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Fonterra fined NZ$300k for WPC food safety failings

By Mark Astley+

04-Apr-2014

Fonterra fined NZ$300k for WPC food safety failings

Fonterra has been fined NZ$300,000 (US$256k, €187k) by a New Zealand court after admitting four food safety violations relating to last year's whey protein concentrate (WPC) recall.

Earlier today, Fonterra representatives appeared at Wellington District Court to face charges - filed by the the Ministry for Primary Industries (MPI) - that it breached the New Zealand Animal Product Act.

The company plead guilty to all four counts, and was handed a fine of NZ$300,000. The company had faced a maximum fine of NZ$500,000 (US$427k, €312k).

Presiding, Judge Peter Hobbs said the guilty pleas show that Fonterra was not trying to minimize or excuse its actions, it was reported.

In a statement sent to DairyReporter.com, Fonterra said that it “accepts the sentence for charges arising from the Ministry for Primary Industries’ investigation into events leading up to the precautionary whey protein concentrate recall last year.”

Maury Leyland, managing director of people, culture and strategy at Fonterra, confirmed that the company would not contest the size of the fine.

“Fonterra had already accepted responsibility for the allegations made in the charges, and we respect the sentencing decision made today,” she said.

Fonterra charges

The MPI accused Fonterra of not processing dairy products “in accordance with its Risk Management Programme” and failing to notify its verifier of significant concerns that products “had not been processed in accordance with its Risk Management Programme.”

It also accused Fonterra of exporting product that did not “meet relevant animal product standards” and failing to notify the MPI Director General “as soon as possible that exported dairy product was not fit for intended purpose.”

Last month, following the filing of charges by MPI, Fonterra confirmed that it would plead guilty.

The charges relate to events leading up to Fonterra's precautionary WPC recall last year.

In August 2013, Fonterra warned eight customers that three batches of WPC potentially contaminated with botulism-causing Clostridium botulinum had entered the supply chain.

In response, a number of Fonterra customers initiated their own product recalls across Asia, the Middle East, and Australasia. Tests later revealed that the precautionary recall had been a false alarm.

Numerous investigations into the incident were launched. 

Danone lawsuit

Today’s ruling takes Fonterra another step closer to putting last year's WPC botulism scare behind it.

Of the eight customers affected by the WPC recall, all except Danone accepted a "commercial solution" tabled by Fonterra. Danone announced In January 2014 that it was instead terminating its existing supply contract with Fonterra and was planning to sue the company.

Last month, Fonterra revealed that it had budgeted just NZ$11m (US$9.5m, €6.85m) to cover the damages it could be ordered to pay Danone.

The provision represents “the maximum contractual liability to Danone,” said Fonterra.

It represents, however, just a fraction however of the €370m (US$510m, NZ$593m) Danone claims to have lost in sales as a result of the scare.

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