Horsemeat scandal: First arrests in Britain - and French Spanghero plant suspected of labelling 750 tons of Romanian horsemeat as 'beef'

A fraudulent meat-trader in the south of France was the probable source of horsemeat in British Findus beef lasagne, the French Government has said.

The French consumer minister, Benoît Hamon, said that an official investigation had uncovered "strong suspicions" that the Spanghero company in Castlenaudary, in Languedoc, had mislabelled 750 tons of Romanian horse meat as beef.

In the UK, the first arrests were made over the food scandal, with police and the Food Standards Agency (FSA) swooping on two meat plants suspected of slipping undeclared horse meat into burgers and kebabs.

At the Farmbox Meats de-boning factory, near Aberystwyth, they arrested Dafydd Raw-Rees, 64, the owner, and a second man aged 42. In a simultaneous operation a 63-year-old man at the Peter Boddy Slaughterhouse in Todmorden, West Yorkshire, was arrested and all three were being questioned on suspicion of fraud.

The operation was disclosed minutes before Asda became the latest major supermarket in Britain to be caught up in the crisis. It took a 500g beef bolognese sauce off the shelves, the first time a fresh beef product has tested positive for undeclared horse. Asda also withdrew a 600g beef broth soup, 500g meat feast pasta sauce and a 400g chilli con carne soup as a "precaution".

Like many other developments in the scandal, the news was slipped out shortly before 7pm. As the Government sought to reassure the public, the FSA revealed that veterinary drug phenylbutazone, "bute", had been found in eight out of 206 carcasses tested over seven days this month.

The anti-inflammatory drug is linked to a rare blood disorder in humans, but the Chief Medical Officer, Sally Davies, said that the risk of ingesting a significant dose through horse meat is extremely small. A human would have to eat hundreds of bute-tainted burgers in a single day to receive a significant dose, she said.

The French investigators disclosed that more than 550 tons of the meat were shipped to a factory in Luxembourg owned by the French company Comigel, which makes frozen meals for Findus and a dozen other European brands. Comigel had been "tricked", Mr Hamon said, but should have checked the meat and accompanying documents more rigorously.

Spanghero – founded by the brothers of one of France's greatest rugby heroes, Walter Spanghero – was suspended from meat trading. The French government plans to bring criminal proceedings against the company which no longer has any connection with the Spanghero family.

"The first elements of the investigation has shown that the Romanian horse meat was first labelled as beef by Spanghero," Mr Hamon told a press conference. "Our inquiries suggest the company knew – or at least that there are strong suspicions they knew – that they were selling horse meat as beef."

The investigation by the French consumer fraud agency has uncovered documents suggesting that the mislabelling started "several months" ago. It has cleared the Romanian abattoir of all blame. The meat was exported from Romania and handled by a Dutch trading company, based in Cyprus. So far, the French investigation has found no documents to suggest the Dutch company, Draap Trading, was complicit in the suspected fraud by Spanghero.

Mr Hamon believes the French company was guilty of "fraud for economic gain". Spanghero later rejected the allegations. In a formal statement, it said: "Spanghero reaffirms (that it) placed an order for beef... (that it) was led to believe that it received beef, and sold back what it thought was beef."