The fridges that caught fire
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special report
the fridges that
caught fire
When Turkish firm Arcelik learned its fridge-freezers may cause fires, it did not
tell customers for years. Did Europe’s regulatory system encourage delay?
BY TOM BERGIN
LONDON, OCT 21
I N JUNE, WHEN a fire ripped through a
concrete tower block in Bermondsey, a
low-income neighbourhood in south-east
London, residents initially blamed it on a
lightning strike. “It was only later we heard
the truth on the television,” said Kathy
Pullady, who lives across a chipped tile-
covered landing from the 17th-floor flat
where the blaze took hold.
The London Fire Brigade had in fact been
investigating the probable cause of the fire
for years. In July it publicly pointed to a faulty
fridge-freezer made by Turkish company
Arcelik, Europe’s third-largest appliance
manufacturer. The fire brigade says timers in
certain models of Arcelik fridges have caused
at least 20 fires in the UK since 2006. One man
has been killed and at least 15 people injured.
Since 2005, the European Commission has
recorded fire safety warnings for 37 fridge-
freezer models. Sixteen of those models
were made by Arcelik under the Beko brand,
18 by Swedish-based Dometic (including
some fridge-freezer-oven combinations used
in mobile homes), and three by South Korea-
based Samsung.
Fire chiefs told Reuters they took the
unusual step of issuing a public statement
about the Arcelik appliances because the
company itself had failed to publicise the
danger. Consumer groups also charge the
company –- along with British regulators
-- with dragging its feet when it came to
warning customers.
Arcelik (pronounced Arch-e-lick) agrees
design flaws in certain fridge-freezers
are to blame for the fires. A company
spokeswoman told Reuters in an email it
believes “there have been 29 incidents which
can be attributed to an issue with the defrost
timer since 2006.” But the company says it
HAZARD: A burned out Beko fridge-freezer. The fire brigade says timers have caused at least 20 fires in the
UK since 2006. REUTERS/London Fire Brigade/Handout
october 2011
arcelik fires october 2011
“As soon as we received this letter… we Arcelik says a faulty timer for
intensely tried to simulate the problem.” activating the defrost unit in some of
acted as quickly as possible to its Beko fridge freezers may be to
tackle the issue. Regulators have blame for up to 29 fires in the UK.
declined to comment.
The issue highlights how an
increasingly globalised supply
chain can expose consumers to
weaker safety regimes than they Defrost
timer
may be used to. The European
Union’s database of unsafe
products has seen a sharp rise
in product warnings since
2003, and the vast majority
is on products made in
emerging markets. Against
this backdrop, Britain’s
fragmented regulatory regime
can slow public notification of
life-threatening defects. And
companies whose products
injure or even kill face much
milder sanctions in Europe
than in the United States.
“The regulatory and safety
standards in the U.S. and TKTKTKTKTKT: Explain the 2 letters
the EU have developed over and headshot please. REUTERS/ Source: Beko
a long period of time,” said London Fire Brigade/Handout
Luke Upchurch of lobby group
Consumers International. “A lot as a “German quality brand” despite the fact
of the products are coming from the appliances are not made in Germany.
jurisdictions where there aren’t Arcelik acquired Blomberg in 2002 and the
tight controls ... It’s still very difficult to WARNING: Extracts from letters Beko sent
to customers about the fault. The first version,
brand hasn’t issued a safety warning about its
monitor that on an international basis.” sent from April to July, mentions only a risk fridges since 1994, when it flagged a potential
Up to half a million of the Arcelik of overheating. The later version mentions a fire risk from overheating in certain models.
appliances have been sold in the potential fire hazard. Left, Ragip Balcioglu,
Arcelik’s UK manager. REUTERS/handout
United Kingdom and another 9,000 THE LONDON FIRE Brigade dealt with its first
in other countries. Following the reported revenues of 3.5 billion euros Beko fridge incident in 2007. By June 2010,
Fire Brigade’s July announcement ($4.8 billion) last year and an operating the brigade says it had identified the defrost
the company started a media blitz margin of 9.2 percent. That’s well above timers as the probable ignition source and
inviting owners of affected models to the 5.1 percent achieved by Sweden’s notified Arcelik.
