* Five Shanghai Husi staff detained include head and quality chief - police

* Food safety violations at Husi were company-led, not individual acts - watchdog

* Over 1,000 tonnes of suspect meat products sealed from OSI in China

* More Japanese firms withdraw Husi-supplied products (Adds visits to OSI plants, local comments)

By Brenda Goh and Paul Carsten

SHANGHAI/LANGFANG, China, July 23 (Reuters) - Shanghai police said on Wednesday they detained five people in an investigation into a Chinese-based supplier of foreign fast-food brands including KFC and McDonald's Corp over allegations the firm supplied out-of-date meat.

The five detained include the head of the company - Shanghai Husi Food Co Ltd, a unit of U.S.-based OSI Group LLC - and the firm's quality manager, the police said in an online statement. It gave no other details.

McDonald's, Yum Brands Inc, the parent company of KFC and Pizza Hut, and coffee chain Starbucks Corp are among global brands to have pulled products from their outlets after it emerged that Shanghai Husi supplied expired meat to clients in China, as well as Japan, in the latest in a series of food safety scandals in the country.

Earlier, the official Xinhua news agency cited the Shanghai food and drug watchdog as saying that food safety violations at Shanghai Husi were company-led rather than the acts of individuals. "We discovered that some of the company's illegal behaviour was not the behaviour of individuals, but rather an organised arrangement by the company," Xinhua reported Gu Zhenhua, deputy head of the Shanghai Municipal Food and Drug Administration, as saying.

Illinois-based OSI has said it was "appalled" and was investigating the matter after a Chinese TV report on Sunday showed staff at its Shanghai Husi facility using expired meat and picking up meat from the floor to add to the mix.

An official at OSI in China reached by telephone on Wednesday declined to comment further.

DIFFERENT STANDARDS

Huang Denggang, 20, worked as a night cleaner at the Husi plant, a modern warehouse compound in a Shanghai suburb, for more than a year, but doesn't plan to return when it re-opens because of lower-than-expected pay and a medical claim.

He told Reuters on Wednesday that he saw workers pick up raw meat from the floor and put it back into processing containers.

"I've seen them pick meat pieces off the floor, though I can't say I know anything about expired meat because I'm not involved in that part of the factory," he said at a local job agency where he works during the day. He showed Reuters his Husi payslip as verification of his employment there.

"The leader didn't say anything when you throw it back. When the raw meat falls out of a container from inside, you just pick it up and put it back," he recalled, adding he also saw some workers not wear gloves while handling raw meat.

"If you wear gloves, maybe it slows you down if you want to pick up the chicken pieces because they're slippery. But again I don't work in that part of the factory. But I've seen them doing that (not wearing gloves)," he said.

Another Husi worker, who gave only the surname Zhang, said by telephone that he worked on the production line breaking up chicken into pieces. He said he quit because of the low pay.

"When it (raw meat) drops, they usually don't see it, and even if they do it was fine to pick it up and put it back," he said. "There was an attitude of 'it doesn't really matter'."

The former workers' comments contrasted with what one worker at another of OSI's food processing plants in Langfang in the northern Chinese province of Hebei told Reuters. He said that regulations there were very strict, all workers need to wear special clothes, and spot checks were often held unannounced.

"The inspections are done by everyone: our own company, the government and also clients like McDonald's. Our rules are very strict and food safety standards are very high," said the worker, surnamed Wei, as he took a break at a nearby supermarket. He added the Hebei factory, which processes meat, vegetables and flour products according to its website, was still open for business despite ongoing government inspections.

"DOCTORED RECORDS"

Xinhua also cited the Shanghai food watchdog's deputy head Gu as saying that Shanghai Husi's controls systems and records for suspected products violated Chinese regulations.

In the Dragon TV documentary on Sunday, staff at the Shanghai Husi facility said they kept two record books related to food products, one of which was doctored to be shown to anyone who came to audit the facility. According to the report, which claimed to show an inspection of the facility by McDonald's, Shanghai Husi staff were aware a day in advance of the visit and made sure that only compliant products were being processed on the day.

Separately, the Shanghai food watchdog said it had sealed more than 1,000 tonnes of suspected meat products from OSI in China, and a further 100 tonnes of products from a range of its customers.

In Japan, a spokesman for Seven & I Holdings Co Ltd said a licensee in Shanghai had been selling two hamburger products using meat supplied by Shanghai Husi. Both products were removed from outlets on Monday.

A spokeswoman for FamilyMart Co Ltd said the Japanese convenience store chain had begun a supply deal with Shanghai Husi this month, selling a "Garlic Nugget" product at its around 10,000 stores in Japan. Another product, "Popcorn Chicken" began test-sales mainly in Tokyo this week. Sales of both products were halted on Tuesday. The company said there were no reports of any customers falling sick from the products.

"I am deeply sorry for causing this trouble and worry to all those involved," FamilyMart President Isamu Nakayama told reporters in Tokyo. "We do not think there is any problem with our operating structure but the very fact that this happened means that I think that additional checks should be put into place to help reassure consumers."

On Tuesday, McDonald's Holdings Co (Japan) Ltd said the company had sourced about a fifth of its Chicken McNuggets from Shanghai Husi and had halted sales of the product on Monday. (Additional reporting by Ran Kim, Shimizu Ritsuko and Olivier Fabre in TOKYO and Adam Jourdan in SHANGHAI; Editing by Ian Geoghegan)

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