Inquiry into Fonterra’s WPC contamination scare identifies shortcomings

An independent inquiry into New Zealand dairy co-operative Fonterra’s recent botulism scare has revealed shortcomings in certain areas and that the company failed to recognise the ‘explosive reputational risk’ involved.

The whey protein concentrate (WPC80) inquiry committee was commissioned in August this year by the co-operative’s board.

It was led by a legal team from Chapman Tripp, co-ordinated by senior partner Jack Hodder, Gabrielle Trainor, a Sydney-based specialist in crisis management and communication, and Netherlands-based international dairy consultant Jacob Heida.

In its report, the committee made 33 recommendations to the co-operative to improve the ongoing processes to address the issues that led to the milk powder recall.

The event occurred due to numerous factors, including a lack of senior oversight of crucial decisions, problems with tracing potentially affected product and belated escalation of the issue, said the report.

It also said that Fonterra had failed to ‘join the dots’ between botulinum, infant food products, consumer sensitivities and its global reputation.

The co-operative’s crisis management planning was inadequate for a crisis of this type and scale, and management of the crisis in the critical early period was not well executed, it revealed.

In addition, there was lack of alignment and confidence between Fonterra and the New Zealand Government after the contamination event was advised to the latter and made public.

The inquiry team lead Jack Hodder said, "Our findings and recommendations do not indicate any fundamental problems within Fonterra. That is not our conclusion."

Fonterra chairman John Wilson said that the independent report has a significant degree of overlap with the management’s operational review, which was made public last month.

Commenting on the findings, chief executive Theo Spierings said, "The independent report findings and recommendations are consistent with our own approach to strengthening the Co-operative and renewing trust and confidence among our many and varied stakeholders."

A false botulism alarm by Fonterra in August triggered a recall of certain infant formula products in more than seven countries.

Further investigation of the implicated products, conducted independently in the US and New Zealand, revealed the presence of clostridium sporogenes, which does not cause botulism.

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Image: The inquiry committee has provided recommendations for Fonterra to address the issues related to the recall. Photo courtesy of Fonterra Co-operative Group.