Sunday, December 3, 2023

NZ Sugar faces charges over tainted sugar recall

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The seven charges were filed by MPI against NZSC in April under the Food Act in accordance with the Criminal Procedures Act.
MPI says NZ Sugar sold raw sugar, food-grade molasses and brown sugar to retail food suppliers and food manufacturers that didn’t comply with the law. Photo: Eva Bronzini
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The Ministry for Primary Industries has accused New Zealand Sugar Co of knowingly or recklessly selling tainted sugar.

That’s among seven charges laid against the maker of Chelsea Sugar, relating to the 2021 recall of sugar that was contaminated with lead.

NZ Sugar (NZSC) will appear in the Auckland district court on July 19 where it is expected to enter a plea, said Ministry for Primary Industries (MPI) food safety acting deputy director-general Jenny Bishop.

The seven charges – which have penalties ranging from $20,000 to $500,000 with a maximum total of more than $1.5 million – were filed by MPI against NZSC in April 2023 under the Food Act in accordance with the Criminal Procedures Act.

The sugar company said the seven charges were related to “elevated” lead levels in a sugar shipment in September 2021, according to its latest financial statements lodged with the Companies Office.

The sugar from that shipment was subsequently recalled in October and November of 2021.

“NZSC is currently reviewing the charges. However, the impact on the group’s operations or results of those operations or the group’s state of affairs is not anticipated to be material,” the company wrote in its annual report.

In the sugar company’s 2021 accounts, it booked an $868,000 provision, which it fully used in the following year.

In the 2022 accounts, the company reported a profit of $20.6 million, up from $12.7m in 2021.

Revenue jumped 19.7% to $270.8m, rising from $226.2m in the previous year. Total inventory rose to $41.3m, from $32.2m in 2021.

Wilmar has a 75% stake in NZSC, through Wilmar Sugar Australia Investments and Wilmar Sugar Refining Investments NZ. Queensland-based MacKay Sugar claims the remaining 25%.

The sugar company didn’t declare a dividend for the 2022 financial year but paid out $20m in dividends in the previous year.

At the time of the 2021 contamination, MPI described it as “low-level”. The threat to the public was deemed to be low risk and unlikely to cause illness.

However, the charging documents with the Auckland district court accuse NZSC of starting the recall without informing MPI’s chief executive.

That charge has a maximum penalty of $20,000.

NZSC initiated a trade-level recall of bulk food-grade molasses due to lead contamination on October 18, 2021, but didn’t notify MPI’s chief executive of the recall until November 3.

The most serious of the seven charges levelled against NZ Sugar has a $500,000 penalty.

MPI said the sugar company sold raw sugar, food-grade molasses, and brown sugar to retail food suppliers and food manufacturers both in NZ and overseas that didn’t comply with the law.

The ministry alleged NZSC hadn’t completed testing for heavy metal contaminants in the sugar prior to “disseminating it for sale”.

When the sugar was being sold, MPI said NZSC “knew, or was reckless to” non-complying manufacturing processes, transportation and hazard control procedures.

The hazard control lapses included NZSC “not having taken corrective actions” in regard to a “burst pipe incident”. The sugar company faces a separate $200,000 penalty for a “loss of control” in the “ burst pipe incident” by MPI.

NZSC was also charged with two different charges, each with a maximum penalty of $200,000, relating to the shipping of sugar – one for failing to test for heavy containments and the other for failing to ensure that contamination was at an acceptable level.

Trading in consumable sugar products which weren’t safe for human consumption added a $250,000 maximum penalty to NZSC’s charges.

“NZSC ought reasonably to have known that the failure may directly or indirectly increase the likelihood of an existing risk to the lives or health of those consuming the food from being realised, namely lead toxicity,” an MPI food safety officer wrote.

The ministry also charged NZSC with failing to control hazards, which has a maximum penalty of $200,000.

“As the case is currently before the court, it would not be appropriate for us to make any comment,” an NZSC  spokesperson said in response to questions.

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