Fonterra has been fined $300,000 for food safety breaches relating to last year's botulism scare which sparked product recalls of infant formula worldwide.
The New Zealand dairy giant had pleaded guilty in the Wellington District Court to four charges of failing to meet food processing standards as set down in the Animal Products Act. The charges were laid by the Ministry for Primary Industries.
Photo: SUPPLIED
Judge Peter Hobbs said on Friday that Fonterra's early guilty plea was a mitigating factor in reducing the penalty and that it had taken steps to address problems. However, he said he had to take into consideration its significant financial capacity.
Fonterra has released a review of events leading up to the contamination of the whey protein used in infant formula products.
In February 2012, an engineer shone their torch up an air pipe to check for a blockage and the torch was sucked into the pipe, breaking its plastic lens. Workers checked to ensure that none of the plastic pieces had got into the milk powder. It was decided that the powder would be reprocessed using non-standard equipment.
The Ministry for Primary Industries said the use of non-standard flexi hoses and a stainless steel pipe probably caused an increase in bacteria leading to contamination of the powder. That loss of control and good hygiene practise led to the global recall.
Judge Hobbs said Fonterra's offending had been a result of carelessness, rather than a deliberate act, but companies need to be given a clear message that failure to meet standards is not acceptable.
Fonterra was fined $60,000 for three of charges: a dairy product not being processed in accordance with its risk management programme, failure to notify the regulator of a dairy product not being processed in accordance with its risk management programme, and failure to notify the ministry's director-general of a dairy product not being fit for its intended purpose.
The company was also charged $120,000 for its dairy export failing to meet relevant animal product standards.
NZ's reputation 'damaged'
During court proceedings, the Ministry for Primary Industries said two of Fonterra's factories at its Hautapu site were where events took place that led to charges being laid.
The ministry's lawyer, Grant Burston, said Fonterra had damaged New Zealand's reputation with its export markets.
Its other lawyer, Simon Barr, said the country's image was damaged by the incident and it was not possible to calculate how much it had cost New Zealand's economy.
Mr Barr said it would take some time before consumer trust in New Zealand's exports could be salvaged.
Lesson for all companies, says ministry
Outside court on Friday, Fonterra said it would not contest the fine. Spokesperson Maury Leyland said the company takes responsibility for the allegations made in the charges and accepts the sentence.
The Ministry for Primary Industries said the fine could have been as high as $500,000, but it is satisfied with the sentence. Senior official Andrew Coleman told Radio New Zealand's Checkpoint programme Fonterra has learnt a lesson and the ministry hopes other companies have as well.
"The risk management programme is a really clear and we hope understood programme. It's got particular requirements in it, and as the regulator we do expect those to be adhered to and I will hold people to task if they're not."
Listen to Checkpoint interview with Andrew Coleman