Fonterra to plead guilty to MPI charges

Last updated 12:25 13/03/2014

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Fonterra has indicated it will plead guilty to charges in relation to last year's worldwide food-safety scare.

The charges include failing to meet export standards and failing to alert the regulator that exported product was unfit for purpose.

Today the Ministry for Primary Industries (MPI) revealed that it had laid charges against the farmer-owned co-operative in the Wellington District Court yesterday "following MPI's compliance inquiries into last year's Whey Protein Concentrate incident".

The charges relate to Fonterra processing dairy product not in accordance with its risk-management programme, exporting dairy product that failed to meet relevant animal-product standards, failing to notify its verifier of significant concerns and failing to notify the director general as soon as possible that exported dairy product was not fit for the intended purpose.

Fonterra said it accepted the charges.

"We have accepted all four charges, which are consistent with the findings of our operational review, and the independent board inquiry," spokeswoman Maury Leyland said in a statement.

The company later clarified that it intended to plead guilty to the charges.

"We have previously detailed issues relating to the decision to reprocess the original WPC80 [whey protein concentrate], and being slow about escalating information – which are reflected in the charges laid by MPI," she said.

Fonterra chairman John Wilson this morning emailed the company's thousands of shareholders informing them of the development.

Last August Fonterra sparked a worldwide product recall and global food-safety scare, when it admitted there could be a bacteria in one of its products which could cause botulism, a severe form of food poisoning.

The product suspected of containing the bacteria was commonly used in infant formula.

Several countries began blocking dairy products from New Zealand in the wake of the scare, which turned out to be a false alarm.

At the time state media in China wrote an editorial sharply criticising New Zealand's food safety system.

Last August, AsureQuality, a government-owned food-safety company, told Fairfax Media that Fonterra had breached its risk-management plan that required it to inform it within 24 hours whenever it discovered a food-safety issue.

Prime Minister John Key will travel to Beijing next week to explain the findings of an independent report into New Zealand's food safety system, which, although it found room for improvement, said that generally the system performed well.

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Part of the report, which relates directly to Fonterra and the incident, has not yet been released.

Food Safety Minister Nikki Kaye said today that the compliance investigation was run by the regulator (MPI), "and has been independent from ministers". She referred all questions to MPI.

Key said the matter was being handled independently of the Government, but the charges reflected that New Zealand saw food safety as important.

"It shows that the regulator takes these issues very seriously," he said on a trip to Waikato this morning.

"They are there to preserve and make sure we enhance the reputation of New Zealand as a producer of high quality food.

"We set, as a government, very strict regulations in these areas and if companies don't follow those and they breach the law, then they'll be held to account."

He did not expect the charges to impact his trip to China next week.

"The main purpose of going to China next week is really to reassure the Chinese that we have world class systems, we produce a world class product," he said.

Key said it also showed that New Zealand had an independent regulator that "holds New Zealand companies to account if there is a breach of the law".

Labour said the timing of the charges was a "cynical ploy" to make the prime minister look good on his trip to China.

In recent days Government officials have insisted they had no visibility over what was happening at the MPI in relation to the charges.

"The charges laid by MPI in the Wellington District Court today are a face-saving exercise for John Key on the eve of his mission to China to apologise for Fonterra's botulism scare last year," Labour's primary industries spokesman Damien O'Connor said.

"This whole debacle occurred because food safety testing by Crown research institute AgResearch and oversight by AsureQuality failed," he said.

"While a mistake occurred, Fonterra was relying on advice from government entities which were not adequately resourced."

O'Connor said the charges "raise questions about whether the Government was trying to discredit Fonterra to boost the operations of Oravida in China".

Oravida exports fresh milk from New Zealand to China, a market Fonterra is not involved in.

Federated Farmers said it was pleased Fonterra had accepted the charges.

"Whilst this product recall was a false alarm it has unearthed some flaws in Fonterra's system," dairy chairman Willy Leferink said.

"By wholeheartedly accepting the charges laid by MPI yesterday, Fonterra has shown they are on the front foot of this issue."

Units in the Fonterra Shareholder Fund, which attract the dividends on its shares but have no voting rights, dropped 1c to $5.84 this morning, the lowest since January 23.

- Stuff

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