How exporter bypassed Sudan 1 ban

The ploy that allowed an Indian businessman to bypass an export ban on contaminated chilli powder can be revealed today.

The Evening Standard has learned how Jagdish Gautam went to extraordinary lengths to sell the spice even after his licence was revoked because batches were found to contain Sudan 1, the banned red dye which can lead to an increased risk of cancer. Its presence in British products has sparked the country's biggest ever food recall. British and Indian authorities believe 51-year-old Mr Gautam was responsible for allowing Sudan 1 into his products. He denies the allegations and says he is a scapegoat.

His licence to export chilli was taken away by the Indian Spice Board in May 2003, after Mumbaibased Gautam Export Corporation and Patons Exports - both run by Mr Gautam and his associates - were found to be selling chilli powder tainted by the industrial chemical. But

Mr Gautam continued trading. Directors falsified documents to set up a new firm, SG Spice and Seed Trading, with their wives holding 80 per cent of the shares to camouflage its identity.

The new company applied for permission to export 80 tonnes of spices. Its identity was exposed six months later, by which time, it is believed, many batches had left India for use by food manufacturers. It was not until December 2003 that the licences of SG Spice and Seed were also suspended.

The operation is likely to have been highly profitable. Adding ?25 of dye to turn naturally-brown chilli powder a lustrous red can double its value from ?250 a ton to more than ?500 a ton. At the height of trading Mr Gautam was sending 25 containers, each carrying 18 tons of spices, to Europe per month: 5,400 tons a year. This has fallen by 75 per cent since he was banned from exporting chilli.

Yesterday Mr Gautam said: "I do not know where the contaminated chilli powder came from. But who can say it came from me? I am being made the scapegoat and have done nothing wrong. The authorities have targeted me and it is unfair. I have seen my business suffer but I have not run away and I am still trading."

He said he ran laboratory checks on his chilli powder and suggested others were to blame: "People who then use the powder should do further checks. We were checking for things like Sudan 1. Perhaps the man who crushed and milled the chilli powder knows more."

Mr Gautam can still export spices such as turmeric, sesame seeds, ginger and cumin. A source at the Indian Spice Board said: "We want a clean industry but there are some unscrupulous people. We were right to suspend the licences of Mr Guatam and his associated companies."

So far more than 400 food products have been recalled from UK stores. Two US insurers, Ace and AIG, will have to foot much of the bill for the recall, which could cost more than ?100 million.