He cost the country as much as $40 million. Sales of infant baby formula tanked overnight, particularly to China, the biggest foreign buyer.
1080 infant formula blackmailer Jeremy Kerr will be sentenced today. Phil Taylor details a crime that had far-reaching consequences.
He cost the country as much as $40 million.
A hit on sales was avoided due to the speedy implementation of additional measures to protect consumers in New Zealand and overseas and major efforts to reassure trading partners.
New Zealand infant formula is still in significant demand in China. In the 12 months to November 2014, New Zealand exported infant formula to China valued at $118 million, and in the 12 months to November 2015, this had increased to $136 million.
Parents had to be told of the risk. Extra testing had to be done on export infant powder to ensure it was safe, guards hired to patrol the shelves up and down the country where infant formula is sold.
It has cost Fonterra and/or its insurer multiple millions. Several Government departments worked overtime, led by the Ministry of Primary Industries. The police investigation was one of the biggest operations in recent times and cost nearly $5 million alone, to catch one man, blackmailer Jeremy Kerr, 60, a former car sales manager, a pseudo-scientist whose claim to an altruistic motive was rejected by the country's top High Court judge. He did it for money, said the judge.
Kerr mixed highly concentrated amounts of the poison with baby milk formula and posted them to the dairy co-op and to Federated Farmers, with a letter demanding the country stop using 1080 or he would release poisoned infant milk powder into the Chinese market and one unspecified market.
The principal supplier of 1080 for the world is a chemical company in Alabama, USA. New Zealand is its biggest user. It has enabled the country to get on top of the possum population which historically was estimated at 80 million. It is now about 20 million and the control of this pest is now said to be in a containment phase.
Kerr is the owner of another pest-control poison, Feratox. Justice Geoffrey Venning found that Kerr was motivated by money, his rationale was that if 1080 (a poison that is dropped from aircraft) was banned, sales of his ground-laid poison would rise at least for some years while another product that can be distributed by air was developed.
In short, Kerr was interested in the money, the judge found.
Kerr fought this contention in court because it is an aggravating factor that may add to the severity of his sentence.
What is the cost of Jeremy Kerr's blackmail attempts?
Between $30 and $40 million. This includes estimated costs to Fonterra or its insurer of about $20 million, and the nearly $5 million cost of the police investigation and many millions to relevant government departments.
The police investigation involved 35 investigators and analysts with additional resources seconded at different stages, plus other agencies led by the head of the Ministry of Primary Industries, Martyn Dunne.
What did the blackmail letters say?
"Mr T Spierings, CEO Fonterra
Mr G Smith, CEO Federated Farmers
NOTICE - Sodium fluoroacetate (1080)
Enclosed is a sample of 1080 blended with New Zealand dairy infant formula currently in China.
If after March 27, 2015, this VTA [vertebrate toxic agent] is still in use in New Zealand, several New Zealand infant and other formula will be released into the retail chain in the Chinese market and one other market with traces of 1080.
The release will coincide with a media package applied to the Chinese authorities and competitors highlighting the risk to New Zealand, their environment and others consuming our export products, from exposure to 1080, and current New Zealand government agency policy and practice with 1080.
A concurrent media release in New Zealand and China will expose the past 30 years of flawed self-serving science and bureaucracy that has allowed the Government's sanctioned approval to continue.
Our group has no confidence in the political or democratic process concerning 1080.
It is for you to manage the outcome.
This notice is private and confidential to you and will remain as such.
If there is no compliance it will be part of the media release.
The magnitude of this issue is now beyond the temporary financial and personal sacrifice that will be made by the agricultural and tourism sectors of the New Zealand economy."
Were the letters a hoax? That was an early question for the police. Tests by the ESR of the milk powder in the letters soon showed it wasn't. The powder contained 1080 of a very pure form. The powder hadn't come from someone who'd picked up a stray greenish pellet dropped in bush.
The police were hunting for a blackmailer who appeared to have the means to kill infants and deal exports a crippling blow.
Depending on the weight of the infant, scientists told the police there was enough poison enclosed with the two blackmail letters to kill from 13 to 33 infants. Kerr initially contested this but later accepted it could have been fatal to a number of infants.
The police also compiled a long list of names - people who had expressed opinions on the use of 1080 and those who may have had access to it.
