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Report: N.Y. Company Eyed For Milk Shipping Fraud

May 29, 1990

NEW YORK (AP) _ A shipping company hired to supply milk powder to the famine-ravaged Sudan is under federal investigation because the powder was unfit for human consumption, The New York Times reported today.

Court papers filed by the government allege that the company, AMG Services, promised to deliver high-quality milk powder to the Sudan but substituted an undrinkable, diluted powder.

AMG president Martyn Merritt said the inferior powder was supplied by a Sri Lankan subcontractor.

Merritt warned U.S. government officials about the switch but was ignored, he said.

″I didn’t want this stuff to get sent off and have people get sick from it,″ he said.

Under an Agency for International Development program, the United States buys food for the Sudan, one of the world’s poorest countries.

AMG received $936,000 to ship hundreds of tons of milk powder in January 1989, the court papers said, but the Sudanese never received a shipment. The cargo apparently got mixed up in Sri Lanka, where an AMG subsidiary was supposed to forward it.

Sudanese government investigators went to Sri Lanka, found a substitute shipment of the low-quality milk powder and rejected it.

Erwin Shustak, an attorney for Merritt, said he believed AMG was under investigation because of a dispute years ago between Merritt and a government investigator.

Prosecutors would not comment.

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