Fonterra Product Caught In Scandal Involving Expired Milk Powder

The founding chairman of a group set up by Andrew Forrest to promote better food safety between Australia and China has been ensnared in one of the biggest milk powder scandals to hit the latter country in recent years.

A company controlled by Liu Yonghao – the billionaire Chinese founder of New Hope Group – has been accused of selling 276 tonnes of expired Fonterra milk powder.

New Hope said it had moved to take full control of the company involved, after Shanghai police arrested 19 people in connection with the case.

“It is obviously unfortunate in the context of everything we are trying to do,” said Nick Dowling, the Australian chief executive of New Hope, China’s largest privately owned agricultural company.

“But it does underscore the importance of safe, green and clean products.”

New Hope’s Mr Liu is the China-based chairman of the Australia-Sino 100 Year Agricultural and Food Safety Partnership (ASA100), an initiative set up by Mr Forrest, the mining magnate turned agriculture investor.

The signing ceremony in 2014 to establish the group, which is co-chaired by Mr Forrest in Australia, was overseen by Chinese President Xi Jinping and former prime minister Tony Abbott.

“ASA100 was established by the leaders of Australia’s agrifood sector to eliminate these exact consumer concerns about food safety,” said a spokesman for the group. “We are most concerned about the development and are watching it closely.”

New Hope has sought to distance itself from the scandal, pointing to a police report that said it was a “personal crime” by the general manager of the Jai Wai International Trading Company, Liu Minggang.

The trading company is controlled by a New Hope subsidiary and chaired by Xi Gang, who is also chairman of New Hope Dairy.

According to the Shanghai Food and Drug Administration, the trading company sold the 276 tonnes of expired Fonterra milk powder to other wholesalers, which then repackaged the product.

It said 167 tonnes of the Fonterra milk powder had been sold into the food industry, with the remainder confiscated by police.

In a statement, Fonterra said it was not part of the official police investigation and it believed the sale of expired milk powder was part of an isolated “criminal case”.

New Hope, which boasts 70,000 employees and $15 billion in annual revenue, has been one of the most aggressive Chinese acquirers of Australian food and agricultural assets in recent years.

It has committed to invest $1 billion in Australian farm, food processing and real estate assets over the next three years.

The company already owns Queensland’s Kilcoy abattoir and is in the process of doubling its slaughter capacity.

It has also spent $100 million buying a majority stake in Australian Fresh Milk holdings, which is expanding the Moxey Farms dairy operation in western NSW.

New Hope founder Mr Liu is often referred to as China’s richest chicken farmer, with an estimated fortune of more than $8 billion.

He was in Australia last month to officially open the company’s Sydney office, which is run by Mr Dowling, who previously headed the $700 million UBS-Grocon Real Estate.

By: Angus Grigg