Fonterra commences review into formula scandal

Photo / Richard Robinson

Fonterra has today commenced an operational review into the infant formula scandal which has plagued the dairy cooperative since the beginning of the month.

The review will be led by its group director of strategy, Maury Leyland, and is expected to be completed by the end of August.

Ms Leyland will also lead Fonterra's recovery management team, responsible for the ongoing operations of the precautionary recall.

Chief executive Theo Spierings said the in-depth review would cover Fonterra's business processes, information and traceability systems, and current ways of working - including decision-making processes.

Ms Leyland said the operational review was separate to the one being conducted by Fonterra's board of directors, but the findings would be shared directly with them.

"Our initial investigations have given us a clear idea of the events that led to our precautionary recall, but we now need to establish a detailed understanding of the processes, systems and decisions involved.

"We are conducting the review to find out why this happened, prevent it from happening again, and ensure we take all steps necessary to maintain our global leadership position within the dairy industry."

The announcement came as the Ministry for Primary Industries (MPI) commenced a compliance investigation into the potential contamination of three batches of Fonterra's whey protein concentrate.

MPI acting Director-General Scott Gallacher said the ministry had a number of questions about the scandal, including when relevant parties were informed, and when they should have been informed.

"This compliance investigation will determine whether regulatory requirements under the Food Act and the Animal Products Act were met by all parties involved, or whether any parties may have committed any breaches or offences.

"The investigation will include decisions made by all parties and their response, including during production of the whey protein concentrate, and from when anomalies in testing initially arose."

The investigation is likely to take three to six months, will be led by the MPI's director of compliance, and will involve upwards of 20 people, Mr Gallacher said.

Maximum penalties for breaching regulations under the Food and Animal Products Acts range from $100,000 to $500,000 and up to 12 months' imprisonment, depending on the nature of the offence.