updated 3/19/2009 12:49:00 PM ET 2009-03-19T16:49:00

The food industry's self-policing system failed to catch filthy conditions at a peanut processing plant blamed for a salmonella outbreak in the U.S., lawmakers said Thursday.

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The House Energy and Commerce investigations subcommittee released new documents and pictures on Thursday that attested to long-standing sanitary problems at facilities owned by Peanut Corp. of America. The company is at the center of a outbreak that has sickened nearly 700 people and is being blamed for at least nine deaths.

The outbreak was traced to a Peanut Corp. company facility in the state of Georgia. Later, another Peanut Corp. plant in the state of Texas was also found to have serious problems. Peanut Corp. is under criminal investigation.

Rep. Bart Stupak, a Democrat and chairman of the investigations subcommittee, questioned how dozens of food companies that bought peanut paste and other ingredients from Peanut Corp. failed to pick up the problems. Part of the reason, Stupak said, is that they relied on safety audits by inspectors who were hired by Peanut Corp.

"There is an obvious and inherent conflict of interest when an auditor works for the same supplier it is evaluating," said Stupak, calling it a "cozy relationship." Peanut Corp.'s private inspector, a company called AIB, awarded it a certificate of achievement in 2008 for "superior" quality at the Texas plant.

‘The place was filthy’
At least one food company that used its own auditors, Nestle, decided not to do business with Peanut Corp.

The committee released a 2002 inspection report from Nestle. "They found that the place was filthy," said Rep. Henry Waxman, a Democrat.

Lawmakers have introduced legislation to take food safety oversight away from the Food and Drug Administration and give it to a new agency with stronger legal powers and more funding.

Thursday's hearing came as a major food company joins consumer groups in saying the U.S. food safety system is broken.

Kellogg calls for overhaul
The head of Kellogg Co., the world's largest cereal maker, is calling for an overhaul of how the government polices the industry. Kellogg lost $70 million in the salmonella outbreak after it had to recall millions of packages of peanut butter crackers and cookies.

Kellogg's chief executive, David Mackay, wants food safety placed under a new leader in the Health and Human Services Department. He is also calling for new requirements that all food companies have written safety plans, annual federal inspections of facilities that make high-risk foods and other reforms.

Mackay's call for major changes could boost President Barack Obama's efforts to remake the system. Last week, Obama launched a special review of food safety programs, which are split among several departments and agencies, and rely in some cases on decades-old laws. Critics say more funding is needed for inspections and basic research.

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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