The Canadian Food Inspection Agency shut down Edmonton-based Capital Packers on Thursday and announced the company was recalling two brands of ham sausages.
The agency said when a test for Listeria on a worker's clothing came back positive on Monday, the company said none of the sausages had been distributed to retailers.
But Paul Mayers, a CFIA vice-president, said inspectors found that some of the suspect meat had left the plant.
"The information provided indicated that all related product was under control," he said Friday from Ottawa.
"Our investigation, which immediately was initiated on receipt of the notification of the result, uncovered that indeed some product had been distributed."
None of the sausages has tested positive for Listeria. He said the recall is a precaution to ensure that none of the potentially tainted meat ends up on dinner plates.
The company will not be allowed to resume operations until it addresses the problems and the CFIA is fully confident that the plant is managing food safety risks.
The bacteria can lead to an infection called listeriosis which can cause high fever, severe headache, neck stiffness and nausea.
In 2008, 22 people died and dozens of others became sick after eating Listeria-contaminated deli meats from a Maple Leaf Foods (TSX:MFI) plant in Toronto.
There have been no reports of people becoming ill from eating the Capital Packer's sausages that were being sold at Loblaws and Sobeys stores in Western Canada under the Compliments and Capital brands.
Mayers also cited other but unrelated food safety issues at Capital Packers that date back to September of last year. The CFIA said some of the problems have been corrected and some are still being dealt with.
Capital Packers president Brent Komarnicki said the voluntary recall involves 378 cases of sausages. Each case contains 10 packages of meat.
He admitted the company's paperwork related to the recall was not satisfactory and pledged to work with the CFIA.
"We have an ineffective recall program that we need to resolve and improve on, so the documentation is readily available for the inspectors when they request it," Komarnicki said. "That is where our failure was."
Komarnicki was adamant that the licence suspension had nothing to do with food hygiene at the plant.
"We were not able to properly provide them the documentation around this recall program and that is what threw us into suspension," he said.
"It is not to do with the quality of the product or the plant cleanliness or sanitation or anything like that."
On its website, Capital Packers describes itself as an 82-year-old, third-generation family-owned business.
It employs about 100 people, who Komarnicki said were sent home for the day on Friday.
The website said the company produces 153 varieties of fresh meats, 13 varieties of cooked meats, 151 varieties of smoked meats and nine varieties of pickled meats.
On Sept. 27, the CFIA suspended the licence of XL Foods in Brooks, Alta., a meat-packing plant at the centre of an extensive recall of tainted beef.
Eighteen confirmed cases of E. coli were linked to the plant, which was closed for more than a month before its operating licence was restored in late October.
Three weeks before the CFIA suspended XL's licence, the agency reported it was having difficulty getting information from the company about its product distribution and testing results.