Commerce Commission investigating free-range egg supplier

A West Auckland egg supplier is being investigated by the Commerce Commission. PHOTO / JOHN STONE

A West Auckland egg supplier is being investigated by the Commerce Commission for allegedly putting caged eggs in cartons labelled as free-range.

The Newsroom website has reported that Blackwater Trading company, which produces free-range eggs at its Gold Chick farm in Henderson Valley, is being investigated after a former employee laid a complaint.

The investigation comes after the industry came under fire in March last year when it was revealed that millions of caged eggs had been sold as free-range in Countdown supermarkets.

An investigation began late last year after the former Gold Chick employee claimed that large quantities of eggs were being driven up from a caged-egg producer in Waikato and then repacked and sold as free range.

The former employee, Feihing (Johnny) Hu, is believed to have told investigators that caged eggs were put into "Farmer Brown" free-range cartons.

Farmer Brown is controlled by Mainland Poultry, which sources eggs from farms around the country as well as its own hens.

Mainland was caught up in last year's scandal when its Woodlands brand was withdrawn from supermarket shelves after it was found that caged eggs were being sold as free-range.

The Serious Fraud Office investigated for nearly 12 months but recently said there was not enough evidence to lay charges, Newsroom reported.

A former employee of Gold Chick told investigators that caged eggs were put into 'Farmer Brown' free-range cartons. Photo / Doug Sherring

But an investigation by Newsroom found the scandal had been running for years and the sums involved topped $7 million.

Blackwater Trading is owned by Xue (Frank) Chen, who late last year was charged with perverting the course of justice.

He is accused of threatening Hu to have him withdraw his complaint to the Commerce Commission, Newsroom reported.

He is due to reappear in the Waitakere District Court next month.

Chen said he was innocent of any wrongdoing, but confirmed that between 10,000-15,000 caged eggs a week were driven up from a farm in the Waikato in one of his trucks.

According to Chen, he sells the caged eggs to bakeries and dairies, "because all these people want cheap eggs".

Hamish Sutherland, general manager of Zeagold, a subsidiary of Mainland that buys eggs for the Farmer Brown brand, told Newsroom the company was assisting the Commerce Commission with its investigation.

"We have supplied all the information that the Commission has asked for. We believed every egg we got from him [Chen] was free-range and came from that farm."

Four per cent of Farmer Brown's free-range eggs came from Chen's operation last year, Newsroom reported.

Sutherland told Newsroom that Zeagold had cancelled Gold Chick's contract in October, before it became aware of the Commerce Commission's investigation.

"We terminated the contract for reasons that were completely unrelated to the eggs themselves. Mr Chen had defaulted in payments to the packaging supplier and was unable to meet the terms of our agreement."

He said it was distressing that Zeagold and Mainland were having to defend their reputations for the second time in 12 months.

"We are victims twice over in this situation, once by having the wrong and cheaper product sold to us under false pretences, and secondly in terms of potential damage to our brand reputation. The Commerce Commission is not investigating our company or brands as being party to any alleged wrongdoing."

Commerce Commission's investigators formally interviewed Chen last month and are now gathering information from Gold Chicks customers and suppliers.