Fonterra settles with NZX for $150k

NIKO KLOETEN
Last updated 10:16 13/06/2014

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Dairy giant Fonterra has agreed to pay $150,000 to settle a case brought against it by the NZX over last year's botulism scare.

The NZX alleged Fonterra had breached continuous disclosure rules by being too slow to make an announcement on contaminated whey protein.

Although Fonterra agreed to the settlement, it said it disagreed with the NZX's view that it had been too slow on its disclosure.

The company has not responded to calls for further comment.

Fonterra announced to the NZX on Monday, August 5, last year that three batches of whey manufactured at its Hautapu plant in Waikato contained a strain of clostridium, a type of bacteria that can cause botulism.

This followed several releases to the NZX on the issue, with the first being just after midnight after the market had closed the previous Friday.

The Ministry for Primary Industries later said the bacteria did not contain the botulinum strain of clostridium and that the affected product posed no risk to the public.

NZX Regulation investigated whether Fonterra had been sufficiently timely with its disclosure after shares in the Fonterra Shareholders Fund dropped on the Thursday and Friday before the initial announcement about contaminated whey.

The NZX Markets Disciplinary Tribunal said Fonterra's announcement after the close of trading on August 2 was two and a half days after it came across what NZX Regulation considered was material information.

However, the tribunal said the matters arose as part of a "significant and fast-moving incident" for Fonterra.

It said Fonterra had since improved its governance and processes, including creating a Food Integrity Quality Council, headed by the newly created position of group director of food safety and quality.

The tribunal said it was "concerning and disappointing" that a disclosure issue had been required to be raised by NZX Regulation and that Fonterra had not accepted that a breach occurred.

"The tribunal also records that Fonterra could have managed its compliance with continuous disclosure obligations better in this case," it said.

"The tribunal reinforces the need for organisations, and particularly those of the size and standing of Fonterra, to devote proper resources, time and training to their continuous disclosure obligations and to foster a culture of openness and transparency in relation to continuous disclosure issues." Fonterra faces separate legal action from Danone, which owns the Nutricia brand of infant formula products that was heavily affected by the botulism false alarm.

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Nutricia's profit fell to $1.99 million in the year ended last December 31 from $61.1m a year earlier, according to the company's financial statements lodged with the Companies Office.

- Stuff

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