Fonterra's $3.7m eased departure of 'fall guy'

Bob Major. Photo / Brett Phibbs

A top Fonterra executive who was paid $3.7 million when he left the dairy giant this year, Bob Major, was an industry veteran said to have been the fall guy for Fonterra's disastrous investment in China's San Lu milk company.

Mr Major retired from Fonterra in May after a 28-year career which spanned service in China for the former Dairy Board, the Dairy Research Institute and latterly as Fonterra's chief in China.

He was also a director of San Lu, which bore the brunt of a Chinese infant formula poisoning scandal last year in which four babies died and more than 50,000 children became ill.

Fonterra's annual report this week shows one executive received between $3.71 million and $3.72 million in the financial year to July 31.

Business Herald inquiries indicate that person was Mr Major, understood to be in his early 50s. His "retirement" was announced by Fonterra in April this year, after the bankruptcy of San Lu, which had been 43 per cent owned by Fonterra, NZ's biggest company and the world's leading dairy exporter.

San Lu was one of 22 Chinese firms caught in the poisoning crisis but it and Fonterra suffered negative global publicity after the New Zealand government blew the whistle on infant sickness in China after an approach from the NZ dairy giant.

Investigations showed milk supply to Chinese dairy firms had been deliberately laced with the industrial chemical melamine to raise protein readings.

Several Chinese San Lu managers were charged with criminal actions, of which Fonterra has denied all knowledge.

Mr Major, known in the dairy industry as a marketer, was one of three Fonterra representatives on the San Lu board.

When his exit was announced, Fonterra said he had not lost his job because of the tragedy.

But industry sources and Fonterra farmer-shareholders approached by the Weekend Herald said Mr Major took the fall for the damage to Fonterra's reputation as a result of the debacle, which cost farmer-shareholders $200 million.

On a visit to NZ in August last year, Mr Major made no mention during an interview with the Herald of the unfolding crisis - two days after a trade recall of product had begun in China.

Mr Major is travelling overseas and could not be contacted.

Fonterra chairman Sir Henry van der Heyden and Fonterra Shareholders Council chairman Blue Read would not comment on the $3.7 million payout.

However, sources close to the situation said it would have included superannuation entitlements from Mr Major's time with the Dairy Board - which was part of the industry merger which created Fonterra in 2001 - expatriate allowances, salary and termination costs.