenge the constitutionality of the Per Se rule under which I was prosecuted. The Per Se rule is a judge-created addition to the Sherman Antitrust Act that came into force in 1898 when price fixing was a misdemeanor with a maximum fine of USD 1,000 (EUR 890). Under the Per Se rule, any act of price-fixing is defined as unreasonable and the government only needs to show the existence of an agreement to obtain a conviction. They do not have to show that the price-fixing agreement was ever put into place, that it was effective or that there was any harm to consumers. We believe the Per Se rule violates the Fifth Amendment and Sixth Amendment of the U.S. Constitution and it should be up to the jury – not the court – to make the determination of what is unreasonable.
SeafoodSource: Are you concerned about your potential liability in future civil litigation?
Lischewski: How could I not be, although, to be honest, I am more concerned about the ongoing cost of funding my legal defense. There is a significant difference between criminal and civil litigation, as plaintiffs in civil litigation must prove financial damage. I believe this will be difficult to do, given the evidence that demonstrates that no U.S. customers were overcharged for their Bumble Bee canned tuna.
SeafoodSource: How do you feel about Bumble Bee’s bankruptcy and FCF’s purchase of the company?
Lischewski: I am disappointed about the bankruptcy, which was brought about by the plethora of civil lawsuits that were filed against Bumble Bee following the criminal guilty plea, a guilty plea that was required following the guilty pleas of former executives Cameron and Worsham. I believe Bumble Bee could have prevailed in the civil litigation, but their lawyers convinced them to settle and based on settlement costs, costs of legal representation, and unsupportive lenders, the company ended up with no other alternative than to file for bankruptcy.
As for FCF, FCF had been a long-time minority shareholder of Bumble Bee and is also the company’s largest supplier. They understand Bumble Bee’s business and I believe they will have a positive impact on the future. Bumble Bee has long been owned by private equity investors, which has impacted the company’s ability to make long-term investments. I believe FCF will have a longer investment horizon and will support a strategy that ensures ongoing growth and profitability for Bumble Bee.
SeafoodSource: Do you believe the government is likely to pursue future antitrust cases against other food companies, and specifically, against other seafood companies or sectors?
Lischewski: It has already started. The Department of Justice is now targeting the U.S. beef processing, poultry, and salmon industries for price-fixing. Four of the largest beef processors in the U.S., Tyson Foods, JBS SA, Cargill and National Beef / Marfrig, who are said to control more than 80 percent of the domestic beef processing industry, have recently been subpoenaed. In the poultry industry, Perdue Farms, Tyson Foods, Pilgrim’s Pride, Sanderson Farms, Peco Foods, Wayne Farms, Koch Foods, Mountaire Farms, and House of Raeford Farms have been in the news for price-fixing and two CEOs have recently been indicted. In salmon, Mowi and Scottish Sea Farms co-owners SalMar and Leroy have been sent subpoenas. If the low bar of the Per Se rule is allowed to be applied to all of these companies, they face the same challenges that the tuna industry has endured.
SeafoodSource: Do you think the seafood industry is too close-knit or works too collaboratively? It seems like even if there was no wrongdoing, the frequent communication between employees of the rival tuna companies gave the prosecutors ammunition for their case and may have raised questions for the jury.
Lischewski: I believe this is a valid concern. Seafood tends to be an incestuous business where people regularly move between companies and there is very little migration into seafood from other industries. Furthermore, executives seem to remain in the seafood industry for long periods of time, during which relationships with competitors form. While communicating with competitors about business, and even discussing prices (as long as there is no agreement to fix prices) is not illegal, it is something government prosecutors can effectively present as questionable behavior to a jury. Coupled with the prosecutor’s ability to mischaracterize phone calls and emails, this is a significant risk.
SeafoodSource: Is there anything you wish to communicate to the larger seafood industry? Perhaps a lesson you’ve learned from this experience or any word of caution?
Lischewski: The key message that I would leave, a message targeted to CEOs and senior executives, is that companies must implement strict compliance management processes that include training, monitoring, and enforcement. While Bumble Bee had a compliance function, we didn’t take this responsibility seriously enough. Had we executed a stricter compliance monitoring process, we would have uncovered the activities of Cameron and Worsham and would have taken immediate disciplinary action. This would have enabled us to avoid this entire legal debacle.
Historically, I always believed it was sufficient to provide training and discuss acceptable (and unacceptable) behavior. I trusted that Cameron and Worsham, two executives who worked with me for more than 15 years, would be honest and ethical in how they conducted their business activities. I was wrong and the trust I put into them has resulted in a guilty verdict against me for a crime I did not commit and a crime that had no victim – but a crime for which I will spend 40 months in prison.
Photo courtesy of Chris Lischewski