Sutton 'sent Powdergate to SFO'

MAF chief executive Murray Sherwin. Picture / Glenn Jeffrey

Agriculture Minister Jim Sutton decided to refer the "Powdergate" case to the Serious Fraud Office for criminal prosecution, the Auckland District Court heard yesterday.

In 2002, Sutton was briefed about the progress of a Ministry of Agriculture and Forestry inquiry into illegal milk powder exporting, ministry chief executive Murray Sherwin told the court.

Ministry officials told Sutton they had reached the limit of their resources and could not continue pursuing the case. They put two options to Sutton - that the ministry be given extra resources or that the case be referred to the SFO.

"We advocated the latter option," Sherwin said. "The minister agreed with that judgment."

In cross-examination, Sherwin was asked about Sutton's enthusiasm for a criminal case. "Did your minister openly advocate a prosecution?" asked John Haigh, QC.

"The minister expressed a wish to see the truth emerge," Sherwin replied. "I don't recall the minister openly advocating a prosecution."

SFO lawyer John Upton, QC, objected to the line of questioning, saying that whatever the minister may have thought about the need for prosecution had no influence on SFO's decision to take the case on.

Sherwin appeared as a prosecution witness to give his opinion on the potential effect of the alleged offending. Much of that evidence was suppressed.

The SFO alleges that $45 million worth of milk powder was exported illegally between 1997 and 2001. At that time all exports were supposed to be handled by the Dairy Board.

The allegation

$45 million of premium milk powder was illegally exported by Kiwi Co-operative Dairies' employees and subcontractors on 210 occasions between January 1997 and October 2001.

The hearing finishes on Friday.