The poisoned baby milk scandal in China is now estimated to have cost dairy giant Fonterra $139 million.
Fonterra says it has recognised a $139 million impairment charge
which reflects the cost of the product recall and the company's
anticipated loss of San Lu brand value.
The stage was set for Fonterra to announce a record year. After its
pre-recorded corporate video was played at an Auckland media
conference, the co-operative's bosses were grilled for more than an
hour on the tainted milk scandal.
"You know how strongly we feel about this," says Andrew Ferrier, Fonterra CEO.
Chinese officials now claim San Lu, the company Fonterra has a 43% stake in, had received complaints as early as last Christmas linking its formula to sick babies.
It took months for tests to reveal the milk was contaminated with the chemical melamine.
Ferrier was asked how Fonterra could have been left in the dark for that long.
"At the board meeting on the second of August, San Lu management reported to the board that they became aware in March and that they went through a series of tests. And that's really as far as we can go," says Ferrier.
Fonterra chairman Henry van der Heyden says he would be"absolutely disgusted and appalled" if any information has been held back.
Away from the boardroom, the crisis in China is widening. Four infants have died from acute kidney failure. Thirteen thousand children are now sick in Chinese hospitals. Forty thousand have been treated for melamine poisoning.
More than 20 companies are accused of selling contaminated products. Fonterra says it is now focussed on getting safe dairy food into the country.
It was put to Ferrier that San Lu's reputation is beyond repair.
"San Lu has been damaged very badly by this tragedy and so it's hard to say, these are early days, how it will be reconstructed," he says.
And in the current climate in China there will be little confidence in the San Lu brand.
Warning over sweets
Meanwile, the New Zealand Food Safety Authority has found high levels of melamine in imported Chinese lollies.
It's advising people not to eat Chinese sweets known as White
Rabbit Creamy Candies.
Testing has found the lollies contain unacceptably high levels of
the industrial chemical melamine which may cause health problems
such as kidney stones.
The lollies are sold in packs through Asian retailers, supermarkets
and dairies.
The Food Safety Authority is advising parents of children who have eaten the sweets to see their doctor or phone the Food Safety helpline on 0800-693-721.
