Fonterra probes begin

New Zealand Prime Minister John Key said on Monday that he wants a government inquiry, possibly with a Chinese representative, into the Fonterra contamination scandal to allay consumer fears in China. Experts said these probes would not solve the dairy giant's credibility crisis.

Key's announcement came as two other inquiries - one by Fonterra and the other by the Ministry for Primary Industries (MPI) of New Zealand - were formally launched to look into how 38 tons of whey protein was contaminated with bacteria that can cause botulism.

"One possibility is that if we can find an eminent Chinese scientist with a specialization in this area then we may well put them on because it would hopefully give them more confidence in their market," Key told Television New Zealand.

Key also said he wanted the inquiry to be completed before he goes to China to raise confidence in New Zealand products.

MPI said Monday it had begun an investigation into whether Fonterra complied with regulatory requirements in informing the authorities of the contamination, which is believed to have occurred in May last year.

The MPI probe is likely to be completed in three to six months.

Maximum penalties for breaching regulations are fines of up to $NZ500,000 ($402,188) and up to 12 months imprisonment.

Also Monday, Fonterra Chairman John Wilson said the company's board had set up an inquiry committee charged with overseeing an independent review into how the contamination occurred and the subsequent chain of events.

Wilson said he had confidence that Fonterra CEO Theo Spierings had made the right decisions and was continuing to do everything to manage this issue, but serious lessons needed to be learned.

"It's critical that we identify these lessons quickly so our farmers, government, customers, consumers and unit holders can again have full confidence in Fonterra and its products," Wilson said in a statement on Monday.

"The investigation itself is not enough to calm down Chinese consumers' alarm over Fonterra products. The company should further strengthen its quality control as soon as possible," Cao Mingshi, a vice general secretary of the Shanghai Dairy Association, told the Global Times Monday.

Fonterra is at the center of another blow as it recalled batches of milk powder in Sri Lanka on Sunday as tests showed the powder is tainted with a farm chemical.

Russia has also stopped importing all products related to Fonterra since Monday, a week after Russian news agency RIA Novosti reported that the country's public health watchdog reminded the public to take "reasonable precautionary measures and not to use formulas by Fonterra or any other of its dairy products."

"The worry over Fonterra products has extended from China to the world. The recent scandal shows that loopholes still exist during its production process," Cao said.

Xinhua contributed to this story