British authorities were aware that tonnes of condemned horsemeat was being imported for use by suspected fraudsters as long ago as 1998 but failed to investigate the criminal networks involved fully for lack of resources, the Guardian has learned.

Over 15 years ago, environmental health officers from Rotherham council investigating a conspiracy in which hundreds of tonnes of unfit poultry meat was recycled in to the human food chain, discovered that regular shipments of around 20 tonnes each of frozen "ponymeat" from China had been arriving at UK ports for months.

The horsemeat consignments had been condemned for the human food chain by the Chinese authorities but could have been used legally to make petfood, according to a source involved with enforcement. However a paper trail showed the horsemeat going in to cold stores licenced for the human food chain rather than for petfood and then disappearing in a separate suspected fraud, the source said.

A spokesperson for Rotherham council confirmed that at the time it had investigated "significant concerns relating to a wide range of food stuffs, including poultry, 'ponymeat', red meats, fish and frozen vegetables". Convictions were secured over the poultry, but no one was charged in the other suspected cases.

The chain of brokers and cold stores through which the horsemeat was passing overlapped with a criminal chain in which condemned poultry meat that was green with slime and covered with faeces was being cleaned up with chemicals, repacked and relabelled with faked official health marks and then moved in to the human food chain, the source said. The fraudulently mislabelled chicken and turkey was sold across the UK to food manufacturers, schools and retailers including the discount supermarkets Netto and Kwik Save.

FSA and police investigations into the 2013 horsemeat scandal have uncovered a similar pattern, in which imported horsemeat passing through a system of brokers and cold stores appears to have been repacked and relabelled with faked official health marks as beef, the Guardian has been told, although they have not proved where exactly the fraud of mislabelling took place.

In the previous Rotherham case, three men were found guilty of selling unfit poultry for human consumption at Hull crown court in December 2000.

According to an enforcement source, at the time officers warned the central authorities, including the Food Standards Agency when it was newly formed in mid-2000, that the fraud was the tip of an iceberg of meat-related crime they could see reaching in to many other areas across the country. Another case in Derbyshire in 2000 found unfit poultry being bleached and recycled to over 1,000 food manufacturers, wholesalers and retailers all round the UK.

A series of meetings are said to have been held at the FSA with local authority officers at which the ponymeat and poultry frauds were discussed. But the significance of the horsemeat was not understood.

Enforcement of meat regulation largely falls to local authorities and Rotherham council's budget was being severely strained by what had become a major criminal investigation costing it over £500,000.

A spokesperson for Rotherham council said that in the 1998 investigation it was decided that the weight of evidence made a prosecution more likely to be successful in the case of the recycled poultry meat rather than the other suspected frauds including horsemeat. "The authority co-operated fully with the other agencies involved in the prosecution," she said. The council no longer has full records for the period however.

A spokesman for the FSA said the agency no longer had any records of meetings held by the relevant enforcement officials for that period either and so could not comment either to confirm or deny whether the horsemeat problem had been discussed with it.

The information about the case from 1998 comes a year after the beginning of the horsemeat scandal when the Food Safety Authority of Ireland first revealed the results of a study that found undeclared horse in beefburgers from Tesco, Iceland, Aldi and Lidl. So far only one British horse abattoir has been charged with technical breaches of the food regulations but there have been no prosecutions for fraud relating to the scandal in either the UK or Ireland.

Measuring the scale of food crime in the UK has now been made a key priority for the team tasked by the Department for Environment, Food and Rural Affairs to review the horsemeat scandal. Professor Chris Elliott from Queen's University in Belfast's Institute for Global Food Security, who is leading the review, told the Guardian that food crime had become "endemic" in the UK. He believes that risks are now so great that he has recommended that a new specialised police force be set up to tackle it.

His interim report last month described a case of large-scale meat fraud in 2005 which was another "missed opportunity". Shipments of suspicious poultry meat from Asia led to raids on a cold store in Northern Ireland where a large supply of forged health marks purporting to come from a variety of meat plants across the EU were found that were the tools of a repacking and relabelling scam in which petfood was recycled as fit for human consumption. But at the time there was no capacity for the major criminal investigation justified by such leads into food crime networks.

Elliott said criminals involved in food crime were still likely to go undetected, and even if detected unlikely to be successfully prosecuted: "Horsegate was not a one-off; fraud is endemic in food and is likely to get worse because of the complexity of chains and the economic climate. The focus of regulators and industry has been safety, and fraud has not been given the priority is should have been." He called for urgent change to policy over food crime, adding that "the complexity of the criminal network involved in the horsemeat fraud will make it extremely unlikely that those who perpetrated the crime will be successfully prosecuted".