It has claimed some corporate “bravery” in its decision to publish the necessarily critical, full, independent, board-level inquiry report.
It has also committed to implement the findings and recommendations and report back publicly in nine months and again in 18 months.
“We believe it is unprecedented that a private organisation has a conducted such a thorough, independent review and even more unprecedented that it should be published,” Queen’s Counsel assisting the inquiry Jack Hodder said.
Fonterra chairman John Wilson said the findings and recommendations of the Sir Ralph Norris-led inquiry focused the mind with its criticisms and learnings.
“The inquiry finds that our manufacturing processes and systems are best-in-class and so that is also encouraging.”
The board level inquiry followed an earlier “operational” review released by chief executive Theo Spierings and group director of strategy Maury Leyland in early September.
“Our priorities are to create a new global benchmark for dairy safety and quality to reinforce the trust of New Zealanders and to continue to strengthen our relationship with customers and critical markets,” Leyland said.
Hodder said the latest inquiry was not done to address the regulatory framework in which Fonterra operates, nor did it analyse the legal risks of the recall handling.
Major customer Danone has already said it will be seeking substantial recompense for disruption to its businesses and ongoing brand reputational damage.
The report did not name individuals or recommend that heads should roll but Wilson said some people had resigned following the incident and some had been moved to different roles within Fonterra.
Hodder said some among the 30 stakeholders interviewed who are outside the company were sceptical the inquiry could be independent and critical.
“The individuals have a lot of experience and their own reputations and we have no interest in being involved in a whitewash,” he said.
The review found 10 “primary things that went wrong”, perhaps the most salient being the errors of judgment in WPC processing and the inadequate testing for suspected Colstridium botulinum.
There was delayed escalation of the “explosive reputational risk involved” and failure to join the dots between botulinum, infant food products, consumer sensitivities and Fonterra’s global reputation.
The report includes 33 recommendations relating to operational matters, governance and some specific matters including clostridial testing and crisis planning and management.
It has recommended a specially trained and multi-disciplinary incident management team (not full-time) and the formation of a risk committee of the board.
The Fonterra Shareholders’ Council has commended the board on its openness and supported its decision to make the report public.
It will review the report thoroughly and meet the board in November to discuss it further.
Council chairman Ian Brown was confident there was real intent on Fonterra’s part to improve while the independent review found the co-operative was generally well-run with good people and processes in place.
Related story: Fonterra finds 33 ways to improve
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