Sun-Diamond Barred From Selling to Government

Sun-Diamond Growers, the big California fruit concern, was barred Friday from participating in all federal food purchase programs for the next three years because of its recent criminal convictions for giving illegal gifts to a former Clinton administration Cabinet member.

The U.S. Department of Agriculture announced the ruling, which applies to all government agencies Sun-Diamond deals with. The decision could mean lost contracts worth millions of dollars to the nation’s largest fruit cooperative.

The ban is effective immediately and could remain in effect for up to three years, the USDA said.

“USDA is taking this action because of Sun-Diamond’s recent federal court conviction for acts that seriously question the cooperative’s business integrity or honesty,” Robert Keeney of the department’s Agricultural Marketing Service said in a statement.

“This action is being taken to protect the interests of the federal government,” Keeney said.

Sun-Diamond, based in Pleasanton, Calif., now has 30 days to appeal the decision before the USDA. A Sun-Diamond executive said the company would appeal.

“We believe that a thorough review of the record, and a fair application of the law will reverse this action,” said Sandra McBride, communications manager for the company.

Sun-Diamond was convicted last week in a federal court on eight criminal counts that included illegal gratuities to former Agriculture Secretary Mike Espy in 1993 and 1994, and illegal campaign contributions to Espy’s brother, Henry.

Richard Douglas, a former vice president of the firm and its chief Washington lobbyist, and James H. Lake, another Sun-Diamond lobbyist, also are prohibited from participating in any federal purchasing program, the USDA said.

The charges arose from the government’s two-year special investigation of the former agriculture secretary, who resigned in 1994 amid accusations he took illegal gifts and favors from companies the department regulated.

The ruling does not affect Sun-Diamond’s five affiliates.

Sun-Diamond is an agricultural cooperative with annual revenue of more than $600 million. Its members include Sun-Maid Growers of California, Diamond Walnut Growers Inc., SunSweet Growers Inc., Valley Fig Growers and Hazelnut Growers of Oregon.

The debarment prohibits the grower, packager and marketing cooperative of dried fruits and nuts from acting as a contractor or subcontractor in bidding on any federal contract.

This includes USDA purchases for the school lunch program and other domestic feeding programs, and on Defense Department food-supply contracts.

Sun-Diamond sold $1.28 million worth of raisins, prunes, figs, walnuts and hazelnuts to the Defense Commissary Agency, Fort Lee, Va., in fiscal 1995, spokeswoman Bonnie Powell said.

The fruit and nut growers who belong to the cooperative may still bid separately on government food-supply contracts, USDA spokeswoman Connie Crunkleton said.