An independent inquiry into Fonterra's botulism scare has revealed a broken torch sparked the contamination scandal.
The inquiry was funded by the dairy giant and employed a panel of seven experts to discover what went wrong when tests incorrectly identified the clostridium botulinum bacteria, which can cause botulism, in whey protein concentrate (WPC80) used in infant formula worldwide.
Products were recalled from shelves across the globe in August, and the country's international reputation as a safe and reliable exporter was questioned by key export markets.
For its report, released yesterday, the inquiry team visited eight Fonterra plants, interviewed more than 70 employees and 30 stakeholders to identify the chain of events that led to the scandal.
Plastic from a broken torch at Fonterra's Hautapu plant in Waikato was found to be the catalyst, not a dirty pipe as claimed by Fonterra at the time. "In February 2012 ... during an examination of a large dryer in operation, a torch came into contact with a part of the equipment, breaking the hard torch lens," the report said.
"A few pieces of this plastic were not recovered and thus contaminated the WPC80."
Staff were approved to re-filter the affected product and remove the broken pieces in May 2012, an uncommon practice which required "improvisations".
A pipe which hadn't been used in two years was required to do this. When investigating the source of the contamination "circumstantial evidence" suggested that a film of micro-organisms had survived cleaning processes to contaminate the whey, but the inquiry disproved this theory.
In its 33 recommendations to prevent and mitigate another crisis, the inquiry team suggested more robust testing and cleaning regimes that align with international best practice, improving engagement with stakeholders to shift a "Fortress Fonterra" perception, establish specialised risk and crisis management plans and develop a strong communications team with local knowledge of key markets.
Fonterra chief executive Theo Spierings said: "We have learned lessons from what has been a difficult experience, subsequently found to be a false alarm. Fonterra is emerging from this experience with a culture of developing more transparency, accountability and retaining utmost focus on food safety and quality."
Prime Minister John Key believed Fonterra produced world-class products and had "very good systems and high levels of accountability".
"We've just got to be absolutely sure they're the gold standard, that's how New Zealand's going to maintain its brand place and position."
Auckland Chamber of Commerce chief executive Michael Barnett said the report made good expectations but did not address issues of the reputational damage caused to companies who used the WPC80.
"It doesn't seem to acknowledge that level of damage is there and the need for repair. Other than that, I think the report is fair and Fonterra has been upfront about it and said there is room to improve."
Danone, the parent company of Nutricia Australia New Zealand which produces Karicare infant formula - one of the affected and recalled products - was understood to be suing Fonterra for $320 million for reputational damage.
The French-based company was unable to answer media requests before press time last night.
Tourism New Zealand, which had faced criticism over its 100% Pure campaign after the scandal, said it could not comment last night as staff had not had time to read the report.