3mo ago

Chelsea Sugar fined over 2021 lead contamination

www.rnz.co.nz

Chelsea Sugar (also known as the New Zealand Sugar Company) has been fined $149,500 for importing and selling sugar products tainted with lead.
More than 970 tonnes of products were manufactured from sugar contaminated during sea transportation from Australia, resulting in the company recalling thousands of products in late 2021.
Two more recalls were needed when it was revealed incorrect information was provided to supermarkets resulting in more tainted goods being released to consumers.

27 comments

That sounds like a tough issue for government to catch. Well done, im glad that they caught the problem and fined them. Unfortunately the seem to profit around 33m before tax so this is barely any impact on their yearly profits. Its hard to decide how much to fine because I think fining them 1/4 their yearly profit is reasonable it would absolutely kill their stockprice and growth and probably severely impact their long term trajectory as a company. What do you guys think a reasonable fine is for this offense?
- Yeah it's a tough one. At the very least the default fine should be higher than the cost of making sure they are complying (as in Chelsea staff in charge of ensuring compliance). But if they were trying to comply and showed their process improvements since the incident then the fine might be appropriate.
  I'd guess they lost a lot more money from doing a recall and also from the loss of brand status, there would probably be people avoiding them after the incident.
  
  I dont think product recalls reach enough people to do any harm. most people dont even read the news so they wont know about this.
- The fine has to be big enough to cause enough pain to the shareholders that the board of directors cares.
  Let's say we set the fine to an amount that would destroy the company if levied in a single financial year, then actually leviing it over five years. Five years of poor dividend performance.
  Or perhaps partial dividend forfeiture for a period of time.
  The people who make the kinds of decisions that result in this kind of failure are driven by next quarter's share price, hurt that enough and they'll make the right decisions.
  Either way, that particular fine is appallingly small for poisoning the general public with heavy metals.
  
  There is another way to deal with this kind of stuff, fines may be effective. But if you want to ensure that this kid of thing doesn't happen. Look to the health and safety regulations.
  Making the board / CEO criminally responsible, will achieve the the thing you want, rather than the decision makers paying out other peoples money (shareholders) which doesn't hurt them directly, make them personally responsible.
  If they are found to be negligent, then it follows that they go to jail....watch how quickly this kind of thing changes.
  Also make it not beholden to them continuing to work at the company they fucked up at, so if this happened and was only discovered years later, the CEO who has moved on to fuck up at another company can still be held liable.
  
  While I agree that it needs to be big enough that they notice, I think we should not go hard on companies genuinely trying to do the right thing. We know accidents happen, and we do not know the details.
  Do we even know the level of contamination?
  If we are super hard on companies trying to do the right thing, no one will try.
- When a person commits a crime we call for punishment that would deter future crimes. Same should apply here. If this is just a minor fine then there is no incentive to not do it again.

Using a ship that had been carrying zinc and lead? She’ll be right mate.
- But we saved $75!

27 comments