Fonterra CEO sorry for milk scare, denies cover-up

Fonterra CEO sorry for milk scare, denies cover-up

BEIJING - New Zealand dairy giant Fonterra apologised Monday for a botulism scare that saw product recalls in China but denied accusations by Prime Minister John Key that it delayed releasing information.

"We deeply apologise to the people who have been affected," CEO Theo Spierings told a news conference in China, the world's biggest market for baby formula.

But he insisted that the company had informed customers and the authorities within 24 hours of confirming the contamination problem.

Dairy product sales to China are a significant contributor to the New Zealand economy - it is the world's largest dairy exporter with the sector accounting for 25 per cent of total exports - and the scare is a blow to its reputation.

It has long promoted itself as a supplier of "clean, green" dairy products, particularly in the vital Chinese infant formula market, where consumers distrust domestically-made products after a series of food safety scandals.

Fonterra revealed at the weekend that a whey product used to make baby milk and soft drinks had been contaminated with a bacteria that can cause botulism.

Beijing ordered recalls of some potentially-tainted products - including baby milk produced by Dumex, a subsidiary of French foods giant Danone - and demanded affected importers check their sales records.

A New Zealand minister said China had banned all imports of milk powder from the country, but there was no Chinese confirmation. Officials in Wellington rowed back on Monday, saying instead that Beijing had imposed a temporary suspension on imports by Fonterra.

Spierings said there were "restrictions" on some of Fonterra's products.

"We totally understand the concern among parents," he told reporters.

"Parents have the right to know that infant nutrition and other dairy-related products are 100 per cent safe."

New Zealand Prime Minister John Key had earlier Monday accused the company of a "staggering" delay in revealing the contamination.

"I'm a bit staggered" that tests had shown "something" in May 2012, when the batch was produced, "but clearly not something that was of concern to the company because they allowed it to go out", Key told Radio New Zealand.

"You would have thought that for a business where its top business is essentially based around consumer confidence, food safety and the quality of its products, that they are risks that you wouldn't take," Key added.

Spierings said the first signs of a problem only emerged after tests in March this year, when further tests had been needed to identify "the root cause and the exact strain" of bacteria involved.

"That takes time," he said. "On July 31 we got that message and we went out 24 hours later in the proper way to inform our customers and to inform the NZ government."

Dumex told mothers in a post on its verified Sina weibo account, a Twitter-like service: "We share your anxiety."

It said in a statement it had "urgently sealed and deshelved" affected product batches and was recalling them.

The other two Chinese companies affected, Hangzhou Wahaha and Coca-Cola's Chinese subsidiary, who used the whey in soft drinks, both said their products were safe but they would recall them as a precaution.

Chris Galloway, a senior lecturer in public relations at Massey University, said there were concerns Fonterra had not learned the lessons of a 2008 scandal when six children died and more than 300,000 fell ill after one if its part-owned Chinese partners illegally laced milk with the chemical melamine.

"The repetition makes it harder for people to accept that this is an isolated incident," he told AFP.

The contaminated whey was exported to countries including Australia, China, Malaysia, Saudi Arabia, Thailand and Vietnam.

Russia's Ria Novosti news agency reported Moscow was "recalling Fonterra's products, including infant formula and advised Russian consumers not to buy the company's other products".

Singapore and Malaysia have also recalled some Fonterra-linked baby milk products, saying it was a precautionary move.

Fonterra said there had been no reports of illness linked to consumption of the tainted product, which contains the bacteria Clostridium botulinum, which can cause botulism, an infection that can lead to paralysis and death.

The company has blamed the contamination on a dirty pipe at a North Island processing plant. Fonterra accounted for 89 per cent of New Zealand's milk production in 2011, collecting 15.4 billion litres.

About 95 per cent of China's milk powder imports in January-March came from New Zealand, up by a third on the same period in 2012, a government website reported in April.

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