Jeremy Hamish Kerr. Photo / Supplied
In that broad net were the names of 2600 people. Within a couple of months that list was whittled to 60 people to be interviewed and to request DNA and fingerprints from.
Kerr, who had an association with 1080 and other toxins dating to the 1990s, was interviewed by Detective Constable Andre De Villiers, seconded to the investigation from his beat in Gore.
Kerr told the detective he had got rid of the 1080 he had, tipping about a kilogram down the toilet. He provided DNA and fingerprints.
Where Kerr tripped up was in writing what was referred to in court as the retraction letter. It was clear from its content that it was from someone with knowledge of what the threat letters said but it also contained DNA.
Why did he do it?
In a word - money. Kerr claimed he acted for the public good, that he was seeking more responsible use of 1080. If that was accepted he could expect a lighter sentence.
In a press release in 1999 Kerr had proclaimed that a rival product he was developing would be "kinder" than 1080 which he described as "an extremely good toxin but persistent in animal tissue". "We're going to alter the formulation so there's no half-life ... in other words it won't kill dogs, cats and birds that try to eat the carcasses of animals killed by it."
But Justice Geoffrey Venning noted that the threat letters themselves were not directed at the indiscriminate aerial dropping that Kerr referred to later but "the total ban of the use of 1080 rather than a change in policy".
Kerr earned royalties from another pest-control product called Feratox, and he was under considerable financial pressure, the judge said.
Feratox is a ground-laid bait and so could not replace 1080.
Kerr claimed he'd be worse off in the long run if 1080 was banned. "If 1080 disappeared, my product would be regulated," Kerr told police. "It might help Feratox in the short-term but not in the long term. It would open the door for a lot more products."
Justice Venning ruled that while there might be other reasons behind Kerr writing the blackmail letters, in writing them he intended to obtain some financial benefit through an increase in sales of Feratox which would in turn lead to an increase in royalty payments to him.
Five months before he sent the blackmail letters, Kerr emailed one of his two sons, Matt. The subject line was "matt must do this".
"Join Ban 1080.co.nz. It's a new political party,"
Kerr: "Ill put $100 in the account you get 4 more to sign up as well"
Matt: "Okay, I'm assuming things will go very well for connovation [the company that sells Kerr's product, Feratox] if 1080 is banned?"
Kerr: "Extremely well"
Who is Jeremy Kerr?
Kerr has no qualifications in science. He has previously run a car dealership and a petrol station, according to a source.
Kerr told interviewing detectives that he employed others with a background in science. "They weren't rocket science," Kerr said during a discussion about his products. "I was really stealing other people's technology ... We reformulated it from someone else's product to make it Feratox."
Jeremy Hamish Kerr. Photo / Supplied
Kerr made an average of $100,000 a year in royalties from Feratox, a ground-laid bait aimed at possums. He also worked on developing poisons aimed at other vertebrates regarded as pests, such as wallabies.
A friend described Kerr as "matey". "He's like an instant friend. He's very plausible. I liked him, he was fun, not crude or anything."
He liked "the good life", he always had money but was not good at managing it and he had his own ethics, the source said. "He's like a mad inventor, he's quite clever but you couldn't get Jeremy to stick to the rules."
Until he was arrested, Kerr lived in a Howick home valued at $1.2 million and owned by a family trust. He owns a boat called Men At Work, a photo of which was published in the Herald after a passenger fell overboard on the Waitemata Harbour.
A crewman on the yacht Men At Work falls overboard during the Auckland Anniversary Day Regatta, on Auckland's Waitemata Harbour. Photo / Brett Phibbs
Where did he get the 1080 poison from?
That remains unclear. Kerr claimed to a detective that he got it from Landcare Research, a government agency with which Kerr had a product development agreement for 10 years ending in 2004. The Herald has been unable to verify the claim.
Kerr told police he thought the person at Landcare he got the 1080 from was called "Elliot". Landcare has advised it has no record of having any staff by the name of Elliot who could possibly have access to 1080.
The only documentation presented in court related to occasions in which Kerr had given small samples to Landcare, in 2001, and Animal Control Products Ltd, in 2004, for testing.
Landcare said it has no record of having provided Kerr with 1080. It has never manufactured the toxin but periodically received tiny samples from clients for toxicology testing in its laboratories and to experiment with in the field, chief executive Dr Richard Gordon said.
