Before the trial of two of its Shanghai facilities and 10 employees, officials with OSI Group expressed “confidence in China’s legal system,” and said they believed the local court would “come to a fair and reasonable judgement with full respect to the facts and laws.”
But Monday, after a Shanghai court convicted the two Husi Food Co. processing plants and 10 of their employees for producing and selling substandard products in 2014, OSI officials at the company’s world headquarters near Chicago reacted by saying “…we can no longer accept injustices against our people and our reputation.”
The Shanghai court fined the two processing plants 2.4 million yuan, which is about $365,000 U.S., and sentenced Australian Yang Liqun, an OSI general manager in China, to three years in prison to be followed by deportation. The manager was also separately fined 100,000 yuan. Nine other employees, including an OSI operations director, received sentences ranging from 19 to 32 months.
In a statement, the court said Husi Food’s Hebei and Shanghai units produced substandard food for fast food chains, including Yum Brands and McDonald’s from March 2013 to July 2014. That’s when the units came in for government scrutiny after Shanghai ’s Dragon TV aired a report purporting to show OSI reselling expired meat.
After the court verdicts, OSI called the Dragon TV report “sensationalized” and accused it of presenting “false and incomplete accusations that ignored the facts and Chinese law.” The OSI statement said: “After an actual investigation was completed, all authorities have recognized that this case has never been about food safety.”
“The distortion of facts and evidence by Dragon TV and the general media clearly influenced the verdict released today,” the OSI statement said.
OSI says it is now “forced to consider an appeal” of the criminal case and may sue Dragon TV “for its role in harming the reputation and business operations of the company through intentional falsification of press reports.”
One problem, which was called out a year ago by OSI, was that all the meat in question was destroyed prior to trial by Shanghai food safety authorities.
Husi is a subsidiary of OSI, which has done business in China for 25 years. It was supplying McDonald’s, KFC’s, Pizza Huts, and other Asian fast-food outlets, but the expired meat controversy led to the loss of those customers who did not want to be part of a scandal.
According to China’s official press agency, the Xinhua News Agency, the nation’s food safety law does forbid the use of recycled and expired in ingredients in food products. It reported the defense argued food returned was not recycled and the dates were for guidance only. Xinhua said the court found the products were being recycled as defined by China’s law and expiration dates once set cannot be changed.
Xu Wei was the presiding judge in the Shanghai Jiading District People’s Court. A few family members were admitted to the court room, which was reported to be too small to admit foreign reporters or even some of the lawyers. The proceeding was not televised and there was no overflow space for anyone wanting to monitor the trial.
The judge told Xinhua that those responsible broke China’s food safety law and needed to be held responsible.
OSI Group is a privately owned, American holding company of meat processors that service worldwide retail and food service industries. Forbes lists OSI as the nation’s 60th largest private company for 2015 with sales of $6.1 billion.
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