Two Kiwi bosses on fraud charges

By LIAM DANN primary industries editor

Two senior executives who worked for Kiwi Co-operative - the dairy company that evolved into Fonterra - are among the seven people charged with fraud in the $75 million "powdergate" export scandal.

Paul Marra, 54, was one of the New Zealand dairy industry's most experienced executives, with more than 35 years in the sector. He was chief executive of Kiwi's high-value product division Food Solutions.

The other senior Kiwi executive is Malcolm McCowan, who worked for many years with the Dairy Board before joining Kiwi in 1997. He worked with Marra at Food Solutions.

Marra and McCowan were suspended during Fonterra's inquiry into the powdergate allegations in 2001.

Both resigned from the company following mediation in December 2001.

Through his lawyer, McCowan said he had nothing to hide and he would defend the charges.

Marra and McCowan worked directly under then Kiwi chief executive Craig Norgate - who went on to take the top job at Fonterra.

The Fonterra inquiry found that Norgate was not implicated in the affair and had at no stage acted improperly.

Others charged include executives employed with Kiwi's Australian subsidiary Cottee Dairy Products.

The whereabouts of Cottee Dairy Products director and general manager Terence Walter is still unknown and the SFO has enlisted the help of Interpol to track him down.

British-born Walter was also the sole director and shareholder of South Pacific Distribution (SPD).

SPD is alleged by the prosecution to be the mechanism used to export about 10,000 tonnes of incorrectly labelled milk powder, worth more than $75 million.

Also charged is Ross Cottee, a senior executive and shareholder in Cottee Dairy Products. He is overseas but has been contacted and is understood to be returning to face the charges.

After an 18-month investigation the Serious Fraud Office laid charges against the seven last week.

Marra and McCowan appeared in the Auckland District Court last week along with former Kiwi employees Sean Miller and Stephen Wackrow and businessman William Winchester. All have been remanded on bail.

The charge of conspiracy to defraud relates to 270 separate shipments of product between January 1997 and October 23, 2001.

Fonterra was in existence for just one week of that period - it was launched on October 23, 2001.

New Canadian chief executive Andrew Ferrier said the matter was in the past and the company was now focused on the future. He would not comment further yesterday.

Only one of the accused is still employed by Fonterra and he has been suspended without pay.

A pre-depositions callover is scheduled for May 18 at the district court.