US owner of China meat supplier at center of food safety scandal lays off 340 employees

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A U.S. meat supplier is laying off most of the workforce of a Chinese subsidiary accused of selling expired meat to KFC, McDonald's and other customers.

OSI Group said Monday it will lay off 340 employees of Shanghai Husi Food Co., which has been under investigation since a Shanghai TV station reported in July it supplied expired meat.

Six employees were arrested in August on suspicion of producing substandard products.

OSI Group said a small number of employees would be kept on in Shanghai while the investigation is underway. It said production was unlikely to resume in the near future. It said the company suffered "significant financial and customer losses."