A CASE ON

“FOOD ADULTERATION OF PRAN”

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 ACKNOWLEDGEMENT

This report is a product of queries and involves many peoples’ considerable attention on it. We would
like to take the opportunity to thank those people without whom this task would have been rather very
difficult to complete.

First, we would be thankful to the Almighty. We also thank our course instructor of the course Business
Ethics, Dr. Mohammad Kamrul Ahsan who has guided us so kindly all the way through our semester.
His wise and caring guidance and clear direction made us to do this study perfectly.

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 INTRODUCTION

This case has been prepared because of the fulfillment of the course, Business Ethics and it was
requested by our honorable course instructor, Dr. Mohammad Kamrul Ahsan. The objective of the study
was to know about the application and effectiveness of ethical standards of business in the organizations
of Bangladesh. Throughout the time of preparing this case, we came to know about the actual scenario
of ethical applications in the organizations of this country.

We have prepared the case on one of most well-known and prestigious companies of Bangladesh, the
PRAN-RFL Group. The topic of the case is “Food Adulteration of PRAN”. As the topic suggests, it
reflects nothing but the charges and allegations that were put against one of the popular product of
PRAN, “PRAN Frooto”.

The case is prepared based on secondary data. The sources of the information were the leading daily
newspapers of Bangladesh and articles.

Food adulteration –definition

The case starts with the company overview of PRAN-RFL group and then proceeds to the origin of the
issue that it adultered its product illegally which was stated by the authorized food and health control
institutes of Bangladesh. Then the case highlights the major impacts that the issue had, both on
consumer and the company. Then it indicates the steps or actions taken by the brand to overcome the
charges and claims.

The findings that we obtained by preparing this case was how the very renowned company or brand can
fall short of ethical standards and how the very established brand can fall victim because of its ethical
issues. This study made us believe that ethics is important as well as much critical in every ascpects of
human life, including business.

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 “FOOD ADULTERATION OF PRAN”

Company Overview of PRAN-RFL:

PRAN (Programme for Rural Advancement Nationally), one of the most reputed conglomerates in
Bangladesh, was established in 1981 by retired Major General Amjad Khan Chowdhury. It started
mainly with Foundry business and gradually diversified to Light Engineering, PVC Fittings, Plastics,
Food and Beverage and Agro-Processing. PRAN Food and Beverage, a sister concern of PRAN-RFL
Group, produces a number of agro products under the banner of PRAN.

PRAN has become one of the largest food and beverage brands in Bangladesh. PRAN pioneered agro
business in Bangladesh. They provided farmers with guaranteed prices. It has its marketing and selling
network in more than 138 countries as of date.

PRAN established a subsidiary company in UAE in 2003. The company has also established production
factory in Tripura, India, after the Indian government lifted the ban on direct investment from
Bangladesh. PRAN’s exports had reached 10 billion taka value by 2016, the biggest markets for the
company was India, Saudi Arabia, UAE, Malaysia, and Oman. The same year the revenue for PRAN
exceeded 500 million USD. PRAN started exporting potatoes in March 2016. In April 2016, PRAN
started to export cassava, the first shipment, worth 3 million USD, was exported to New Zealand.
PRAN has 80 thousand direct employees and 200 thousand indirect employees. “PRAN” is currently
one of the most admired food & beverages brands among the millions of people of Bangladesh and
other 138 countries of the world where PRAN Products are regularly being exported.

All the products of PRAN are produced as per international standards maintaining highest level of
quality at every stages of its production process. PRAN is currently producing more than 400 food
products under 10 different categories i.e. Juices, Drinks, Mineral Water, Bakery, Carbonated
beverages, Snacks, Culinary, Confectionery, Biscuits & Dairy. The company has adopted ISO 9001 as
a guiding principle of its management system. The company is compliant to HACCP & certified with
HALAL which ensures that only the best quality products are reaches to the consumers table across the
Globe.

Issue- Food Adulteration:

In 2012, one popular brand of PRAN, “PRAN Frooto” faced complaints from BSTI (Bangladesh
Standards and Testing Institution) that PRAN juices have no fruit pulp that has put public health at risk.
It stated that, PRAN, was cheating people of Bangladesh and neighboring countries using sweet
pumpkin in the name of mango juice. These juices were made by mixing mango flavors with sweet
pumpkin using artificial scents. What is used in the name of mango pulp with sweet pumpkin has toxic
formalin associated with it.

