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Bloomberg | By William McQuillen | 26 March 2003

Chattanooga, Tennessee, March 26 (Bloomberg) -- Tyson Foods Inc. was acquitted of plotting to smuggle illegal immigrants into the U.S. to work at poultry-processing plants.

The verdict spares Tyson, the world's biggest chicken processor, from penalties that might have exceeded $100 million. Tyson's shares have lost more than a quarter of their value this year and profit has been eroded by rising feed costs and lower chicken prices. First quarter earnings plunged 69 percent.

Federal prosecutors charged Tyson with conspiring to smuggle Mexican and Central American workers into the U.S. and provide them with phony documents. Tyson said executives knew nothing about such activities and blamed rogue managers for any wrongdoing. Each plant hires its own workers, the company said.

The trial "added some uncertainty to the stock" and was "probably keeping the price down a little bit," said David Kathman, an analyst at Morningstar Inc. in Chicago. The verdict is "positive for the stock because it's not good to have this potential" for government penalties.

Shares of Springdale, Arkansas-based Tyson fell 18 cents to close today at $7.97 in New York Stock Exchange trading. The shares fell as low as $7.84 before rising on news of the verdict.

"The verdict confirms that Tyson Foods has made a concerted effort to hire properly and abide by the law," said Greg W. Lee, the company's chief administrative officer.

Penalties Avoided

The case was closely watched by business lobbyists and legal experts after the Justice Department said it would try to force the company to forfeit "ill-gotten gains," a tactic usually reserved for prosecutions of mobsters and drug dealers. Tyson said the government planned to seek more than $100 million in penalties if it won a conviction.

U.S. Attorney Sandy Mattice said he was disappointed by the verdict, which came after less than a day of jury deliberations. "We're consoled by the fact that we believe it was the right thing to bring this prosecution," he said. "We would do it again."

Three current and former Tyson executives also were acquitted today. They include: Robert Hash, who was a vice president in the company's poultry division; Keith Snyder, a plant manager; and Gerald Lankford, a retired human resources manager. Hash and Snyder, who have been on administrative leave, will return to work, Lee said.

In the trial that began Feb. 4 in Chattanooga, prosecutors claimed that Tyson knew it violated the law by smuggling illegal immigrants who work harder for less pay. The company allowed the practice because it was good for profits, the U.S. said.

Undercover Investigation

The prosecution resulted from a 2 1/2 year undercover investigation. At trial, government lawyers played tapes of Immigration and Naturalization Service agents posing as smugglers talking with Tyson managers about transporting illegal workers from the U.S.-Mexico border. In addition, two former Tyson workers, who pleaded guilty, testified against the company.

Tyson and six managers were indicted in December 2001. One former manager committed suicide last year. The company originally faced 36 immigration and conspiracy charges; 24 were dismissed before the case went to the jury.

This was "an effort by the government that was doomed from the beginning," said lead Tyson lawyer Tom Green. "They never had a theory, never had proof.''

Barbara Hailey, forewoman of the 12-member jury, echoed Tyson's argument that any violations were committed by rogue managers. "The way this investigation went, I was appalled," she told reporters after the verdict. "There were so many gray areas, we could not find the evidence."

Hailey said she thought the employees who testified against the company were angry and "had a bone to pick." They "sounded like whiners," she said.Bloomberg: