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August 14, 2013

NZ: Senior Fonterra exec quits in wake of botulism affair

Gary Romano, the head of Fonterra's domestic milk products business, has resigned from the New Zealand dairy giant in the wake of the contamination scandal that has rocked the world's largest dairy exporter.

By Dean Best

Gary Romano, the head of Fonterra’s domestic milk products business, has resigned from the New Zealand dairy giant in the wake of the contamination scandal that has rocked the world’s largest dairy exporter.

Romano’s exit from his role as MD of Fonterra NZ Milk Products comes less than two weeks after the company admitted a batch of whey protein concentrate contained a bacteria that could cause botulism – prompting product recalls across Asia and the Middle East and bans on its imports by markets from China to Russia.

Fonterra chief executive Theo Spierings, who has faced calls to step down in the wake of the affair, will assume interim responsibility for the day-to-day operations of the division.

“Gary has made a significant contribution during his time at Fonterra and we respect his decision,” Spierings said.

Fonterra announced the “quality issue” affecting the whey protein concentrate on 2 August. Romano was tasked with facing the press for the following two days as Spierings flew to China to meet with officials and affected customers.

The company, which accounts for around a quarter of New Zealand’s exports, is set to face a government inquiry into the contamination and into the way management handled the affair. Fonterra is also holding its own investigation.

The affected whey protein, manufactured in May 2012, was shipped to customers in New Zealand and various international markets, including China, Malaysia, Thailand, Vietnam and Saudi Arabia. Customers including Danone, Abbott Laboratories and Coca-Cola Co. had to recall products.

Fonterra said it identified a potential “issue” this March when a product tested positive for clostridium. On 31 July, tests showed there was a potential presence of a strain of clostridium that could cause botulism. Fonterra then contacted its customers.

Spierings has reportedly said the five-month gap between the March result and the recall two weeks ago was unavoidable.

“We found the clostridium level was up, but you can’t start reacting on that basis because you no idea what you are seeing,” he told reporters on 5 August. “There are 191 strains [of clostridium], of which only a very limited number produce toxic strains. We have to go by the rules of micro-biology.”

Spierings said at the weekend the contamination and recall could cost Fonterra “tens of millions of dollars”. China, a key market, issued restrictions on Fonterra imports. Russia has also placed a ban on the company’s imports and was this week joined by customs union partners Belarus and Kazakhstan.

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