Last week’s NBR led with a story linking the disbanding of Fonterra’s ethics committee with the San Lu crisis and I commented on it here.
The comapny’s CEO Andrew Ferrier responded to the NBR with a letter to the editor this week saying the story was without foundation.
It’s not on line so here’s an abridged copy:
The suggestion that Fonterra has become a less ethical organisation under my leadership is outrageous and I reject it utterly. There is simply no factual basis for this story. . .
The article was entirely based on observations by the former external chairman of our internal ethics committee, Dr Simon Longstaff.
. . . As management and staff at Fonterra can verify, integrity and ethics are absolutely at the core of Fonterra’s way of working and corporate values and of my management style.
It was my decision . . . to disband the committee in the form that it was because I wanted to elevate ehtical considerations to the highest level of management under my personal direction.
Ethics has to be instilled and driven through an organisation from the very top and should not be the responsiblity of a middle and lower level management sub group.
. . . My and Fonterra’s every action in handling the San Lu crisis has been driven at all times by the highest ethical considerations. . . Fonterra’s sole priority was the health and safety of Chinese consumers and taking every practical step within the constraints of the Chinese system to protect them. . .
I have no questions over Fonterra’s ethics and agree with the importance of instilling ethics through an organisation rather than regarding them as an adjunct.
My concern is that Fonterra’s very high standards did not seem to be shared by San Lu in which it had a 43% investment.
Neither company can be blamed for the melamine poisoning which was an act of sabotage. But had the ethics and quality standards which Fonterra requires in every link of the production chain in New Zealand been required by San Lu in China the contamination would almost certainly have been picked up before anyone’s health was put at risk.
The company has learned the hard way about the difficulty of investing in other countries whose systems and standards are so different from ours. But the real test will be what it does now to ensure its standards are met everywhere it operates and that may mean it has to have a majority share in any overseas investments.