have modifications made. Electrolux, the number one appliance-maker The company says incidents involving the
“They could have acted faster ... there are in Europe, and the 5.5 percent reported by timers dated back to 2006, but the information
a lot of questions unanswered in this,” says Whirlpool of the United States, the global it received from fire authorities did not clearly
Alice Judd, senior researcher at the UK’s number one by sales. identify the source of the fires. It says that
Consumer Association. Arcelik operates factories in Turkey, between 2007 and the middle of last year it
Romania, China and Russia and says it exports worked closely with the fire service to pinpoint
ARCELIK IS LISTED on the Istanbul stock to 115 countries across the world. According to the problem. The brigade would not discuss
exchange and majority-owned by Koc Holding, Ragip Balcioglu, the company’s UK country details because of a police investigation into
an $8 billion-group controlled by the Koc manager, Beko refrigerators are already the a 2010 fire.
family, Turkey’s richest. The company, which biggest sellers in the UK, accounting for one The June 2010 notice from the fire service
is expanding around the globe and has huge in three of all sold. Beko’s UK website says -– Arcelik says it did not receive the letter until
ambitions in China, sells its products under British Prime Minister David Cameron is the middle of July -- confirmed that timer units
a number of brands including Beko, Arcelik among its customers. on certain models manufactured between
and Leisure. For the most part it targets the In the United States Arcelik’s range includes 2000 and 2006 were prone to condensation,
economy end of the market. sleek, expensive cookers and fridges sold according to Andrew Mullen, Director of
Low prices don’t mean low profits. Arcelik under the Blomberg brand, which it describes Service at Arcelik’s UK unit. Condensation can
2
arcelik fires october 2011
AFFORDABLE: For the most part, Arcelik targets the economy end of the market. An Arcelik dealer selling washing machines and refrigerators in Istanbul, October 2011.
REUTERS/Serkan Senturk
cause a short-circuit, which may ignite plastic
components and other highly flammable
insulation inside the appliance.
Mullen said the company then spent months
trying unsuccessfully to recreate an accidental
fire: “As soon as we received this letter... we
intensely tried to simulate the problem.”
Then last November, a Beko fridge erupted
in flames in the west London house of the
Benjamin-Muthiah family. Santosh Benjamin-
Muthiah, 36, died and his wife Jennifer narrowly
escaped with their two daughters aged three
years and three months. Ian Webber, secretary
of Wealdstone Baptist Church where the
family worshipped, said that nine months on
they were still too distraught to speak to the
media. Burnt furniture and bedding were piled
in a dumpster outside their home in August as
repair work continued inside.
After Santosh’s death, Arcelik abandoned
its attempt to replicate the fires and started
to design a fix that would stop condensation
getting into the timers, Balcioglu told Reuters At this point Arcelik also planned a campaign situations and measures it had taken in the
in an August interview at the company’s UK to alert owners. But it decided against taking past. The company said it wanted to contact
head office in Hertfordshire, just north of out advertisements in newspapers or issuing people by mail rather than rely on people
greater London. a press release, common practice in such seeing a notice in a newspaper.
3
arcelik fires october 2011
A SLUGGISH
REGULATOR
THE fridge FIRES in London were
not the first time Turkish appliance
maker Arcelik and its UK regulator
have responded more slowly than they
might to a hazardous appliance.
In November 2008 a student in Cork,
Ireland, died from carbon monoxide
poisoning which the coroner said was
caused by a gas cooker. The cooker
was sold under the New World brand
which is owned by appliance maker
17TH FLOOR BLAZE: The tower block in Bermondsey, London, where a June fire prompted the London Fire
Brigade to alert the public about the Arcelik appliances. REUTERS/TOM BERGIN
Glen Dimplex. The cooker had been
manufactured by Arcelik.
