US meat processing giant Smithfield Foods has shut one of its Polish meatpacking plants after local media showed employees scraping mould off sausages and sending them back to retailers.
This could have repercussions for firm, which has been looking to increase its position in the emerging markets of Eastern Europe.
Polish daily paper Rzeczpospolita and television channel TVN caught workers at the Constar plant on hidden cameras, debating whether expired products sent back by stores should be thrown out or cleaned up and sent out again.
A Reuters report this morning said that the director of Constar, which is owned by Smithfield's Polish unit Animex, has been suspended and production has been halted until the matter is cleared up. An investigation by government food safety inspectors is being carried out and the company has promised to initiate an internal audit.
The European Union, which Poland joined last year, is awaiting the results of the Polish investigation before deciding whether to take any action.
US-based Smithfield Foods bought a majority share in Poland's largest meat processor, Animex, back in 1999 and recently acquired Morliny, which has annual sales of more than €77.8 million. Expansion has certainly been at the centre of Smithfield's plans, as these recent acquisitions show.
"These acquisitions strengthen our presence to capitalise on marketing opportunities to develop the protein marketplace in Eastern Europe as these markets emerge," said Robert Sharpe II, president of international operations for Smithfield.
The company has also positioned itself to take advantage of further anticipated EU enlargement and the development of Europe as a cohesive market. Romania is currently on track to join the EU in 2007.
But this latest scandal could undermine the company's reputation at a critical point in its expansion strategy, and damage limitation is likely to follow swiftly.