Business


Business Briefcase: Meat supplier admits safety problem in China

TUESDAY, JULY 29, 2014

BEIJING – A U.S. meat supplier said Monday that a Chinese subsidiary embroiled in a safety scandal fell short of its requirements for maintaining high standards.

The president of OSI Group, David G. McDonald, declined to give details of what the company has found at Shanghai Husi Food Co. A Shanghai TV station reported last week that Husi sold expired beef and chicken to restaurants including McDonald’s and KFC.

The Chinese food safety agency said last week its investigators found unspecified illegal activity and police detained five employees of Husi including its product quality manager. But the government and OSI have yet to confirm publicly whether it sold expired meat.

“Our investigation has found issues that are absolutely inconsistent with our internal requirements for the highest standards, processes and policies,” McDonald said at a news conference in Shanghai. “Why these things took place, by whom they took place and for what motives they took place, we simply can’t understand.”

McDonald said OSI, based in Aurora, Illinois, will create a “quality control center” in Shanghai and will spend $1.6 million on a food safety education campaign.

Restaurant operators that have withdrawn products made with meat from Husi include McDonald’s Corp., KFC owner Yum Brands Inc., pizza chain Papa John’s International Inc., Starbucks Corp. and Burger King Corp.

Olive Garden struggles spur exec’s departure

NEW YORK – Darden Restaurants CEO and Chairman Clarence Otis is stepping down as the company fights to fix its flagship Olive Garden chain following its contested sale of Red Lobster.

The company, based in Orlando, Florida, also said Monday that it’s changing its corporate policies to split the chairman and CEO roles. It appointed lead independent director Charles Ledsinger Jr. as independent nonexecutive chairman, effective immediately.

Darden shares rose $2.03, or 4.5 percent, to $46.95 in after-hours trading.

Darden Restaurants Inc. earlier on Monday announced that it had completed the sale of Red Lobster to investment firm Golden Gate Capital. Activist investors Barington Capital and Starboard Value had objected to the nature of the breakup.

The company also said Monday that it expects to nominate nine of its independent directors for its board, meaning that at least three Starboard nominees would be elected. But Darden said it failed to reach an agreement with Starboard over the investment firm’s pending proxy contest after settlement discussions.


 

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