Conspiracy case launched against 'Powdergate' seven

The Serious Fraud Office has unveiled its "Powdergate" conspiracy case against seven former dairy industry executives.

It has alleged that nearly $45 million of premium milk powder was illegally exported between 1997 and 2001 by a group which includes four senior executives of the now-defunct Kiwi Group.

At depositions in the Auckland District Court yesterday, the SFO said powder was deliberately mislabelled as animal feed and exported through intermediary companies.

In 2001, Kiwi was merged with Waikato's Dairy Group and the New Zealand Dairy Board to create Fonterra.

The SFO portrayed Paul Marra - the most senior former Kiwi Group executive charged - as ringleader in a conspiracy primarily motivated by politics and personalities rather than money.

A personal vendetta against the Dairy Board and a desire to show it up as "outdated and ineffective" were likely motives for the fraud, argued SFO lawyer John Upton, QC.

Another likely motivation was a desire to boost Kiwi Group's market share to strengthen its position before the industry merger.

Six of the seven accused were present in court yesterday. They included former Kiwi executives Malcolm McCowan and Stephen Wackrow. A fourth Kiwi executive, Sean Miller, was not present.

The other three accused are William (Ross) Cottee, William Winchester and Terence Walter.

The prosecution plans to call 25 witnesses in the four-week hearing, including former Kiwi Group and Fonterra chief executive Craig Norgate.

An internal inquiry by Fonterra in 2001 found that Mr Norgate was not involved in the affair.

If the JPs hearing the case agree there is enough evidence, it will go to a full trial next year.