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New Zealand's largest company, Fonterra, went into damage control yesterday following announcements of a slashed payout to farmers and over its role in a contaminated milk scandal that killed Chinese infants.
The dairy giant's bosses were yesterday forced to put the Sanlu debacle at the top of the
agenda at a news conference to announce its business plan.
To compound its problems, the company also cut its payout forecast to farmers to $5.10 per kg, a move that could see billions taken out of the economy.
Media interest in the Sanlu scandal has reignited following a Herald report that former Sanlu boss Tian Wenhua had blamed an unnamed Fonterra board member for her decision not to stop producing the fatally contaminated milk products, even after she was made aware of it on August 2.
Fonterra - which was a 43 per cent owner of Sanlu - says it is not responsible for the actions. Company chief executive Andrew Ferrier said it would register as an interested party to defend itself if a planned appeal against the Sanlu chief's life sentence was to be heard.
Six babies died and hundreds of thousands of infants last year developed kidney disease after consuming contaminated milk formula produced by Sanlu.
Tian, 66, said during her trial that a Fonterra board member had given her a document which stated that the European Union's permitted levels of melamine were a maximum of 20mg to every kg of milk.
Tian said she decided not to stop production of tainted products because she had trusted the document at that time.
Mr Ferrier admitted a Fonterra-appointed director gave the document to Tian, but that it was a provisional statement from the European Union on melamine, and that it was just a guideline and not regulation.
He said the company searched for more information about melamine and found the EU report detailing provisional melamine levels.
"At that time those documents were handed over, our director made it crystal, crystal clear to Sanlu that the only acceptable level of melamine was zero," Mr Ferrier said.
He said minutes of phone calls to Sanlu stating that had also been recorded, but the documentations could not be released to the media because of Tian's possible appeal.
Mr Ferrier would not name the director who supplied the information "in the interest of his safety". Fonterra had three directors on the Sanlu board: Bob Major, Mark Wilson and Chinese national Patrick Kwok.
Mr Ferrier said the company had not been approached by the Chinese authorities to release any documents, but said Fonterra insists it is not responsible for the actions of Tian or Sanlu, and will register as an interested party should the appeal proceed.
"We'll certainly do our best to make sure we are heard if it goes to appeal," Mr Ferrier said.
Fonterra chairman Henry van der Heyden also said that an independent investigation had also found Fonterra had acted properly, but the report would not be made public because it was "a commercial decision".
Despite having to write off the $200 million it invested in Sanlu, Mr Ferrier said the company was still looking at the possibility of re-entering China, and didn't see any problems in winning support for the brand there.
"Frankly, the Chinese are very positive about Fonterra ... they thanked us for being the one entity responsible for getting this into the public eye, and we have been accepted well by the Chinese."
Green MP Sue Kedgley called on the company to "set the record straight" by releasing minutes of the telephone conversations.
"If the minutes demonstrate, as Fonterra claims, that Fonterra was adamant it was totally unacceptable to sell milk with any level of melamine contamination in it, this will help set the record straight," Ms Kedgley said.
