Tuesday, September 23, 2008

Fonterra’s Troubles Multiply in China Poisoned Milk Scandal

Fonterra’s problems continue to mount in the melamine-tainted infant formula scandal in China involving its minority-owned San Lu joint venture.

The number of Chinese infants made ill by the toxic formula has now risen to over 13,000 hospitalised, with 4 deaths being linked to the formula. The numbers requiring clinical care but not hospitalization has climbed to greater than 54,000 children, according to the Xinhua news agency.

China's chief quality supervisor Li Changjiang, director of the General Administration of Quality Supervision, Inspection and Quarantine (GAQSIQ), has resigned.

Wu Xianguo, the Communist Party chief of Shijiazhuang, the capital of northern Hebei Province was also sacked on Monday.

The New Zealand government, through Prime Minister Helen Clark, has now criticised Fonterra’s ineffectual crisis management, saying that the cooperative had failed to act fast enough to alert Chinese national authorities to the health safety problem and for its 4 delay in publishing information in New Zealand on the problem, points made in earlier posts on this blog as the story broke.

It’s about time the 12,000 dairy farmer stockholders of Fonterra called for the resignation or firing of the executive responsible for the mis-management of Fonterra’s interests in San Lu and the consequent loss of buyer confidence in the Fonterra brand in some international markets.

Fonterra ought to issue a public apology to its customers for its failure to ensure adequate quality control and for the harm done to its most vulnerable consumers, infants. It ought to also take concrete steps to assist in the recovery of these children. Failure to do so will demonstrate Fonterra only pays lip service to the concept of corporate social responsibility.

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