Fonterra blames 'criminal contamination'

Fonterra has been struggling "to do the right thing all along" in the growing Chinese milk scandal, chief executive Andrew Ferrier has just told a press conference.

And he has claimed that the adding of the chemical melamine to milk is the result of "criminal contamination".

Up to three children are dead and more than 6200 have been diagnosed with kidney stones or illness after drinking milk powder that contained melamine - a chemical banned from food. A second scare has since emerged with the recall of a milk product intended for pregnant women.

Sanlu, the company first linked to the powder, is 43 per cent owned by Fonterra.

"The [infant] milk had been poisoned," he said, adding no dairy company in the world had been testing for melamine until now.

He has spoken of being "absolutely demoralised" by it all.

"You want the children to get better, you hope you can get better".

He said anger would come later: "right now we are just trying to do the right thing."

Fonterra had spent six weeks the company knew about the contamination before the scandal broke publicly trying to "do the right thing".

They wanted to use influence and work inside the Chinese system so that the product could be taken off the shelf as past as possible.

He said he was "hugely relieved" when, after six weeks, they got a public recall.

He said they were not concerned about the value of the Fonterra brand in future.

"We're not worried about where we are in China in six months; this is the ethical issue of doing the right thing."

He believed that the three New Zealand directors on Sanlu's board were safe and were not immediately facing arrest in China.

FONTERRA CAUGHT IN SECOND CHINESE MILK SCARE

Meanwhile, Fonterra has been caught in a new Chinese milk scare, with a product intended for use by pregnant women recalled just days after the poisoned baby formula scandal broke.

It's own Chinese business – separate to the Sanlu joint venture which has accidentally poisoned thousands of babies – has announced a voluntary recall of one batch of its Anmum Materna milk.

"This particular batch had been manufactured and distributed under licence by Sanlu using what we believe to be contaminated local raw milk,"' the company said.

Anmum is one of Fonterra's most valuable brands in Asia, along with Anlene, and the Materna milk is intended for consumption by pregnant women. Fonterra China said in a statement issued in Auckland that the stock was being recalled because consumer safety was the company's "utmost concern".

The company said all its other Anmum and Anlene products had been produced using only milk imported from New Zealand and were free from any possibility of contamination with melamine from locally sourced milk.

A company spokesman said the batch of Anmum Materna was distributed in China but not Hong Kong, Macau and Taiwan. "None of the batch in question was exported out of China," said Fonterra.

OFFICIALS FIRED AS SCANDAL DEEPENS

China fired four city officials and a company boss amid a widening scandal over adulterated milk powder blamed for the death of least three infants.

Facing alarm at the latest food safety scandal, the government sacked four officials in Shijiazhuang, capital of Hebei province in north China and base of the Sanlu Group, the dairy company first linked to the toxic milk.

The firings included the vice mayor in charge of agriculture, Zhang Fawang, and the director of the city's food and drug watchdog, Zhang Yi, as well as chief officials for animal husbandry and quality inspection.

The chairwoman and general manager of Sanlu, Tian Wenhua, was also dismissed from what has been China's biggest seller of infant milk powder.

But with other big dairy companies found to have also used milk carrying melamine, the widespread anger over the poisonings may be far from dying down.

The results of a government-led probe announced on Tuesday showed that out of 109 dairy producers checked, 22 had been found to have produced batches of milk contaminated with the compound.

China has been beset by scandals about toxic and unsafe food and other products in recent years. In 2004, at least 13 babies died after drinking fake milk powder that had no nutritional value.

Chinese officials last week ordered a nationwide check of all baby milk powder makers after Sanlu's problems began to emerge. The offending companies include Beijing Olympics sponsor Inner Mongolia Yili Industrial Group and Hong Kong-listed Mengniu Dairy, state television news reported.

Melamine, used to make plastic and other industrial products, is rich in nitrogen, an element often used to measure protein levels, and so can be used to disguise diluted milk.

China is the world's second biggest market for baby milk powder, and Sanlu has been the top-selling company in the sector for 15 years, with 18.3 per cent of sales in 2007.

Sanlu last week halted production and announced a big product recall. But local Chinese officials acted only after the New Zealand government contacted Beijing, New Zealand Prime Minister Helen Clark said on Monday.

MOTHERS FLOCK TO TAIWAN FOR FORMULA

Thousands of mothers from China have flocked to Hong Kong to buy milk powder manufactured overseas, newspapers in the former British colony said.

Separately, Fonterra's Taiwan business is known to have imported 25 tonnes of the "melamine milk" from Sanlu, with much of it being sold for use in food manufacture.

And the regional Taoyuan District Prosecutors Office is moving to interrogate the head of Fonterra's New Tai Milk Products, which imported the contaminated milk in late June.

"The person in question is still in mainland China, but prosecutors will question him after he returns to Taiwan," the China Post reported. "Health authorities have confiscated all of the imported tainted milkpowder, and will destroy all further imports".

The local Department of Health said that some people in Taiwan may have already consumed processed foods and beverages that were made with 50 bags, or 1250kg of the melamine milkpowder.

Of the total 1000 bags imported, 564 bags have been seized, and Fonterra sold another 434 bags to food processors to be used as an ingredient in cakes, calcium tablets, creams and beverages. The remaining two bags were used by distributors as samples.

Products seized after being made with the milkpowder, include 665 boxes of bottled coffee drinks which were shipped to Hong Kong.

Premier Liu Chao-shiuan on Sunday ordered an import ban on all products made by the Chinese conglomerate.

The Cabinet-level Consumer Protection Commission said that according to Taiwan's consumer protection laws, Fonterra is legally responsible for the tainted milkpowder that it imported.

- NZPA