KEY POINTS:
Dairy giant Fonterra is rejecting reports that the former head of its Chinese partner company embroiled in the contaminated milk scandal has admitted charges punishable by death.
China's state news agency Xinhua reported yesterday that Tien Wenhua, former chairwoman and general manager of the Sanlu Group, had pleaded
guilty to producing and selling fake or substandard products.
It said Tien admitted in court testimony on Wednesday that she had known of problems with the company's products for 2 months before she told authorities.
Three other executives were reported by the China Daily newspaper to be facing similar charges, and possible execution if convicted.
At least six babies died and nearly 300,000 became sick after being fed milk-based infant formula supplied by Sanlu and 21 other Chinese dairy companies.
Fonterra chief executive Andrew Ferrier, whose company wrote off its 43 per cent Sanlu shareholding for a loss of $201 million, said last night he had heard conflicting reports from the trial.
He would be saddened if Tien were to be convicted, let alone executed.
He had met her two or three times, and Fonterra had enjoyed a good relationship with her.
"She seemed to live and breathe Sanlu," Mr Ferrier said. "She only wanted the best for Sanlu and it would be very sad if she's found guilty of any crimes."
Although Fonterra was not represented at the one-day court hearing, from which verdicts have yet to be delivered, another company spokesman contacted the Herald later to say Tien had "absolutely and unequivocally" pleaded not guilty to the charges she faced.
The spokesman said he received that assurance while making inquiries in Asia at Mr Ferrier's request.
Xinhua said Tien told the Shijiazhuang Intermediate People's Court she had learned of consumer complaints about milk in mid-May, and led a company team set up to handle the case.
But she did not submit a written report on the situation to the Government in Shijiazhuang, the northern Chinese city where Sanlu is based, until August 2.
Mr Ferrier said that was the date on which Fonterra's three directors on the Sanlu board were told that the company's milk products had been contaminated with melamine.
Any suggestion that Tien knew about it earlier was "absolute news" to his company.
Fonterra was also surprised by charges that Sanlu sold products after it knew they were contaminated.
Mr Ferrier said August 2 was "the absolute first that anybody in Fonterra had ever heard of this and from that moment on we pushed to recall the product".
Chinese authorities had made no attempt to press charges against Fonterra.
"The signals we get is that they believe we've done the right thing, and we've consistently done the right thing."
Even so, Mr Ferrier said Fonterra wanted the Sanlu affair resolved before it could re-invest in China.
"It is our intention to re-invest in China at an appropriate time, providing we have enough comfort and control in the supply chain.
"We've been selling New Zealand dairy products in China for 20 years and we will continue to sell New Zealand dairy products in China."
Tien's trial has been the most high-profile yet in the milk scandal, in which middlemen who sold milk to dairy companies were accused of adding water to raw milk, then mixing in nitrogen-rich melamine to fool quality tests for protein content.
Melamine is used to make plastics and fertiliser and can cause kidney stones and kidney failure when ingested in large amounts.
Xinhua quoted state prosecutors as alleging that Sanlu received complaints about its baby formula as early as December 2007.
News film from the courtroom showed Tien and her colleagues hanging their heads as they appeared before a three-judge panel.
Wang Yuliang, a former deputy general manager at Sanlu, was in a wheelchair because he had lost use of his legs in a suicide attempt, Xinhua said.
- additional reporting: AP