Shanghai Regulators Fine OSI and Unit More Than $3.6 Million for Meat Scandal
Shanghai Regulators Fine OSI and Unit More Than $3.6 Million for Meat Scandal : BEIJING—Regulators in Shanghai slapped U.S. meat supplier OSI Group LLC and a local subsidiary with more than 24 million yuan ($3.6 million) in fines on Sunday, after a bid by the company to fight back against allegations of selling expired meat to fast-food chains ended in failure.
The fines were announced in a statement posted on Monday to the website of the Shanghai Municipal Food and Drug Administration, which said that both OSI and its subsidiary, Shanghai Husi Food Co., would be put on a “black list” of food-safety violators.
Blacklisted firms face being banned from the food industry for between two and five years, according to local regulations.
The fines extend from a 2014 scandal in which Chinese units of OSI were accused by a local television station of selling out-of-date meat to a number of fast-food outlets, including McDonald’s Corp. and KFC parent Yum Brands Inc. A Shanghai court ruled the company guilty, fined its subsidiaries 2.4 million yuan and sentenced 10 people to prison.
In an unusual move for a foreign company in China, closely held OSI challenged the decision, but lost the appeal in July.
Monday’s statement said Shanghai Husi would be fined an added 17 million yuan and have its business licenses revoked in China. OSI China would be fined 7.3 million yuan and had been served with a warning, it said.
Food-safety regulators would “rigorously investigate criminal violations of food safety,” the statement said, adding that both OSI and Shanghai Husi had accepted the punishment and promised to pay the fines in a timely manner.
Calls to Shanghai Husi and OSI’s Asia-Pacific headquarters in Shanghai rang unanswered on Monday, a national holiday in China. Messages seeking comment sent to OSI’s U.S.-based director of communications weren’t immediately returned. Calls to the China offices of McDonald’s and Yum Brands also rang unanswered.
At the time of its appeal in February, OSI said it was the victim of a smear campaign and said the original verdict against it was “inconsistent with the facts and evidence” presented before the court.
The U.S. company had 11 factories in China in February, nine of which were operating. Operations at Shanghai Husi were suspended in 2014, shortly after the scandal broke.
The Aurora, Ill. food-processing company was McDonald’s largest meat supplier in China before the allegations aired. Both McDonald’s and Yum cut ties with the company, leading a monthslong hamburger shortage for McDonald’s that hurt sales.
—Kersten Zhang contributed to this article.
Source : http://www.wsj.com/articles/shanghai-regulators-fine-osi-and-unit-more-than-3-6-million-for-meat-scandal-1475486390
