Fonterra won't hold any of its own accountable for the contaminated milk scandal, while the Sir Edmund Hillary Outdoor Pursuits Centre says no-one's to blame for last year's canyoning deaths. Both lack the guts to simply put their hands up and take responsibility

It seems that we can't get away from stories of accountability this year. Globally, the war in Gaza raised again questions once more about where the blame should lie for the continuing misery in the Middle East. In the Pacific, regional leaders have been trying to decide how to hold Fiji's coup leaders to account for their failure to hold democratic elections. And at home, well, the list is a long one.

We've had the question of compensation for victims of serious crimes and the Sir Edmund Hillary Outdoor Pursuits Centre and its corporate guilty plea, we wait to see whether police officers need to be held accountable for the death of young Halatau Naitoko and watch Fonterra dance around responsibility for the death of six children and the illness of thousands more in the Sanlu contaminated milk scandal.

In each case it's a matter of trying to hold people to account without descending into self-righteous blame; determining a line between tragic human error and cruel – even criminal – neglect. It seems we're not great at that in this country.

Last week, the outdoor pursuit centre which ran a canyoning trip on which seven people died last year pleaded guilty to charges under health and safety law. My initial reaction was to be led by the victims' parents. I was skeptical as to how a business entity, rather than individuals, could plead and stand trial. But if the OSH charges were enough for the parents, who was I to question that?

Then I read the two very different views presented by opinion writers in the Sunday papers. The Herald on Sunday's editorial said it was "commendable" that the centre had put its hand up. Michael Laws in the Sunday Star Times flayed the centre's managers. He wrote:

Where manslaughter charges could and should have been laid, the families of the victims must instead be content with a ministerial inquiry and a couple of Osh charges. This is the price for deathly incompetence in this country: nothing.

And deathly incompetence it surely was. The kinds of mistakes and oversights which would see medical professionals censured and politicians sacked. Stunning ineptitude that transcends neglect, and roots itself in negligence.

I find myself, on this rare occasion, being swayed by Laws. On one hand, any weather-related death must in part be put down to misfortune. But as Laws says, failing to check weather reports after 8am and assuming that conditions would be unchanged by 3pm – especially at that time of year – is a managerial failure. The legal entity did not fail in its duty, people did, and should be held to account. Yet no-one has lost their job or, in fact, "put their hand up" by resigning. No individual has been charged, not yet anyway.

Laws also wrote that there has been no public apology. I could scarcely believe it, having searched newspapers and the centre's own website I can find only expressions of sympathy. There's been no apology that I could see.

Fonterra, at least, has apologised for its part in the death of six Chinese babies and the poisoning of thousands more by contaminated milk supplied by its joint-venture partner Sanlu. Its silence on other matters, however, has become an embarrassment to the entire country. As Fran O'Sullivan has written, five months on we still haven't got straight answers to some vital questions.

Fonterra-appointed directors say they learnt of the contamination on August 2 and the company pushed for an immediate public recall. Yet it took a month for that recall to begin. Did Fonterra know that contaminated product remained on sale throughout August? Can the company that owns 43 percent of Sanlu really claim it couldn't have forced management to act sooner? It insists government officials refused to act (presumably concerned about bad PR during the Olympic Games), but there was nothing to stop it going public, if it had been brave enough. Fonterra chose expediency; and that seems to have been its priority ever since.

The impression Fonterra is giving is that the lessons it needs to learn from this tragedy is to better control its supply chains and how to minimise the damage to its reputation in Asia. Those are important commercial considerations, but they should come only after proper repentance for the company's failings.

Because there were failings. At the heart of Fonterra's defence is the claim, "we didn't know". Despite having three directors on the board and owning 43 percent of the company, Fonterra says the melamine was added surreptitiously and criminally, and they had no way of knowing it was happening. That's disingenuous at best.

The Wall Street Journal has reported that the spiking of milk with "protein powders" was an "open secret" in China's dairy industry. Farmers say they have been adding the powders for around two years, unaware it was poisonous. Complaints were made as early as 2005; a news report had even been run on TV. "We didn't know" doesn't wash. Company directors, those people governing a business, must surely be expected to know such details about the industry in which they're working.

My father has spent years working in the Asian dairy sector, mostly in south-east Asia. When I first talked to him about the story last year, he immediately scoffed at Fonterra's protestations of innocence. Of course quality control in a country like China would be vastly inferior to standards in New Zealand. Of course there was a risk of contamination. Of course regulators would be corrupt and politically compromised. Of course farmers – mostly poor, uneducated and with tiny herds – would seek to cut costs and corners whenever and wherever they could. Fonterra and its representatives should have expected that then and acted. And they should admit as much now.

To say, as CEO Andrew Ferrier does, that Fonterra has learnt a painful lesson and will be much more suspicious of its supply chains worldwide from now on is a spin doctor's line worthy of contempt. It's a mockery. Potential problems with supply chains and quality control must have been blindingly obvious issues for Fonterra to confront when it bought its share in Sanlu.

If the Fonterra-appointed directors didn't know of these concerns and the realities of the Chinese dairy industry, they should have. And Fonterra bosses should never have appointed such ignorant people. If they did know, they failed to get them sorted before it was too late. And Fonterra bosses should have been demanding action long before it came to this. Either way, Fonterra has failed in its duties and should put is hand up, rather than trying to weather the storm.

Both the Sanlu and canyoning cases contain unintended tragedy. No-one wanted the deaths to happen and I'm not saying those in charge aren't genuinely heart-broken by what's occurred. But that isn't the test. The test is to take care of your customers and then, if you fail in that, to take responsibility for your mistakes. It seems that Elton John was wrong. Sorry isn't the hardest word. Harder still is stringing together the three words, "I was wrong". The sad thing is, until someone does put their hand up, there can be no accountability. And if there's no accountability, there's no justice.

Comments (5)

by Phil Wallington on February 02, 2009
Phil Wallington

The late Schmuel Gelbfisz, who later became famous as a Hollywood Czar and creative mangler of the English language, would have known just what to say to Andrew Ferrier.

"In two words un believable!!" was one of the more famous "Goldwynisms"... The pithy and pointed retorts made by Samuel Goldwyn to his colleagues.

Is it just me who finds Mr. Ferrier uncomfortable to watch?

Is it only who watches him fronting the Fonterra press briefings with a sense of disbelief?

I am definitely suffering from cognitive dissonance as I see the whole sorry saga of Sanlu and the tainted baby formula so painfully teased out.

Whoever is running the P.R. campaign and managing the media needs to go back to first principles.

We need the truth. We need reassurance and we need those at fault to be outed or to front up for their sins.

It is simply unbelievable that the management of this mega-corporation, which carries New Zealand's reputation out into the world, could have been so ignorant for so long while so many Chinese families lives were ruined.

The truth will out.   

by Tim Watkin on February 03, 2009
Tim Watkin

I hope your faith in truth pays off Phil, because it seems to be well shrouded at the moment. The PR effort thus far has played down a story that should be dominating the national media, but has been largely consigned to the inside and business pages. So it has been effective, if appalling. Ferrier's possum-in-headlights look doesn't help, but it's the way he's choosing to play this that is the real problem.

Interesting to note a comment from John Key last week:

Fonterra did not have control of the vertical production chain, in other words they were making the milk powder not the supply of the milk, so it was a difficult position and they did not know until quite late in the piece.

That's exactly the problem. When you own 43% of a business, you should have control of the production chain. Fonterra failed in its governance responsibilities.

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