15 Aug 2013

Top manager at Fonterra resigns

6:10 am on 15 August 2013

Fonterra has announced the resignation of its managing director of New Zealand Milk Products, Gary Romano, amid fallout from a contamination scare.

Gary Romano.

Gary Romano. Photo: RNZ

Mr Romano fronted for the company during the initial days of the crisis.

On 3 August this year Fonterra revealed that 38 tonnes of its whey protein used by other manufacturers, including infant formula, was contaminated with a bacteria that can cause botulism. The whey protein was tainted by a dirty pipe at the company's processing plant in Waikato in May 2012.

In a statement to the Stock Exchange on Wednesday, Fonterra said chief executive Theo Spierings has accepted Mr Romano's resignation, which is effective immediately.

Mr Spierings said he had made a significant contribution during his time with the company. Mr Spierings will will assume interim responsibility for the day-to-day operations of New Zealand Milk Products.

The contamination scare has prompted countries including China and Russia to recall or ban some Fonterra products.

Federated Farmers dairy chair Willy Leferink said the resignation of one of Fonterra's top managers is a complete surprise.

There have been calls for people to go at Fonterra in the wake of the scandal, but Mr Leferink told Checkpoint the resignation seems premature. He said Gary Romano was one of Fonterra's top executives and is sad to see him go.

Four separate investigations will be held to try to get the bottom of the contamination scare.

Fonterra will conduct an operational investigation reviewing its business processes and traceability systems, and a board-level inquiry over the way the company has handed the situation.

On a regulatory level, the Ministry for Primary Industries will look into whether Fonterra met its requirements under the Food Act and Animal Products Act and if it committed any offences. The investigation expected to take three to six months.

Prime Minister John Key said a Government inquiry was also needed to reassure Chinese consumers and the terms of reference for it would be determined shortly. Mr Key wanted this inquiry to be completed by the end of this year.