It began gathering addresses, but did not fridges sold, the 10 call-centre staff and A joint Arcelik-Glen Dimplex
post its first letters until mid-April 2011. A team of engineers Beko hired to handle the investigation discovered that
spokeswoman for the fire service said that modifications could only handle so much at potentially lethal carbon monoxide
between February and April 2011, there were once. Letters were sent out at a rate of 10,000 fumes could build up if the oven’s
nine fires in London involving the Beko fridge a week; Balcioglu said this was to ensure the grill unit was used with the oven door
freezers under scrutiny. team was not swamped. By the time of the closed.
Bermondsey fire, only a third of owners had In January 2009, Glen Dimplex
APPROACHED FOR FURTHER comment been contacted, he added. The company informed Ireland’s National Consumer
shortly before Reuters published this story, did not have the address of the family in the Agency and its UK regulator, the
an Arcelik spokesman said the company had Bermondsey flat. Trading Standards unit in Knowsley
always intended to launch a media effort, A staggered approach is at odds with EU borough, of these findings. The
later in the campaign. Arcelik said its decision guidance to act as quickly as possible. company and both regulators agreed to
to run a postal campaign was not aimed at That guidance also states that companies issue consumer warnings immediately.
minimising damage to the Beko brand. should highlight “details of the safety risk”. That month Arcelik also informed
“It wasn’t a concern ... ultimately we were Arcelik’s initial letter mentioned only a risk the regulator for its UK headquarters,
driven by what has been suggested by the that the “timer may fail and overheat”. Arcelik Hertfordshire Trading Standards, of
EU safety guidelines,” the youthful, Rolex- said it worded its message that way because the problem. But it took until March for
wearing Balcioglu told Reuters in a large it still believed a faulty unit was more likely to the Hertfordshire regulator to issue a
showroom full of glistening Beko appliances. emit smoke than catch fire. But Hertfordshire warning about the ovens. By that stage
Waving a copy of a document titled ‘Product Trading Standards, which regulates Arcelik’s another oven owner had been killed,
Safety in Europe: A Guide to corrective action British distribution unit, subsequently forced bringing the total deaths to at least six,
including recalls’, Mullen said the European the company to amend the warning to include according to media reports.
Union deems direct contact the best way to mention of “a potential fire hazard”. Arcelik said it had taken a “pro-active
alert consumers to a defect. After the publicity surrounding the approach” and that its products had
The document, produced jointly by the Bermondsey fire, Arcelik increased the resources met EU safety standards, but its UK
EU and industry trade bodies, is as close to committed to its corrective action, boosting subsidiary declined comment on any
a rulebook on such matters as Europe has. modifications from 3,000 a week to 24,000. settlements related to the case. Glen
While it says “personal” contact is the most Arcelik’s approach to notifying regulators Dimplex also declined comment, as
effective way of informing people at risk, it also seems to have been at odds with EU did Hertfordshire Trading Standards.
also warns that relying on a mail shot alone guidelines. The EU General Product Safety The regulator also refused a Freedom
leaves a risk some customers will not be Directive says companies should inform of Information Act request for details
contacted. The guide also advises in several the “competent authority” as soon as they of its discussions with the company,
places that companies should use the media become aware that a product may be unsafe. saying that if such information was
to alert customers. But Arcelik said it notified Hertfordshire released, its relationship “would
Mullen said one reason the company did Trading Standards in January 2011 -- seven suffer as they would be less inclined to
not launch a media campaign was because months after the London Fire Brigade’s release sensitive information to us”
it wanted to concentrate resources on warning to the company, and two months (Reporting by Tom Bergin)
direct contact. But with 480,000 affected after it had started on a design fix.
4
arcelik fires october 2011
It took the company even longer to inform annual revenue in Britain is above 300 million
regulators in other places. Ireland’s National pounds ($470 million) -- told investment
Consumer Agency (NCA) said it first heard of analysts it did not expect serious financial
the problem in March 2011, when it received a repercussions from the accidents. Arcelik’s UK
tip-off from a retailer. It sought a meeting with subsidiary has declined to comment on the
Arcelik which took place in May; immediately cost of settling any cases involving its fridges
afterwards, the NCA issued a consumer warning. and cookers.
