Fonterra had not heard of milk revelations - Ferrier

By Owen Hembry, Eloise Gibson

Fonterra today denied any knowledge of revelations that its Chinese partner San Lu lied for eight months to hide complaints about its melamine-contaminated baby formula.

China's State Council reported that San Lu received complaints as early as last December blaming its infant formula for illnesses in babies.

Fonterra chief executive Andrew Ferrier issued the denial today saying he had no knowledge of the revelations and would be holding a media conference at midday today.

Eight months later, tests revealed the milk was tainted with the industrial chemical melamine, which causes kidney stones and can lead to kidney failure.

San Lu is one of 22 companies involved in a tragedy in which at least four babies have died and nearly 13,000 children have been hospitalised. About 53,000 babies became ill after drinking tainted formula.

Fonterra spokeswoman Hilary Marett yesterday repeated the New Zealand company's statement that it did not learn of the complaints until August 2.

The complaints it learned of went back as far as March, she said.

Fonterra also defended an upbeat interview its San Lu director Bob Major gave the Herald on August 8 about the dairy company's Chinese operations several days after becoming aware of the sick babies and poisoned milk powder. The interview was given two days after the trade recall began.

Asked if Mr Major has given the interview in preparation for bad news, Fonterra said his trip had been scheduled well in advance.

"They [Major and another director] were in Auckland for the bi-annual meeting of Fonterra's senior executives," a company official said.

"The interviews had been set up prior to August 2, and we wanted to fulfil the commitment we'd given to journalists."

During the interview Mr Major made no mention of the unfolding crisis.

He said he liked China's dynamism and rate of growth, and the bold decisions its people made.

"The rest of the world is very static by comparison," he said.

Fonterra wanted to become a greater participant in the local dairy market.

"It's growing so quickly internally that the supply is struggling to keep up with the growth in demand," Mr Major said.

"The biggest constraint of growth there is milk and quality milk."

Fonterra is expected to face further questions from analysts and journalists when it gives its annual results in Auckland today.

China's official Xinhua news agency also reported yesterday that Communist officials in the northern city of Shijiazhuang, where San Lu is based, delayed referring the matter to higher authorities for more than a month after they were told of it in early August.

"They violated rules on reporting major incidents involving food safety," Xinhua said, quoting the cabinet probe.

The Xinhua report appeared to be the first official admission that delays in reporting the risks were deliberate.

The scandal claimed a high-level political scalp when the head of China's food safety watchdog resigned because he had failed to stop the widespread contamination.

The resignation of Li Changjiang, who headed the General Administration of Quality Supervision, Inspection and Quarantine since 2001, came a year after he and the government promised to overhaul the system in response to a series of product safety scares.

New regulations and procedures were introduced in an attempt to restore consumer confidence and retain export markets after a string of recalls involving tainted toothpaste, faulty tyres, contaminated seafood and in March last year pet food containing melamine that was blamed for killing dogs and cats in the United States.

Improvements announced included establishing a national food recall system, random inspections, and increased exchanges with quality inspectors in other countries.

The Philippines is the latest country to ban Chinese dairy products.

"What we are telling parents now, especially the mothers, is to avoid buying milk with 'made in China' markings," said Leticia Gutierrez, head of the country's Bureau of Food and Drugs.

Bangladesh, Brunei, Burundi, Japan, Gabon, Malaysia, Myanmar, Singapore, Taiwan, Tanzania and Vietnam have barred Chinese milk products or taken other action to curb consumption.

Who and when:

Fonterra says it learned of the complaints about San Lu milk formula on August 2, and the complaints it learned of went back as far as March.

The company yesterday defended an upbeat interview its San Lu director, Bob Major, gave the Herald on August 8.

Communist officials in the province where San Lu is based are said to have delayed referring the matter to higher authorities for more than a month after they were told in early August.

- ADDITIONAL REPORTING BY AGENCIES

- NZ Herald

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