Last week’s announcement by the New Zealand government that it was the victim of an extortion threat, highlights the issues facing companies in this position. At a pressconference, the New Zealand Police, the Ministry for Primary Industries and Fonterra, Australia’s second largest dairy processor, revealed that threats were received last November to contaminate baby food formula with poison if New Zealand does not stop using the pesticide 1080 by the end of March 2015.
So is “going public” with a threat ever the right course of action? The primary responsibility of every food or drink manufacturer is to protect consumers, and this responsibility must be the first consideration when assessing a threat. As a general rule, consumers are at no immediate risk from a threatened malicious product contamination. The whole point of an extortion demand is that the threat will only be carried out if the demands are not met.
The extortionist is hoping that the victim company will comply with the demand, usually for money, rather than risk having its products contaminated with the inevitable loss of consumer confidence and sales. As there is no immediate risk to consumers, the information should be kept on a “need to know” basis. The hope would be that law enforcement agencies might be able to identify and catch the extortionist before the deadline is reached.
Only if the deadline were approaching with no hope of catching the criminal would the option of going public need to be seriously considered. And then only if there was a belief that the threat might be carried out and consumers put at risk, bearing in mind that 90% are hoaxes. The New Zealand government has assured consumers that rigorous testing has established that there is no poison in the supply chain, and dairy products, including infant formula, are safe to consume. New Zealand’s Ministry for Primary Industries said more than 40,000 product samples had been tested, with no evidence that any had been contaminated.
So it is hard to see what has been achieved by this announcement. If the primary aim was the protection of consumers, this has not been achieved. The government has not agreed to comply with the demand to stop the use of 1080, therefore there is still exactly the same the risk that the threat will be carried out when the deadline is reached at the end of March.
One of their arguments for going public was that manufacturers would have time to put extra security measures in place. However, contamination can take place after the product has left the manufacturer. There are many documented cases whereproducts have been purchased, contaminated and put back on the shop shelf. This announcement also runs the risk of encouraging copycats to believe that they can exert significant pressure on the government.
Meanwhile, there has been a steep decline in Chinese demand for infant formula, according to Michael Barnett, Chairman of the New Zealand Infant Formula Exporters Association. He said several small companies marketing milk powder in China were already reporting sharp cuts in orders, some of them by up to 70 percent.
The advice for companies facing similar threats is to work with the authorities to assess the threat. If the public is at risk they must be warned. If not, there is no reason to cause wide spread alarm and commercial damage to the company or companies concerned by a premature public announcement. It remains to be seen what advice the government gives to consumers when the deadline is reached. That may have been the point at which a public warning will be necessary.
Shane Russell, Malicious Product Tamper and Extortion Specialist