Charges after Nippon Meat beef scandal


Supermarkets across Japan have been removing Nippon Meat's products

CNN's Ravi Hiranand in Hong Kong
and wire reports

TOKYO, Japan (CNN) -- Three sales managers at a Nippon Meat Packers subsidiary will have charges filed against them by Japan's Agriculture Ministry over the next ten days, the company told CNN.

The sales managers, who still work for the company and have not been arrested yet, were implicated by the ministry in a scandal involving foreign beef mislabeled as domestic beef.

The beef was then sold to an industry body under a buy-back program initiated by the Japanese government to halt the spread of mad cow disease, but Nippon Meat had the body cancel the sale and return the beef without ministry permission before destroying it.

Despite the news, Nippon Meat's shares were up 3.99 percent to 808 yen, rebounding after a seven session losing streak that saw its share value halve.

Analysts told Reuters that the stock was due for a rebound, but it might not see any further improvement. Moody's Investment Service downgraded Nippon Meat's senior unsecured long-term debt rating on Tuesday on worries about the scandal.

Investigation

The ministry alleged that the sales managers fraudulently claimed 900,000 yen ($7,683) by passing off the foreign beef as domestic.

A spokesman for Nippon Meat told CNN that he did not know whether the company would take any internal action against the three sales managers.

Nippon Meat claims that the three, who manage separate divisions, acted without asking management and that the company was unaware of their scheme.

The Nihon Keizai Shimbun reported that the ministry also wants to investigate further the actions of the company's senior managing director, Motoaki Shoji, who resigned last week.

The ministry will investigate whether Nippon Meat management were aware of the deception and clarify the details of the incineration, which the company claimed at first was because the beef was past its sell-by date.

They are also trying to ascertain whether Shoji ordered the incineration and whether he knew that it was to avoid the beef's inspection.

Embattled food industry

The effects of the scandal have hit the company, Japan's leading beef producer, and the nation's embattled food industry hard.

Nikkei says Nippon Meat decided to cancel a sales promotion on Wednesday that it planned to run from September to November, having already suspended all other forms of advertising in an effort to show the public that it regrets its involvement.

On Tuesday the company announced that it expected sales to fall 40 percent for August as supermarkets and retailers remove the company's product from store shelves. (Full story)

It wasn't the only company in trouble for mislabeling beef, however, as major supermarket chain Tokyu Store announced yesterday that one of its stores had sold beef passed off as a more expensive variety.

And earlier this year Snow Brand, the sixth-largest meat packer in the country before its liquidation, admitted to mislabeling foreign beef as domestic.