Christopher Adams

Christopher Adams is the Markets and Banking reporter for the New Zealand Herald

Fonterra chiefs left in dark

Botulism scare avoidable if responsibility passed swiftly to top management: review chairman.

Sir Ralph Norris and his team found gaps in Fonterra's procedures. Photo / Richard Robinson
Sir Ralph Norris and his team found gaps in Fonterra's procedures. Photo / Richard Robinson

Fonterra's botulism false alarm would not have occurred had responsibility for the contamination been swiftly passed to senior management, says Sir Ralph Norris.

The former Air New Zealand chief executive, and current Fonterra independent director, chaired the independent review committee into the August food safety scare.

The results of the inquiry were released yesterday in a 163-page report that made 33 recommendations for improvements at the dairy giant.

Fonterra first became aware of a possible botulism contamination in 38 tonnes of a whey protein - used by a number of its customers to make a range of consumer products including infant formula - in March this year.

Chief executive Theo Spierings was not informed of the problem until August 1.

The company went public with the botulism announcement on August 3, which was followed by a precautionary recall of products in seven countries, including China and New Zealand.

Further testing showed the bacterium present in the whey protein was harmless.

"The chief executive should have been advised a considerable period earlier, right at the outset," Norris said yesterday. "If that had happened I am sure that we wouldn't be sitting here today."

Chapman Tripp senior partner Jack Hodder, QC, who led the inquiry team, said some of Fonterra's customers felt deeply wounded by the scare.

The report does not name any of Fonterra's affected customers, but French dairy giant Danone claims the scare cost it more than $500 million in lost sales and has said it is seeking "full damages" from the New Zealand company.

Key findings of the report include:
*Fonterra did not carry out any sulphite reducing clostridia (SRC) tests on whey protein concentrate, despite having a contractual agreement with at least one of its customers that such tests would take place.
*Fonterra failed to recognise the "explosive reputational risk" involved in the scare.
*A lack of alignment and confidence existed between the Government and Fonterra in the critical fortnight after the contamination scare was made public.

Key operational recommendations include:
*Plant cleaning programmes be amended.
*Fonterra's food quality and safety be reviewed to ensure "best in class" standard.
*Risk and crisis management processes be strengthened.
*A "Fortress Fonterra" perception held by many "key stakeholders" be addressed.

"These changes are not optional - they're vital and they need to happen as soon as possible," said Norris. He added that progress would be reviewed.

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