KEY POINTS:
Fonterra will investigate claims of a big-money deal to try to cover up the poisoned-milk scandal in China.
Chinese weblogs have carried allegations of a public relations campaign by the San Lu dairy company aimed at silencing victims and concealing negative media coverage.
Fonterra - which has a 43 per cent stake in San Lu - said through spokesman Graeme McMillan yesterday that it had no knowledge of any public relations strategies to cover up the scandal.
"It was never discussed at the San Lu board or with any of the Fonterra-related staff interacting with San Lu."
Mr McMillan said it was too early to detail the steps of the investigation. He had not been in contact with San Lu's public relations team yesterday.
"Without the facts, all we can tell you is that we knew nothing of it," said Mr McMillan.
Production at San Lu has been shut down and its products recalled after its baby formula was found to be contaminated with melamine.
The contamination has led to the deaths of four infants and made tens of thousands of others very sick.
Fonterra pushed for a public recall earlier but was blocked and New Zealand Government officials intervened to make the problem public this month.
Reports published in New Zealand yesterday claimed the memo recommended San Lu "do anything to pacify victims, and accept all they want to keep them silent for at least two years".
It said a "PR protection" deal had been negotiated with the Chinese search engine Baidu in which San Lu agreed to buy $640,000 worth of advertising in return for having negative stories blocked from search results. But Baidu reportedly said it had never screened out any related search results about the San Lu case. The firm threatened legal action and a spokesman denounced what he called a campaign by e-commerce firm Alibaba to spread rumours about the case.
The chain of events leading to the conflict apparently began on September 12, when a document entitled the San Lu Crisis Public Relations Proposal was posted on the internet.
Meanwhile, the list of products caught up in the scandal grew to include baby cereal and milk tablets in Hong Kong, snack foods in Japan and cheese at Pizza Hut in Taiwan.
Reports in China suggested San Lu could be sold to a rival in that country. Fonterra said yesterday it had not been approached about selling its stake in the company.
