Norgate witness in ‘Powdergate’ case

Former Fonterra chief executive Craig Norgate will be one of the key "Powdergate" witnesses for the Serious Fraud Office (SFO) in its court action against seven former dairy industry executives.

The depositions hearing begins in the Auckland District Court today and is scheduled to run for about four weeks.

The SFO alleges that more than 7000 tonnes of premium milk powder - owned by the Kiwi Dairy Co-operative - was mislabelled as animal feed and exported without proper documentation and outside the statutory regime set down by the Dairy Board at the time.

The exporting occurred in the lead-up to the merger of the Dairy Board, Kiwi Dairy and Dairy Group, which formed Fonterra in 2001.

Norgate was chief executive at Kiwi during the time the alleged activity took place.

A Fonterra inquiry found that Norgate was not implicated in the affair and had at no stage acted improperly.

It is understood the SFO values the milk powder at more than $45 million. It says it was exported on 210 separate occasions through a small intermediary company.

At the time, the Dairy Board set strict limits on the amount of premium product companies were allowed to export.

Depositions is the process by which the prosecution tries to satisfy the court that there is sufficient evidence to warrant the accused standing trial. If the prosecution is successful at depositions a jury trial would be held some time next year.

The background

* The Serious Fraud Office alleges that $45 million of premium milk powder was illegally exported by a group of Kiwi Dairy employees and subcontractors.

* It claims that on 210 occasions between January 1997 and October 2001, 7717 tonnes was mislabelled as animal feed and exported without proper documentation and authority.

* The seven accused are charged with conspiracy to defraud the Ministry of Agriculture, Customs, the Dairy Board and Kiwi Dairy Co-operative.