Experts said, people were getting affected by various diseases due to eating these junk or fruit drinks.
The amount of acetic acid in the juice was 5-6% Juice and fruit drinks usually have to be below 1
percent. In the meantime, this named company was spreading huge campaigns and advertising in the
channels of Bangladesh and India.

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Impact on the consumers:

The proof of this adulteration was found in Bangladesh Standard and Testing Institute (BSTI)
examination of the Food Standards Control Institute of Bangladesh. It was said by experts that children
were at risk due to eating these adulterated juices. Children and kidney diseases experts said that such
drinking is harmful for the human body. These artificial drinks are also harmful for pregnant and old
people. They may also suffer kidney and liver diseases.

Experts further said that after entering formalin, the presence of methanol enzymes in the liver or liver
becomes first formaldehyde and later on formic acid. Immediately there are many diseases including
abdominal soreness, indigestion, diarrhea, ulcerative colitis. Even liver cancer can be caused. Due to
the consumption of fruits and other foods including formalin, the function of the lungs is waste,
sneezing, cough, shortness of breath, and asthma diseases. Cancer might be caused in the lungs and
other respiratory organs. Crippling baby's birth, headache, and eyes may cause irritation.

Public health institute director Dr. Subimal Singh Chowdhury in 2012, told 71 newsmen that, of the
seventy-two fruit juices from different places of the country were examined. Excessive acetic acid was
found in each of them.

Charges against PRAN:

The High Court issued the rule following a writ petition that claimed PRAN's fruit -strawberry, mango,
pineapple, apple, orange and litchi - drinks did not contain any traces of pure fruit. The rule also asked
the government to explain why its failure to ban production, marketing and sales of the products should
not be declared illegal. Advocate Manzill Murshid, president of Human Rights and Peace for
Bangladesh, filed the petition following a report published in a daily -- Amader Shomoy -- on October
23. The report claimed PRAN's fruit drinks do not contain pulp, and that the Bangladesh Standards and
Testing Institution (BSTI) has cancelled the licenses of PRAN's various fruit drinks. The HC bench of
Justice Naima Haider and Justice Muhammad Khurshid Alam Sarker came up with the rule following
a writ petition filed by Manzill Murshed.

The Daily Star also carried a report on October 18 after the BSTI annulled the fruit drink licences of
PRAN and six other firms. The standard body cancelled the licenses of PRAN's mango, orange, lemon,
strawberry, litchi, apple, pineapple and fruit cocktail drinks for not using the minimum 10 percent fruit
pulp, Md Nurul Islam, BSTI's deputy director for certification, told The Daily Star earlier.

Company’s comments against the allegations:

Director (Marketing) of PRAN Group, Kamruzzaman Kamal told reporters of Financial Express at the
briefing that the reports against their product were not true and they are protested it. He claimed that
the fruit juices do not have anything that could endanger public health.

Mr Kamal read the written speech on behalf of the company which expressed great concern over the
recent news on PRAN made juices claiming that apart from a financial loss, the reports on PRAN juices

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are seriously hampering image of both the company and the country as PRAN exports fruit juices to 88
nations. The paper said the company bought 50,000 tons of mango last season to make fruit pulps. A
total of 74,000 contracted farmers in the Northern Region supplied agro produces worth Tk. 5.0 billion
last year (2011), the paper said. The juices have been made of mango and other fruits available in
Bangladesh by fully maintaining the criterion of the Bangladesh Standardization and Testing Institute
(BSTI) and US Food and Drug Administration, Kamal claimed.

When asked on the recent rule of the High Court over PRAN made flavored drinks, Kamal told the
Financial Express that his company has 500 products and HC issued rule against eight products which
are fruit-flavored drinks not juices. He also said that PRAN has been maintaining maximum quality of
its products since its initiation in 1981 and thus it has been possible to export the juices to countries in
EU, Gulf, US and Africa.

Initiatives taken by the PRAN:

Though PRAN refused claim of food adulteration and took two apparently prominent initiatives, which
were in fact less than enough to get over the bad image created by the allegations.

The two initiatives taken by PRAN were:

1. The company announced BDT 10 lakh reward if anyone could prove that its juice items are
adulterated or do not contain any pulp.
2. They posted video in their official website of the DMD of PRAN Group titled ‘Have faith in
us’ where the DMD of PRAN group tried to defend their stance and also at the same time tried
to communicate the quality assurance of their production process.

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REFERENCES