The Consumer Association’s Judd said Its optimism may be partly based on the fact
the gaps between the various stages of the that courts in Britain and elsewhere in Europe
corrective action, given the nature of the do not generally award punitive damages
warning, were unsatisfactory. or compensation for pain or emotional loss.
Arcelik may have to compensate victims only
HERTFORDSHIRE TRADING Standards’ for fire damage to their properties and medical
response also appears to have been wanting. bills, according to Paul Verrico, a lawyer with
Consumer advocates say this highlights London-based Eversheds and an adviser on
flaws in the UK’s decentralised approach to product safety issues. Even the death of a
monitoring product safety, in which units of family’s main earner like Benjamin-Muthiah is
local governments oversee companies based unlikely to bring a big payout.
in their region. “You’re not normally looking at more
Most other EU countries have dedicated than a couple of hundred grand in total,”
product safety bodies, noted Christine Verrico said. Deaths of children, since they
Heemskerk, product safety lead officer at the have no dependents, warrant only minor
Trading Standards Institute. Safety experts compensation -- about enough to pay for a DAMAGE: The kitchen of the Bermondsey apartment
where a Beko fridge-freezer caught fire in June,
and consumer lobby groups say the British modest funeral, he added. pictured in August, 2011. REUTERS/Tom Bergin
set-up can lead to an uneven application of A company which fails to notify the regulator
the rules and allows companies to call the in a timely fashion about a product risk can be June 2010 warning to the company, the
shots when it comes to corrective action. fined, but only up to 5,000 pounds. coroner investigating the death of Benjamin-
“Agencies that are set up to deal with a By comparison, failure to promptly notify Muthiah called in the police.
specific consumer issue tend to be better the authorities in the United States can lead While Arcelik might not face large fines,
functioning,” said Consumers International’s to fines of many hundreds of thousands of Ashley Mott, solicitor at London-based law
Upchurch. “Agencies that are broader and dollars, while companies that fail to warn firm DLA Piper, says if a UK business, or its
cover a wider range of areas can sometimes consumers about known defects have seen officers, are suspected of having failed in their
let things slip through the cracks.” potentially ruinous awards for punitive or duty of care they can be charged with the
After Arcelik informed Hertfordshire Trading exemplary damages. criminal offence of corporate manslaughter.
Standards, the regulator was bound by the A Los Angeles court in 1999 awarded a Arcelik’s Balcioglu said the company had
UK’s General Product Safety Regulations to record $4.9 billion product safety payout been helping police, but believes it did its best
“immediately” notify the government so it in relation to defects in the fuel system on a to protect consumers.
could file a notice with Rapex, a European General Motors vehicle; the payout was later “Being open and honest, we really had all
body charged with logging EU product safety reduced to $1.2 billion. the right reasons and the best intentions with
problems. But the Department of Business, Simon Smith, a personal injury lawyer safety in mind ... without consumers in mind
Innovation and Skills said Hertfordshire with London-based Goodmans Law, said the and safety in mind, I don’t believe there is a
Trading Standards informed it only on July 15, UK legal regime, which is similar to that in future for any company,” he said.
after the publicity around the Bermondsey fire. other European countries, is stacked against
The department filed a Rapex notice within victims. “The law is a bit harsh in that respect (Additional reporting by Ece Toksabay in
days, the EU database confirms. Hertfordshire ... it expects us to be fairly stoic about things,” Istanbul and Clare Kane in London; Edited by
Trading Standards declined comment. he said. Sara Ledwith and Simon Robinson)
Arcelik could still face serious criminal
SHORTLY AFTER THE Bermondsey fire made repercussions, though.
headlines, Arcelik –- which has said Beko’s In July, after learning of the fire brigade’s
For more information contact:
sara ledwith, Simon Robinson, tOM bergin
ENTERPRISE Editor, EUROPE, MIDDLE EAST Enterprise Editor, EUROPE, MIDDLE EAST AND CORRESPONDENT
AND AFRICA AFRICA +44 20 7542 1029
sara.ledwith@thomsonreuters.com simon.robinson@thomsonreuters.com tom.bergin@thomsonreuters.com
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