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USDA determines 'inappropriate conduct' by American Egg Board

AMS recommends that AEB implement corrective actions immediately.

The U.S. Department of Agriculture’s Agricultural Marketing Service (AMS) has concluded an investigation into allegations that the American Egg Board (AEB) violated laws by using public funds to prevent a company from selling its eggless mayonnaise alternative “Just Mayo.”

While the AMS Review Report did not find evidence to substantiate all nine allegations made by Joshua Tetrick, chief executive officer of Hampton Creek Inc., AMS said it did reveal several instances of “inappropriate conduct” by AEB staff and board members.

The results of the AMS Review Report were analyzed in coordination with USDA’s Office of General Counsel to determine if any violations of the statute or regulations governing the AEB occurred.

AMS deemed inappropriate conduct as inappropriate emails between AEB staff members and a board member, inappropriate emails by AEB's former CEO, focusing on a specific company and product by AEB and failing to adhere to the USDA Guidelines for AMS Oversight of Commodity Research & Promotion Programs ("AMS Guidelines"). At the time AMS C&A initiated the review, all of the inappropriate activities had stopped. Also, the CEO and president of AEB retired on Sept. 30, 2015.

AMS said the Egg Research & Consumer Information Act of 1974 provides limited authority for USDA to address the types of inappropriate conduct evidenced in the AMS Review Report. However, it did recommend that corrective actions be immediately implemented, including:

• Require AEB staff and board members to complete additional training regarding the AMS Guidelines on acceptable research and promotion activities and business operations;

• Require AEB staff to complete further training regarding the ethical principles of holding a public trust position with USDA’s Research & Promotion Board;

• Require annual management reviews of AEB by the AMS Compliance & Analysis Program's Compliance Branch for at least three years from issuance of this memorandum;

• Conduct a program evaluation of the Livestock, Poultry & Seed Programs’ Research & Promotion oversight activities to ensure adherence with applicable laws and USDA policies and procedures, and

• Initiate rule-making to standardize all Research & Promotion Order provisions regarding the removal of Research & Promotion board and staff members when necessary.

“Although Mr. Tetrick’s allegations did not extend to AMS’s oversight of AEB, AMS took this opportunity to thoroughly review our oversight procedures for both AEB and all other Research & Promotion programs,” the agency said.

To further strengthen AMS’s oversight of AEB, as well as all other Research & Promotion programs, the following actions were recommended to be immediately undertaken:

• Provide all AMS Research & Promotion program staff with additional training in areas that include:

o Reviewing budget and financial activities of the boards;

o Documenting agency communications with board staff;

o Applying the AMS Guidelines and program-specific authorizing statutes, and

o Reviewing what constitutes and what does not constitute influencing government policy.

• Enhance the AMS Guidelines by developing and implementing a standardized new board member orientation to include consistent information on areas such as board member responsibilities, oversight functions and proper use of checkoff funds.

• Revise the AMS Guidelines to include requirements for CEO contracts.

• Evaluate AMS’s consistency in oversight of all Research & Promotion programs.

• Provide additional information to Research & Promotion staff members, as appropriate.

Hampton Creek initially obtained the emails under the Freedom of Information Act (FOIA); they revealed email exchanges in which former AEB CEO Joanne Ivy sent messages calling the start-up “a crisis and a major threat.” The conversations began prior to Hampton Creek launching the product and also included a discussion about whether to call Whole Foods about keeping the product from being sold.

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