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OSI’s Shanghai unit on blacklist for 2014 Dragon TV scandal

Tuesday, October 4, 2016 22:26
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The last word in the 2014 scandal involving the sale of expired and substandard meat by Husi Food Co. has come down from the Shanghai Municipal Food and Drug Administration.

Shanghai’s local regulator Sunday imposed fines totaling 24 million yuan — about $3.6 million — on Husi and its parent company, OSI Group LLC. Both companies were also placed on a local blacklist of food safety violators.

Shanghai Husi Food Co. also had its licenses revoked by the Jiading Market Supervision and Management Bureau, resulting in illegal profits and offending food products being confiscated.

The Shanghai Husi Food Co. is a unit of the 60-year old OSI Group LLC, which is headquartered in Aurora, IL, near Chicago. It was the meat supplier in China to such American brands as McDonald’s, KFC, and Burger King. Two years ago, it was targeted by the investigative unit of a Shanghai TV station.

The report that aired purported to show meat that was substandard and expired when being sold. Chinese consumers were outraged and the OSI unit quickly lost the fast food companies its had as customers.

After a trial, closed to most late last year, two Husi Food Co. processing plants and 10 of its employees were convicted of producing and selling substandard products during 2014. The Shanghai court fined the two processing plants 2.4 million yuan or about $365,000.

Australian Yang Liqun, an OSI general manager, was sentenced to up to three years and fined $100,000 yuan. Nine other employees were sentenced to 19 to 32 months in Chinese prisons.

OSI responded by saying it would “no longer accept injustice against our people and our reputation,” and filed an appeal of the Shanghai court’s convictions and sentencings. It claimed the “Dragon TV” report contained “false and incomplete accusations.”

That appeals, however, was denied in July.

An OSI spokesman declined an opportunity to comment when contacted by Food Safety News about the latest penalties being imposed by Shanghai Municipal. The most problematic for the company is likely to be the blacklist.

Those on the blacklist are banned from food production and management for up to five years. Chinese companies on the blacklist typically face barriers to credit and land use, also.

In China, the administrative actions wait for the completion of the judicial case, which was heard by the Shanghai No. 3 Intermediate People’s Court.

OSI is a top 100 privately-held company in the U.S. with a long history in China. It has retail and food service units in numerous Chinese cities that are not impacted by the Shanghai restrictions.

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