Chinese could sit on Fonterra investigation

WELLINGTON - New Zealand Prime Minister John Key said Monday that he wants a government inquiry into the Fonterra contamination scare to allay consumer fears in China, possibly with a Chinese representative.

His announcement came as two other inquiries -- one by Fonterra and one by the Ministry for Primary Industries (MPI) -- were formally announced to look into how 38 tons of whey protein was contaminated with a bacterium that can cause botulism.

"One possibility is that if we can find an eminent Chinese scientist with a specialization in this area we may well put them on because it would hopefully give them more confidence in their market," Key told Television New Zealand.

The terms of the inquiry and other details had yet to be settled, but he said he wanted the inquiry be completed before he goes to China.

"I need the answers of the inquiry so I can look down the barrel of their cameras and say 'Have confidence in our product; we've fixed this'," Key said.

MPI said Monday it had begun an investigation into whether Fonterra complied with its regulatory obligations in informing the authorities of the contamination, which is believed to occurred in May last year.

"This compliance investigation will determine whether regulatory requirements under the Food Act and the Animal Products Act were met by all parties involved, or whether any parties may have committed any breaches or offences," MPI Acting Director- General Scott Gallacher said in a statement.

"The investigation will include decisions made by all parties and their response, including during production of the whey protein concentrate, and from when anomalies in testing initially arose."

The probe, which could involve a team of up to 20 people, would likely be completed in three to six months.

Maximum penalties for breaching regulations under the Food and Animal Products Acts range from 100,000 to 500,000 NZ dollars ($80, 438 to $402,188), and up to 12 months imprisonment, depending on the nature of the offence.

Also Monday, Fonterra Chairman John Wilson announced that the company's board had set up an inquiry committee charged with overseeing an independent review into how the contamination occurred and the subsequent chain of events.

Wilson said he had complete confidence that Fonterra CEO Theo Spierings had made the right decisions and was continuing to do everything to manage this complex issue, but serious lessons needed to be learned.

"It is critical that we identify these lessons quickly so our farmers, governments, customers, consumers and unit holders can again have full confidence in Fonterra and its products," he said in a statement.

A retired New Zealand High Court judge had been appointed to the committee as an independent member and an eminent scientist would also be appointed, he said.