Because of their small size - no more than a few grams - Landcare did not return samples.
"We have never held anything remotely close to a kilo or 'drum' of 1080. Our laboratory records show the maximum inventory we have held over the last 20 years is approximately 300g."
As Kerr sought to develop new pest control products, including Feratox, he would send toxins, which included 1080, to Landcare for testing and verification.
The intellectual property of products that reached the market was owned by Kerr via a company called Feral IP Ltd, and Landcare would earn a small royalty.
As Kerr sought to develop new pest control products, including Feratox, he would send toxins, which included 1080, to Landcare for testing and verification. Photo / File
How detective caught 1080 blackmailer in web of lies
The takeaway from watching the video interview of Jeremy Kerr (JK) is that Kerr is an affable but not very convincing liar.
He was, however, persistent. Detective Senior Sergeant, Aaron Pascoe (AP), expertly and methodically walked Kerr, step by step, through the reality of his situation, explaining how each piece of evidence that had been collected exploded each position in Kerr's landscape of deceit.
Police interview with Jeremy Kerr. Photo / NewsHub
Nearing the end of its second hour, the interview came to this:
AP: Well I think Jeremy, now's the time to actually tell the truth.
JK: Ahum [nods]
AP: Because not telling the truth and us slowly identifying each area where you're not being honest ... isn't doing you any favours.
Earlier in the interview, Kerr denied ever having written to Fonterra or Federated Farmers, ever having written an anonymous letter in his life.
He is asked what, theoretically, he thought the impact would be for New Zealand if 1080 was released into infant formula in any market?
JK: "Oh it would be devastating I would think."
The detective shows Kerr a photograph taken in Kerr's factory in 2011 in which a container labelled 1080 can be seen.
JK: "God where on earth did you get that. Amazing ... well there you go, there's the sample ..."
Kerr concedes that this would have been left over from a larger amount of about 1kg that Kerr had earlier told Detective Andre de Villiers he had flushed down the toilet years ago.
The interviewing detective moved on to establish that Kerr had been in Marton, where he has a major share in a possum belt company, Nature's Support. He had stayed with Charmaine Wilson, a "friend" and employee, and then travelled to Wellington on the day the threat letters were posted from the Wellington region.
Jeremy Kerr with Charmaine Wilson. Photo / Supplied
The interview moves on to what is referred to as the retraction letter sent to De Villiers a few days after De Villiers had interviewed Kerr.
The letter tries to withdraw the blackmail threat.
AP: Have you ever written to anybody on this investigation team?
JK: Not a thing
But DNA was on the retraction letter that has been found to be 260 times more likely to be from Kerr or a male paternal relative than a random member of the public, Kerr is told. JK: I find that absolutely staggering.
JK: No I can't, I certainly didn't type the letter ... no.
The "retraction letter". Photo / Supplied
The detective explains the retraction letter was written on a laptop from Nature's Support, it connected to Wilson's IP address when Kerr was staying there, a Brother label maker was plugged into the laptop and Wilson has such a label maker.
AP: "We've got you sitting in her lounge using her work laptop ... we've got your DNA ... we've got you being visited by Detective De Villiers on the 27 of June. You travelled to Marton on the 2nd of July and on the morning of the 3rd of July you were trying to type a letter that included the name De Villiers ...
AP: I think this might be your opportunity to tell us what you actually intended to do, because at the moment we have a threat letter which contains sufficient 1080 to kill an infant." .. JK: I definitely didn't write that letter [shakes head]
AP: And you're saying you didn't write any of the letters.
JK: I'm not saying that but I definitely didn't write the first letter [the threat letter]
AP: So you are admitting writing the second letter?
JK: Well I suppose I have to [shrugs]. I've got no choice now.
It takes another 10 minutes during which the detective explains that the author of the retraction letter must have known what the threat letter said, how using a scientific process which measures carbon, hydrogen and oxygen atoms, they had been able to narrow 56 samples of 1080 collected around the country down to the toxin in the threat letter possibly coming from only five of them. Two were traced to Kerr and one to an associated company.
At 9.47am on 13 October 2015 in an interview room in an Otahuhu police station the detective tells Kerr "now's the time to actually tell the truth because not telling the truth and us slowly identifying each area where you're not being honest isn't doing you any favours.
