Sanlu chairwoman Tian Wenhua, who has been sentenced to life in prison by Chinese courts, said this week that she acted on information in a document supplied by a Fonterra board member that the European Union had a permitted level of the industrial chemical.
Fonterra chief executive Andrew Ferrier, forced on to the defensive over the issue yesterday, told media in Auckland that the document was one of several sourced by management in August and September last year and given to Sanlu as the company went on a worldwide hunt for information on the chemical.
But he said the policy on melamine, of which little was known, was clear.
"Zero was the only acceptable level."
He said such instructions were minuted and would be made available to the Chinese courts should there be an appeal by the defendants, two of whom have been sentenced to death and three facing long jail sentences.
Mr Ferrier said he was struggling to comprehend how people could taint food product which a toxin.
"I cannot conceive how criminals can add it to human food," Mr Ferrier said.
It was reported yesterday that Mrs Wenhua would appeal her conviction and that she acted on information supplied by Fonterra about acceptable melamine levels.
Mr Ferrier said he had not heard of any appeal.
Because little was known about melamine, what it did and how in acted, staff went on a worldwide hunt for information as soon as the toxin was detected, and, while much of this was draft research, it was passed on to Sanlu.
Telephone discussions during the crisis between Fonterra and Sanlu were minuted, said Mr Ferrier.
Green Party MP Sue Kedgley said Fonterra should release the minutes of the telephone conversation to confirm its directors advised Sanlu there was no safe level of melamine contamination in milk.
"Fonterra's credibility is on the line with the new allegations by Tian Wenhua, and it would be wise for Fonterra to be open and transparent and rebut these allegations by releasing the minutes.
"Fonterra is our biggest exporter and it is critical for its international reputation that the dairy company fronts up with evidence to dispel any doubts about its business practices in China," she said.
Mr Ferrier said Fonterra acted appropriately.
He had reviewed the actions and decisions made during the crisis and said he was confident it had been handled correctly, given the circumstances.
Chairman Henry van der Heyden said an independent review of the board's actions and whether it met its duties also showed it had acted appropriately, given the circumstances.
However, Mr van der Heyden would not say who carried out the independent review, nor would Fonterra be releasing the results.
Conducting the review was the prudent thing any board would do.
Asked if Mr Ferrier should resign over the incident, Mr van der Heyden said Mr Ferrier had his and the board's full support and confidence.
The incident was the result of a criminal act and not a lack of judgement by Mr Ferrier or other Fonterra managers, he said.
Mr van der Heyden said Chinese officials had told him the New Zealand company had operated correctly.
Mr Ferrier said Fonterra had taken the 40% stake in Sanlu because it had operated successfully for 50 years, and from that base Fonterra could introduce its systems and structures.
It had planned to progressively introduce New Zealand-style full supply-chain integrity, but was overtaken by the deliberate adulteration of product.
