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Fonterra's Chinese nightmare

Fonterra's Chinese nightmare is a poison mix of corporate failure, free trade and state corruption

Alliance Party media release FOR IMMEDIATE RELEASE Friday 19 September 2008

The Alliance Party says the response of New Zealand dairy giant Fonterra and the Government to the Sanlu disaster in China is looking increasingly inadequate, on the back of further revelations that toxic products have been known about for several years.

Reports in the Chinese media suggest Sanlu, with a 43% Fonterra shareholding, knew it had a problem as far back as 2005.

Alliance Party national spokesperson Victor Billot says the management, approach and response of Fonterra to the crisis has been shambolic, and says New Zealand should consider offering medical treatment to the poisoned children.

"Fonterra is a major corporation which has enormous resources and highly paid management. So why didn't they do their homework, why didn't they understand the risks, and why weren't procedures and safeguards in place?"

The Chinese Government has said the tainted milk powder incident reflected chaotic industry conditions, as well as loopholes in the supervision and management of the industry.

"It seems strange that Fonterra was investing millions of dollars in this disaster waiting to happen, without knowing any of this."

Mr Billot says it appears a level of arrogance and complacency is part of the problem, as the focus has been on the "big money" rolling in for Fonterra rather than the risks and downsides of their global activities.

He says that Labour and National are distancing themselves from the scandal because they are responsible for boosting free trade policies without taking into account the risks.

Mr Billot says it was disturbing that much of the focus in New Zealand seemed to be about Fonterra's brand image rather than a human catastrophe, which was unacceptable.

He says latest reports indicate several deaths of infants, hundreds suffering from acute kidney failure, and thousands ill, with the figures rising daily.

Mr Billot said the wider issue of New Zealand's free trade policies was not being examined.

"What we see is the result of free trade policies that means New Zealand is directly involved in production in nations where workers rights are non-existent, health and safety is lax, and there is substantial corruption by local capitalists and bureaucrats."

The Alliance has criticized Trade Minister Phil Goff for his response, including comments such as "China is a market of huge opportunity but it's also a market which operates quite differently from New Zealand."

Mr Billot says this is the understatement of the year and Mr Goff was going to have to get serious.

"The Chinese government now says nearly 10 per cent of milk samples taken from top Chinese dairy companies is contaminated by melamine. Yet our leading dairy corporation with massive investment in China seems to have been blundering along in blissful ignorance of the business environment they were operating in."

He says that New Zealand had a responsibility to offer support and medical assistance if required to the affected families, as New Zealand had profited from its investment in Sanlu, so should offer its solidarity to those affected.

"The money should come from Fonterra in the first instance, but extra support may be required, for example New Zealand could take in some of the poisoned children and their families for treatment."


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