China probes food businesses; Hong Kong bans imports in meat safety scare

[July 24, 2014]  SHANGHAI (Reuters) - China's food regulator has visited close to 600 restaurants, businesses and food distributors as it investigates a fast-spreading food safety scare that has dragged in a number of global brands and hit food outlets as far away as Japan.

Hong Kong said on Thursday it suspended, with immediate effect, all imports from the U.S.-owned Chinese supplier at the center of the latest scare. It was unclear when the company last shipped its products to Hong Kong.

Shanghai police detained five people on Wednesday, including the head and the quality chief of Shanghai Husi Food, a supplier to foreign fast-food brands including KFC, McDonald's Corp and coffee chain Starbucks Corp over allegations it supplied out-of-date meat. Shanghai Husi Food is owned by Illinois-based OSI Group.

Yum Brands Inc, the owner of KFC and Pizza Hut, severed ties with OSI, and McDonald's said it would move supply from the Shanghai facility to OSI's new plant in the eastern central province of Henan.

The Shanghai Municipal Food and Drug Administration said in a statement that it visited 581 food-related facilities suspected of using expired meat from Shanghai Husi Food, and sent 875 personnel to carry out inspections.

Chinese police, local government and prosecutors are now also involved in the case. Police have given no further details on those detained.

The scandal broke after a TV report on Sunday showed staff at Shanghai Husi Food using long expired meat and picking up food from the floor to add back to the mix. Some former staff at the facility have told Reuters that oversight at the plant was lax, though workers at another OSI unit in northern China said rules and management were strict.

OSI said in a statement that local Chinese authorities have inspected all its other facilities in China and found no issues. The firm apologized to its China customers in a statement on Wednesday. "What happened at Husi Shanghai is completely unacceptable. We will bear the responsibility of these missteps, and will make sure they never happen again," Chairman and CEO Sheldon Lavin said.

Warehousing firm Shanghai Yuanhong Warehouse & Logistics Co, which media reports said had stocked Husi products, told Reuters on Thursday it had sealed all its Shanghai Husi Food products. "We have over 300 tonnes of Husi products here, but this only accounts for about 1 percent of our stocks," company manager Dai Guohui said.

McDonald's and Japanese convenience store FamilyMart Co Ltd said they had taken some products off their shelves in Japan, which had been supplied by Shanghai Husi.

Chinese consumers are sensitive to food safety scares after a deadly dairy scandal in 2008. KFC saw sales dip after a food safety scare in late 2012, while Wal-Mart Stores Inc came under fire early this year over tainted meat products.

(Reporting by Adam Jourdan in SHANGHAI and Donny Kwok, Nikki Sun and Clare Baldwin in HONG KONG; Editing by Paul Tait and Ian Geoghegan)

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