Cabinet minister Shane Jones has asked Treasury for an opinion on the "robustness" of Fonterra's past financial reports following the shock forecasted writedown of $800 million-plus of asset values.
The Associate Minister of State-owned Enterprises, Regional Economic Development Minister and Associate Finance Minister has also asked major Fonterra shareholder Landcorp, a Crown-owned business, to advise if it sees "any problems" with Fonterra's financial reporting.
Landcorp is Fonterra's second largest shareholder.
"We will get Treasury and Landcorp to establish for the SOE ministers whether there are things that we should be more alert to, whether there are any problems," Jones said.
"It would be a horrible outcome if those financial reports are not robust. One would imagine however that given all the sharemarket analysts covering Fonterra and given the reputation of [auditor] PwC that the information given by Fonterra is defensible.
"However, I have sent a message to Treasury and Landcorp asking whether or not they can see anything."
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The spotlight has gone on Fonterra's past financial reporting and the role of its long-time auditor PwC as Fonterra's stunned farmer-owners absorb the dairy conglomerate's announcement of an expected $675 million loss for the financial year just ended and writedowns of $820m-$860m, mostly in its offshore businesses.
One of the biggest surprises was an anticipated $200m writedown in the value of the New Zealand consumer business.
The grim financial assessment follows Fonterra's first ever annual loss last year - of $196m.
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Fonterra responded that it operated in a legislative framework regulated by the Financial Markets Authority.
"Our financial statements are independently audited every year," the company said in a statement.
"The writedowns we recently announced were in line with our market disclosure obligations, are all approximates and are yet to be audited. Those calls were made as a result of the full review of the business which has taken place across the year, as well as the work done so far to prepare our financial statements for FY19."
The statement noted "the numbers could change following the end of year audit process".
Final numbers would be released with the annual results on September 12.
NZ First MP Jones, asked to comment as a Landcorp shareholding minister, said "beyond the actual figures", the loss and writedowns forecast for the 2019 financial year had come as no surprise to him and NZ First leader and SOE minister Winston Peters.
"I was mandated by Winston Peters to take on the performance of Fonterra because we had both been advised over the years that Fonterra had moved too far from its base and invested billions of dollars chasing international dreams instead of tending to the business at home.
"We said executive salaries were out of control. We said the number of staff at Fonterra earning over $1 million was a very bad sign, especially when their performance was going down the gurgler."
Former chief executive, Dutchman Theo Spierings, who departed in August last year, was paid $43m in his seven years in the top job. He collected $8m in each of two recent years and in August was paid an extra $4.6m from an incentive programme despite losses.
New chief executive Miles Hurrell is being paid significantly less, the company has said as it resets the business following an internal review.
Jones urged New Zealand's largest company, created in 2001 from an industry mega-merger which ducked opposition from the Commerce Commission by gaining special enabling legislation under Helen Clark's Labour government, to "get back to brass tacks" or basics.
"I think the [credit] rating agencies are actually believing what Fonterra is saying [about the reset] but now it has to crystallise a plan, sooner rather than later, that copes with its inordinate debt of $7.4 billion. It has to shrink its cost structure.
"Fonterra has to earn the right to pursue growth ambitions. It has not earned that right."
Jones said as part of a return to basics, "in a nano-second" he'd send Fonterra's headquarters to the provinces.
"I've always felt the base of Fonterra in that Star Trek building [in Auckland] reflects the distance the executive class have moved from the punters down on the farm.
"The majority of New Zealand milk sells itself. You don't need legions of people swanning around representing cost centres when at the end of the day there's no net profit after tax."
Fonterra said it was not planning to move its offices from Auckland.
Fonterra employs more than 22,000 people according to the 2018 annual report. The company has refused to say if the business review has led to redundancies.
Jones said Fonterra's value-added "ideology is a fish tale".
"It's mythology. I don't want to hear any more about it because I don't believe it. I don't see any financial results reflecting the mythology."
New Zealand wanted Fonterra to succeed but it had to "go back to basics and clear away the detritus in terms of debt".