The milk powder is believed to have contained melamine, a chemical that can make it appear there is more protein in a product than is really there – but which causes kidney stones and other health problems. Two infants have been reported dead after drinking the milk powder, and almost 600 are sick.
Speaking to reporters by videolink, Fonterra chief executive Andrew Ferrier defended his company as it emerged that Sanlu’s board had known about the contamination since August 2, according to AFP – but the recall only swung into action last Thursday.
He said that Sanlu, in which Fonterra has a 43 per cent stake, had to follow the rules made by Chinese authorities – and that took time.
"If you don't follow the rules of an individual market place then I think you are getting irresponsible.
"We as a minority shareholder had to continue to push Sanlu. Sanlu had to work with their own government to follow the procedures that they were given.”
The problem finally came to light when New Zealand prime minister Helen Clark became aware of it, and by-passed local authorities to inform Beijing directly.
On home turf, the problem has also stirred political tempers. Alliance Party spokesperson Victor Billot said on Sunday that Fonterra must be held accountable for the deaths, as its role as a shareholder is to carry out checks and regulations of Chinese operations.
"I'm sure they checked out how much cash would be in it for them, so why didn't they check the safety of the production facilities?" he reportedly said.
Ferrier said that during production, storage, and sales had been ruled out, however, according to AFP.
"In this case we frankly have sabotage of a product," Ferrier said. "Our hearts go out to the parents and the infants who were affected."
The affected milk was bought by Sanlu from third party suppliers. So far, 19 people have reportedly been detained in connection with the incident, all understood to be related to suppliers down the chain and not employees of Fonterra or Sanlu.
Ferrier refused to comment on speculation that the contamination had been covered up so as not to cast a shadow over the Olympic Games.