Meat Supplier OSI Says Six Chinese Workers Arrested

Dec 03, 2014 5:04 pm ET

(Corrects first and third paragraphs of story originally published Aug. 30 to show that sale of out-of-date products was alleged, not proven.)

Aug. 30 (Bloomberg) -- OSI Group LLC, the U.S. meat supplier ditched by Yum! Brands Inc. in China last month for allegedly selling out-of-date products, said six employees of its Shanghai unit were arrested.

OSI, owned by Sheldon Lavin, confirmed the arrests in a statement yesterday. Executives at OSI’s Shanghai Husi Food Co., including Hu Jun, were arrested for the suspected production and sale of shoddy products, the Shanghai People’s Procuratorate said yesterday in a separate statement.

Production at Shanghai Husi’s plant was suspended in July after workers were allegedly caught repackaging and selling chicken and beef past its sell-by date. McDonald’s Corp. stopped using OSI in China after the discovery while Burger King Worldwide Inc. has said it will do the same.

The safety scare is just one of many in recent years in China, where consumers have become increasingly concerned about food standards. Six years ago, toxic milk killed six infants and sickened 300,000. Earlier this month, H.J. Heinz Co. recalled some batches of flour in the country after one was found to contain high levels of lead.

Earlier this week, U.S. private-equity firm KKR & Co. agreed to acquire an 18 percent stake in Fujian Sunner Development Co., China’s largest chicken breeder and processor, for about $400 million. Fujian Sunner said Aug. 26 the companies will form a partnership to expand its operations to provide meat that’s safe to eat.

OSI, which is based in Aurora, Illinois, reported Aug. 4 that the Public Security Bureau had detained six Shanghai Husi employees. OSI said yesterday it will continue to cooperate fully with Chinese authorities and that it supports the government’s “consistent application of the country’s food quality and safety laws.”