Fonterra denies Sanlu chair's claims

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Fonterra chairman Henry van der Heyden says he has full confidence in chief executive Andrew Ferrier in the wake of the baby milk formula scandal in China.

Fonterra today defended its role in the tainted milk formula scandal in which at least six babies died and 300,000 others taken ill.

The fallout from the scandal last week saw Tian Wenhua, chairwoman of Sanlu, in which Fonterra held a 43 percent stake, sentenced to life in prison.

Mr van der Heyden told a briefing in Auckland today that he disagreed with suggestions the scandal could have been predicted from the time Fonterra decided to invest in Sanlu due to a history of quality issues with food in China.

"From my point of view the management has acted appropriately," Mr van der Heyden said.

"The board went through the process of taking out an independent review and it reconfirms everything that we have communicated.

"Andrew has got the 100 percent support and confidence of the board."

Mr Ferrier said the company had invested in a company which had a good reputation and could not have expected "criminals" to have added melamine to the baby milk formula.

He said the company now regretted not having more control of the supply chain in China.

He also said several other foreign food companies had also begun business in China and that the possibility of contamination could not have been expected.

Mr Ferrier earlier denied claims from Tian that Fonterra approved a level of melamine in baby milk formula sold in China.

Tian said a Fonterra-appointed director gave her a document showing the levels of the industrial chemical melamine permitted by the European Union.

Mr Ferrier yesterday confirmed Tian had been given a document by a Fonterra board member but he also emphasised melamine was not to be used in the formula.

"We were vividly clear to Sanlu that the only acceptable level (of melamine) was zero."

He said at no point did Fonterra tell Sanlu it was acceptable to keep producing formula with melamine.

Mr Ferrier said records of this conversation had been minuted but he would not release it to media while an appeal was pending.

Fonterra had three directors on the Sanlu board -- Bob Major, Mark Wilson and a Chinese national, Patrick Kwok.

"As we have stated throughout, Fonterra consistently pushed for a full public recall of contaminated product from August 2 when we learned of the contamination," Mr Ferrier said.

China's state news agency, Xinhua, has reported Tian would appeal her conviction.

Two men was sentenced to death for their role in the scandal while three other company executives received 15, eight and five-year sentences.

Xinhua said rather than stopping production of tainted products after the contamination was confirmed on August 1 last year, Sanlu decided to limit melamine levels to within 10mg for every kilogram of milk.

"Tian said during her trial that she made the decision not to halt production of the tainted products because a board member, designated by New Zealand dairy product giant Fonterra that partly owned Sanlu Group, presented her a document saying a maximum of 20mg of melamine was allowed in every kg of milk in the European Union," Xinhua said.

"She said she had trusted the document at that time."

- NZPA