Fonterra finally joins the dots

A failure to join the pivotal dots is the primary finding to emerge from Fonterra's WPC80 Precautionary Recall Report released today. 

A failure to join the pivotal dots is the primary finding to emerge from Fonterra’s WPC80 Precautionary Recall Report released today.

The 160-page report, compiled by the seven-person inquiry team, examines the context and chronology behind the botulism scare false alarm that damaged both Fonterra [NZX:FCG] and New Zealand Inc. last August.  

Having consulted about 70 personnel within Fonterra, and a further 30 individuals from outside it, the report outlines 21 decision points where decisions made could or should have gone differently.

But no one single person could be blamed, it says

The inquiry found there was a lack of senior oversight when engaging C. botulinum testing with AgResearch.

Furthermore, there was an inadequate scope for that scientific testing, as well as an inability to promptly and definitively track the affected batches once the threat was identified. In addition, ineffective external communications and problems with tracing potentially affected product and belated escalation of the issue also contributed to the event.

“No single event or the actions of one individual can be held entirely responsible for what occurred,” independent review committee chairman Sir Ralph Norris said.

Sir Ralph added that a review of how the report’s recommendations are applied would be reviewed in nine months’ and 18 months’ time to ensure genuine lessons have been learnt from the inquiry.

Independent inquiry team leader Jack Hodder QC said that the report had been thorough and independent throughout, while claiming publically releasing the findings of a report written for a board was unprecedented in contemporary corporate culture.

Mr Hodder said the report’s chief objectives were to verify the narrative of what happened and to identify the lessons that followed from that, while solely focusing on how Fonterra performed in its dealings – not any ministry or any other company.

 “What directors found encouraging is that this Independent report to the Directors has a significant degree of overlap with management’s Operational Review, which was made public last month,” Fonterra Chairman John Wilson said. 

“There are no contradictions between the two sets of recommendations.”

Chief executive Theo Spierings said Fonterra had learned lessons from what has been a difficult experience, subsequently found to be a false alarm.

“We understand the anxiety caused at the time to our customers, regulators, shareholders and other stakeholders, both in New Zealand and around the world, and especially parents concerned for the welfare of their children,” Mr Spierings said.

Fonterra group director of strategy Maury Leyland said the Board’s independent report added specificity to work already under way.

“The majority of the independent report recommendations are in line with our operational review and there is important feedback for us regarding the way we interact with our broad range of stakeholders, both at times of crisis and during the course of normal business,” Ms Leyland said.

jball@nbr.co.nz

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