Its comments came as the company agreed to pay $575,000 to CBP in a settlement after an investigation which found that it had “imported at least 20 shipments of stevia powder and derivatives produced from stevia leaves that were processed in China with prison labor, in violation of US law.”
PureCircle - which operates facilities in China and Malaysia - was recently acquired by Ingredion following a period of extreme turbulence, which prompted the rapid departure of key executives amid a probe into accounting irregularities.
The CBP investigation relates to shipments made between 2014 and 2016, and first became public in June 2016, when PureCircle told investors that some shipments from China (where some of its stevia products are processed) had been detained in the US “based on inaccurate allegations that they contained stevia that was produced using forced labor.”
The move followed a May 2016 Withhold Release Order issued by CBP against Inner Mongolia Hengzheng Group Baoanzhao Agricultural and Trade LLC.
PureCircle supplied 'substantial, detailed documentation' to CBP officials
At the time, PureCircle claimed that there had been a misunderstanding, stating that, “We have confirmed that our product is not produced by the Inner Mongolia Hengzheng Group Baoanzhao Agricultural and Trade LLC, including the two shipments currently detained by CBP.”
In a statement issued in early January 2017, it claimed that "the CBP has confirmed that PureCircle’s shipments are compliant with the law and have been released."
In a follow-up statement, it said: “PureCircle was removed from WRO and shipments were released after CBP review of substantial, detailed documentation from PureCircle, including independent, third-party verifications.”*
In a statement issued this morning, PureCircle added: "In January 2017, after reviewing extensive evidence provided by PureCircle, CBP removed PureCircle as a named entity from the Withhold Release Order, and PureCircle’s importation of stevia into the United States was allowed to resume without further interruption to date. While the Withhold Release Order remains in effect today, it does not apply to PureCircle or its products since this January 2017 determination."
The 20 shipments at issue represented a fraction of the "hundreds" of shipments entering the US between 2014 and 2016, it added.
CBP: 'Pure Circle U.S.A., Inc. imported at least 20 shipments of stevia powder and derivatives produced from stevia leaves that were processed in China with prison labor'
In a press release issued yesterday (August 13, 2020), however, CBP said it was collecting $575,000 from PureCircle, which it claimed had violated US laws against importing goods produced using forced labor.
It added: “The action against PureCircle stems from an investigation into stevia produced in China by Inner Mongolia Hengzheng Group Baoanzhao Agricultural and Trade LLC that CBP initiated after receiving an allegation from an NGO. That investigation led CBP to issue a Withhold Release Order (WRO) in May 2016. The WRO remains in effect.
“During the subsequent investigation into PureCircle’s importations of stevia from Baoanzhao, CBP obtained evidence establishing that PureCircle U.S.A., Inc. had imported at least 20 shipments of stevia powder and derivatives produced from stevia leaves that were processed in China with prison labor in violation of U.S. law, and issued a penalty against the importer.”
It added: “CBP has collected $575,000 in penalties following the closure of a civil enforcement action against the importer Pure Circle U.S.A., Inc. This action is the first penalty that CBP has issued for imports made with forced labor since the passage of the Trade Facilitation and Trade Enforcement Act in 2015, and demonstrates another enforcement tool in CBP’s ongoing effort to prevent goods made with forced labor from entering the United States.”
A spokesman told FoodNavigator-USA: "The removal of PureCircle LLC from the Withhold Release Order in 2017 had no effect on imports prior to 2016, which were subject to the penalty. The Withhold Release Order on Inner Mongolia Hengzheng Group Baoanzhao Agricultural and Trade LLC remains active."
PureCircle: We were cleared by CBP in 2017
PureCircle said yesterday that it "vigorously contested the claims," made in the 2016 WRO, although it did not clarify whether it had ever dealt with Inner Mongolia Hengzheng Group Baoanzhao Agricultural and Trade LLC.
“We have strongly refuted and provided substantial evidence disproving the CBP’s 2016 claim that forced labor was used to produce the stevia we source from China," said former PureCircle CEO and current spokesperson Peter Lai.
"When this matter was rigorously investigated in 2017, we were cleared by CBP, and allowed to import product without any future restrictions.”
PureCircle 'did not admit any liability as part of the settlement'
In a longer statement issued this morning, PureCircle added: “Rather than engage in extensive litigation requiring travel to China during the COVID-19 pandemic to challenge the penalty notices, PureCircle instead settled the matter with the US government for less than 7% of the amount sought by CBP in penalties.
"PureCircle did not admit any liability as part of the settlement, and PureCircle’s investigation has never found evidence of PureCircle having purchased stevia produced by forced labor at any point in time."
*At the time, PureCircle told FoodNavigator-USA that in response to questions from CBP, it had provided documentation including an audit report from Bureau Veritas (a third party inspection service) which found no evidence of force, bonded or involuntary prison labor; proper procedure of assessing suppliers; and proper traceability systems to trace each batch of extract produced to leaf supplier.
It also supplied a SEDEX Members Ethical Trade Audit which it claimed found no evidence of forced, bonded or involuntary prison labor; and conformance with regulations regarding employment freely chosen, child labor, and regular employment.
“As part of its trade enforcement responsibilities, CBP will hold companies accountable for importing goods produced with forced labor. Companies have a responsibility to proactively monitor their supply chains to mitigate the risk of importing goods into the United States that were produced with forced labor.”
Brenda Smith, executive assistant commissioner, CBP’s Office of Trade
In early April 2020, then-CEO Peter Lai Hock Meng noted that the stevia ingredients business had become more competitive in recent years, denting prices for Reb A, the most prevalent sweet-tasting glycoside in the stevia leaf.
However, he said, PureCircle anticipated this trend and has been “aggressively shifting the product portfolio, including flavor solutions and blends, to taste-advantaged, exclusive ingredients based on [the better-tasting, but more scarce glycoside] Reb M.
“In addition, the company exclusively developed a new stevia variety making this product more scalable, efficient and cost effective for customers. These advances continue to be protected by the company's expansive patent portfolio and intellectual property library.”
As for COVID-19 impacts, he said, PureCircle’s refinery in Malaysia restarted production in early April after a brief closure beginning March 18, while production at its stevia extraction plant in China was running as usual.