VOICES: Peanuts, profits and crime

By Phil Mattera

Our culture worships spunky smallbusinesses and entrepreneurship. Stewart Parnell epitomized that idealand was living the good life in Lynchburg, Virginia until last month,when his Peanut Corporation of America (PCA) was linked to one of thebiggest salmonella outbreaks--at least eight deaths and more than 500illnesses--ever to occur in the United States.

parnell21.jpgAccording to federal officials, PCA knowingly shipped contaminated peanuts as well as peanut butter and paste on numerous occasions, including 32 truckloadsmeant for the school lunch program. PCA also provided tainted rawmaterials for many large food processors, which have issued a cascadeof product recalls. PCA is now the subject of a criminal investigation,and this week Parnell (photo) was compelled to appear at aCongressional hearing, where he grim-facedly invoked the FifthAmendment and declined to answer questions.

He had reason to look grim. The House Energy and Commerce Committee released several e-mail messages sent by Parnell, including onein which he told his plant manager to make shipments (his exact wordswere "let's turn them loose") despite some test results showingevidence of salmonella. In another he complained that those problematic results were "costing us huge $$$$$."

Thiswas also a week when the chief executives of the country's largestfinancial institutions were called before Congress and pelted withquestions about bonuses paid out amid the massive federal bailout ofthe industry. But these days everyone expects executives of largecorporations to be reprobates.

The Parnell situation is morechilling. He is the head of a privately held company with annualrevenues of only about $25 million, which makes it a small business bycontemporary standards. PCA had almost no public profile until lastmonth, and Parnell's only previous time in the national spotlight(though a much dimmer one) was in 2005, when Bush AdministrationAgriculture Secretary Mike Johanns appointed him to the Peanut Standards Board. (Parnell was just oustedfrom the panel by the USDA, which also announced that it is seeking todebar PCA from doing business with the federal government.)

Accordingto the Atlanta Journal-Constitution, PCA was built by Parnell's father,Hugh Parnell, as an outgrowth of his ice cream sandwich business. Thecompany later got caught up in the takeover wave that swept through thesmall world of peanut processing. The Journal-Constitution reportsthat PCA was sold in 1995 to Morven Partners, the vehicle set up bybillionaire investor John Kluge to take over various nut companies suchas Jimbo's Jumbos.

Jimbo's, by the way, was mentionedin one of the e-mails released this week by the House. In it Parnellsaid: "We need to find out somehow what our competition (JIMBOS) isdoing [about salmonella] and at the very least mimic their policy."

Stewart Parnell and his brother Hugh Brian Parnell, the Journal-Constitution goes on to report, became management consultants for Morven until the late 1990s, when Stewart repurchased PCA.

Hugh Brian Parnell told reportersthat work and family occupy his brother Stewart's time. "He doesn'tdrink, smoke or socialize," Huge was quoted as saying. "He's a familyman. You never see him without a grandchild around." The AssociatedPress quotesa neighbor of Stewart's as saying: "He's always been an upstanding,generous person and a pillar of the community." Parnell and PCA didn'thave a much of a presence in the business community in Lynchburg, wherethe company has its modest headquarters. "This episode is the firsttime I've heard of them," the president of the city's chamber ofcommerce was quoted as saying.

peanut-butter-breakfast-lg.jpgEven less is known aboutParnell's associate David Royster III, who reportedly financed theacquisitions that allowed PCA to reach its current size. Royster is oneof the younger members of a family that operates a variety ofapparently respectable businesses in Shelby, North Carolina.

Theapparent fact that supposed pillars of the community can engage inoutrageously reckless business practices shows that there is sometimesa fine line between the aggressive pursuit of profit and behavior thatcan legitimately be called evil. Those who would venerateentrepreneurship should keep in mind that it can also have a dark side.

Philip Mattera is director of the Corporate Research Project at Good Jobs First. This article originally appreared in Dirt Diggers Digest.