McDonald's faces payout over beef fat on its fries

Fast-food firm McDonald's is to pay $10m (£7m) in an out of court settlement after offending religious and vegetarian groups by using beef flavouring to prepare its French fries.

Under the agreement being finalised, McDonald's will also issue a full apology on its website and and convene an advisory board to advise it on vegetarian matters.

Sixty per cent of the settlement will go to various vegetarian organisations and the rest will go to Hindu and Sikh groups as well as organisations that are concerned with children's nutrition and kosher dietary practice.

According to a draft copy of the settlement, the world's biggest restaurant operator will also pay an additional $4,000 to each of 12 plaintiffs in five separate US lawsuits, which claimed McDonald's wrongly described the French fries as vegetarian. Last year, McDonald's was forced to issue an apology after it was revealed the company used natural beef flavour throughout the production of its fries, while still claiming they were suitable for vegetarians.

Though McDonald's switched to vegetable oil to cook its fries in 1990, the disclosure that they were still flavoured with beef tallow angered vegetarians and others who do not eat beef.

Last May, Hindu groups attacked a McDonald's in Bombay after it was sued in the United States for using beef tallow.

Harish Baltic, a Seattle-based attorney who filed suit against McDonalds's last year and is one of the successful plaintiffs, last night told The Independent: "I'm not happy with the $10m, and wish I could do better in terms of money. But our focus was to change the fast food industry, and this is a big victory for consumers in this country.

"In the past 100 years, this is the first giant corporation to apologise, admit wrongdoing and also pay millions of dollars. I am proud of that."

In the apology, McDonald's will say it "sincerely apologises to Hindus, vegetarians and others for failing to provide the information they needed to make informed dietary decisions'' in its US restaurants, said Mr Baltic.

Last night, a spokesman for McDonald's said it was premature to discuss details before an official settlement. But he added: "McDonald's has been working in good faith to resolve this matter and publicly apologised last year for any confusion we may have caused."

"It was purely unintentional, and we have been working to addressthis issue in a positive way. In August of 2001, McDonald's led our industry by being the first to provide information to our customers about the sources of natural flavours in our products."

The five lawsuits over beef-flavored fries were filed last year in Washington, California, Texas, Illinois and New Jersey. The proposed settlement is a master settlement agreement, which would control the terms in all pending cases and protect McDonald's from further liability from lawsuits arising from beef-flavored fries.