A massive haul of cocaine, with a street value in New Zealand of more than $50 million, has been found inside a Fonterra shipping container in Algeria.
It is understood 165 kilograms of pure cocaine was hidden in the container, which was supposed to contain milk powder.
Yesterday, both Fonterra and Customs New Zealand were scrambling to discover how and where the drugs could have been put into the shipment.
Customs insisted the cocaine could not have been in the container when it left New Zealand on the Bahia Castillo.
The ship headed to Panama, where the container was transferred to a different ship before heading to Valencia, Spain. It stayed there for 24 days before making its way to Algeria.
Customs group manager trade and marine Paul Campbell said there was no evidence to suggest any illegal substances were introduced into the container before it left New Zealand.
"Fonterra is a trusted trader and is part of Customs' secure export scheme. Containers are sealed when they are packed, and the seal assures that the container has not been breached until it is loaded on to a ship."
Algerian newspaper El Watan, which carried news of the bust on its front page last night, claimed the drugs were found by members of the rural police force after clearing Customs, including two scans.
The container was due to be delivered to Baraki, a suburb of the capital city Algiers, it said.
It noted there had been a huge increase in drugs being smuggled into Algeria, 80 per cent of which were then sent to other countries.
Cocaine has a street value of about $325 per gram in New Zealand, placing the value of the haul at $53m. El Watan reported the amount would yield a profit for the importer of $46m.
Business commentators in New Zealand said the discovery could temporarily damage Fonterra's brand, but was a far cry from the SanLu milk scandal that cost the company dearly in 2008.
Dairy industry expert and consultant Peter Fraser said Fonterra controlled its supply chain very tightly, and it appeared the dairy giant had "just been unlucky".
The incident was "absolutely not" on a par with the scandal in which the partly Fonterra-owned Chinese company SanLu added melamine to infant formula, killing six babies and making thousands more sick with kidney problems.
That incident hurt Fonterra's international reputation and cost its farmer shareholders about $200m.
"With SanLu, the product had actually been taken by consumers," Mr Fraser said. "In this case, my understanding is they've found it on the wharf, it hasn't been distributed, and it hasn't been mixed with the [milk] powder."
Wayne Attwell, brand strategist at Bold Horizons, said Fonterra would get international exposure for the wrong reasons, but the impact would probably be short-lived once it was proven Fonterra was in the clear, as seemed likely.
A Fonterra spokeswoman said last night it was yet to confirm the report, and was waiting to hear from Algerian authorities.
The company has a branch office with five staff in Algeria, which is one of its largest markets in Africa and the Middle East.
- © Fairfax NZ News
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