MCD McDonalds Corp

By Laurie Burkitt 

SHANGHAI--A Shanghai court fined two units of U.S.-based food processor OSI Group LLC 2.4 million yuan ($365,000) and sentenced 10 people to prison for "producing and selling inferior products" in a case that has rippled through the food industry in China.

The Shanghai Jiading People's Court said in a statement on its microblog that it fined the Shanghai and Hebei units of OSI and that it sentenced Australian Yang Liqun, a general manager at OSI in China, to three years in prison, followed by deportation, and fined him 100,000 yuan. The other nine defendants, including one OSI operations director, face sentences from 19 months to 32 months, the statement said.

The court's statement said that from March 2013 to July 2014, OSI's Hebei and Shanghai units produced substandard food for fast-food chains, including Yum! Brands Inc. and McDonald's Corp. The company violated food-safety laws regarding recalled food, the statement said.

A spokeswoman for OSI said the company had no immediate comment on the fine or sentences. Mr. Yang couldn't be reached for comment. Yum Brands and McDonald's both cut ties with OSI in China in July 2014.

Chinese authorities began investigating the company in 2014, after a Chinese TV report purported to show workers at OSI's Shanghai unit, Shanghai Husi Food Co., changing production dates on meat to extend its sale period. The report alleged the meat was going to fast-food chains. Chinese authorities arrested six Shanghai Husi employees that have been held since August 2014.

Sheldon Lavin, OSI's CEO, apologized at the time for "completely unacceptable" missteps at the company.

In January 2015, when Shanghai food-safety watchdogs announced plans to destroy all meat recalled in the incident, OSI questioned the measure, which it said was done without any testing of the relevant products.

The moves by authorities against OSI paralyzed its business in China, where it had been one of the biggest food suppliers by volume.

Lilian Lin contributed to this article.

(END) Dow Jones Newswires

February 01, 2016 05:06 ET (10:06 GMT)

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