(
)
The US Food and Drug Administration was on the verge of “taking down” Herbalife 30 years ago — but was stopped by a powerful US senator, a former enforcement chief at the regulator said.
“Herbalife — that was really a traumatic thing,” Mervin Shumate, a former FDA enforcement chief, said in an interview in 1987, after he retired from the agency.
The interview — and dozens of others with other agency officials set to leave the regulator — are posted on the FDA website as part of an oral history on the agency.
READ SHUMATE’S FULL INTERVIEW (PDF)
In two separate interviews, Shumate and a former field inspector, Deborah Ralston, said in the early 1980s the agency planned a “massive operation” to simultaneously seize Herbalife product from five warehouses based on allegedly fraudulent claims of its effectiveness.
“It would have brought them to their knees,” Ralston said, adding that “the cases were legally sufficient but politically unattractive.”
“I was told … that Sen. Orrin Hatch had had a discussion with the commissioner, and there were not going to be any seizures,” Shumate said, in a lengthy discussion of how politics was encroaching on the FDA.
Hatch (R-Utah), at the time headed the Labor and Human Resources Committee, which had oversight over the FDA. Today he is the ranking member on the Finance Committee.
Shumate does not say he had any direct knowledge or evidence that Hatch did anything wrong — but said in the interview that another FDA official relayed to him the Hatch information.
The interview was given as Shumate was about to retire. At that time, Shumate also learned that he was not going to receive an expected bonus.
A spokesman for Sen. Hatch called the comments “baseless.”
Herbalife, in a statement, said, “This is not even remotely newsworthy — it’s blatant, unsubstantiated speculation about ancient history from a quarter century ago, and has absolutely no relevance whatsoever to the Herbalife of 2013.”
Since 2007, Herbalife execs and its PAC have donated $42,008 to Hatch, enough to make it the No. 8 source of donations to the lawmaker, according to the Center for Responsive Politics.
The FDA never brought any charges against the nutritional supplement company, and today Herbalife is a New York Stock Exchange-listed company with a $3.8 billion market cap with different products.
But the threat of regulatory turbulence is once again swirling around it. Activist investor Bill Ackman in December called Herbalife a pyramid scheme that should be shut down by regulators.
The company denies Ackman’s charges.
Herbalife shares closed yesterday at $37.45, down 0.9 percent.