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McDonald's fries supplier Simplot fined in China for water pollution

SHANGHAI - Beijing authorities have fined U.S.-based J.R. Simplot's China processing unit, which supplies frozen french fries to McDonald's Corp, 3.92 million yuan ($632,370) for water pollution, state media and Simplot said.

A local regulator in Fengtai district of Beijing found that Beijing Simplot Food Processing Co Ltd had been discharging contaminated wastewater that exceeded acceptable levels, the company said in a statement on its China website.

"As soon as we discovered the wastewater leaks, we immediately complied with the environmental bureau and took measures to stop the emissions," it said, adding it was still investigating the matter to stop it happening again. The company did not specify the fine amount.

China strengthened its environmental regulations at the start of this year as public anger builds over worsening levels of pollutants that regularly afflict the country's cities and waterways.

The unit, which was set up in China in 1992, is a joint venture in which McDonald's holds a 5 percent stake, the U.S. fast food giant confirmed in an emailed statement to Reuters.

Simplot, headquartered in Idaho, is a global potato supplier for McDonald's and one of the U.S. chain's key suppliers.

"Simplot has assured us that they have implemented a corrective action plan, and we will continue to hold them accountable for implementation and enhanced procedures for compliance," McDonald's said, adding it took the infraction "very seriously."

China will ban water-polluting paper mills, oil refineries, pesticide producers and other industrial plants by the end of 2016, as it moves to tackle severe pollution of the water supply which has left one-third of China's major river basins and 60 percent of its underground water contaminated.

Chinese sales at McDonald's and Yum Brands Inc's KFC slumped last year after one of their suppliers, Shanghai Husi Food Co Ltd, was forced to suspend operations after an undercover Chinese media report alleged to show workers using out-of-date meat and doctoring production dates. U.S-based meat supplier OSI Group [OSIGP.UL] is the parent company of Shanghai Husi.

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