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Toxic milk powder incident is a moral and ethical failure

September 20, 2008

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Scoopit!

Adam has now read the strong article by Fran O’Sullivan in today’s NZ Herald. As he blogged a while back Adam thinks that Fonterra erred in their handling of the issue.

In line with what Ms O’Sullivan writes the timelines appear unnecessarily elongated.

Although Adam blogged earlier today about how San Lu is not the only ‘offender’ on this matter, there is the fact that the Chinese authorities might reasonably take the view that Fonterra having taken a 43% holding should have been actively seeking to bring San Lu into line with best practice.

This case highlights a couple of other issues:-

Given that there had been other food related issues with China in the past, why were testing procedures not amended to specifically test for a wider range of additives – the excuse that nobody tests for melamine is not good enough – especially given past instances of melamine use to adulterate product in China

Why were processes not reviewed at San Lu to ensure they were complying with required practices. Did Fonterra just take management’s word

Why did Fonterra not push harder on central government notification, were they pressured by the NZ Embassy/Government

The extract from O’Sullivan’s article below is especially relevant:-

The problem is that Ferrier has made much of the internal debates his executives held over whether they were doing the right thing by staying publicly silent over the poisonous contamination of San Lu baby formula.

The mere fact that his executives felt it necessary to ethically debate whether they should go public, when it was clear their initial decision to “be responsible” and push San Lu to deal directly with Chinese authorities had resulted in failure, should have sparked Ferrier to simply announce the contamination himself.

It may have caused some embarrassment to local officials, but Chinese consumers would have been thankful and Fonterra would retain its self-respect. Fewer Chinese babies would have got sick and maybe there would have been fewer deaths.

Fonterra’s reputation elsewhere in the world would have been reinforced. Instead it is in the spotlight.

Now the company is trying to deflect further examination of its role by suggesting to journalists that undue focus on its actions will hurt New Zealand Inc’s reputation offshore.

This disgraceful stratagem frequently gets pulled when politicians and officials want to shut down debate over Kiwi business mishaps.

O’Sullivan calls for an inquiry noting:-

An inquiry would also pinpoint to what extent New Zealand officials and Fonterra itself might have initially soft-pedalled the issue so as not to cause embarrassment to China during the Olympics.

She concludes with this:-

There has been a prior example where the Clark Government delayed the announcement of bad news so as not to cause embarrassment to China.

In 2004, it suppressed news that Beijing had refused to issue any new import permits for New Zealand meat so as not to spoil the signing ceremony for a trade and economic framework which was the first step towards getting the recent free trade deal.

The issue was raised privately with the visiting Chinese minister Bo Xilai. But it was not until Bo left New Zealand that the Government publicly acknowledged that our China meat trade was in jeopardy.

This suggests a mindset has developed here where “not giving offence to China” takes precedence over upholding our own values. There are valuable lessons to be learnt, if New Zealand has the courage to turn the microscope on itself.

However, Adam will not hold his breath, especially as Clark is taking credit for blowing the whistle to the Chinese Government.

Fonterra definitely needs to review it’s approach to such issues. Adam has not been that impressed with what he has seen of executive handling of this matter.

He wonders if Mr Ferrier will be in his role this time next year!

At the risk of banging a drum, Adam would point out that there was not just a failure to detect melamine here, there was a failure of corporate governance at San Lu and Fonterra, plus questions need to be asked over the role of the NZ government as well as Chinese authorities. What is not unclear is the ethical and moral failure of apparently virtually everyone involved. Lives were put at risk because of other considerations. That is not acceptable. Given the questions over what the NZ Government knew, when and the nature of action taken, perhaps MS Clark should not take credit too soon.

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