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.
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.
They have to organise the return and refund of all stock in stores and any in transit which while not being super expensive, could easily be more than the fine. $150k really isn’t that much for a large company.
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.
That’s way better.
I’d entirely forgotten we have that kind of option available.
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.
Before choosing the vessel, Chelsea Sugar had been advised that the Rin Treasure had failed a survey report and was not fit to transport bulk sugar. Despite a cleanliness report, the cleaning of the ship’s hold was not effective, leading to the sugar’s contamination.
Are we sure they were trying to do the right thing? They were told the ship was not fit for transporting bulk sugar.
I think it should be the other way around, the financial impact should make so they don’t even entertain the risk of jeopardizing the consumer’s safety in future.
My argument was “we don’t know the detail so let’s give some benefit of the doubt”. But I missed that part, if they knew they shouldn’t and did it anyway then $150k does not seem big enough.
I’m no expert on bulk shipping, but I suspect it’s a case of trying to save time and money on finding another ship that was suitable. Putting their bottom line before safety. I wonder if the fine is actually even bigger than the costs and delays of them finding a new suitable ship.
It could be a case of the planned ship broke down and they needed an alternative. If they swapped to a different ship and it turned out it was contaminated, that’s one thing. But being told it’s not suitable and using anyway is a whole nother level.
Edit: or did it mean they were told it’s not suitable, then they had it cleaned and the cleanliness report said it was fine but it actually wasn’t? That’s different again.
Yeah I’m not sure, the wording isn’t so clear. But still, they knew it was carrying “metal sulphide concentrates (zinc and lead)” on it’s previous voyage. A quick google says: “Metal sulfide concentrate is a refined ore that contains high concentrations of valuable metals and has had impurities removed.”
Is it really suitable to risk cleaning it then transporting consumable food items in it? Especially one that was carrying lead of all things? As the Food safety deputy director general said:
“New Zealand Sugar Company knew what its responsibilities were to consumers - ensuring the safety and suitability of its products and managing any potential risk to consumers,” Arbuckle said.
Also the fact they didn’t even detect the extent of the lead contamination until after it had already been used in production.
Samples were taken between 15 and 24 September for testing, but Chelsea Sugar followed its normal process for distribution and sale.
“The test result on 7 October showed high readings of lead contamination, but rather than take immediate action and stop production and distribution, they instead sought more testing which confirmed the same result,” Arbuckle said.
"Some of this product was sold between October and early November. We were not informed of the lead contamination until 3 November, which is unacceptable.
I’m not saying they should be made bankrupt, but it should probably have more impact than “the cost of doing business”
Why do you think no one will try? If they see one company go out of business because they did the wrong thing won’t other companies try not to make the same mistake?
If one company spends millions trying to do the right thing and got driven to bankruptcy by a mistake that could have happened to any large company, the other companies might instead just not do anything except the bare minimum then spend that money on insurance.
Edit: this is now hypothetical as it’s been pointed out to me they were not trying to do the right thing.
If a company spends millions and still doesn’t get it right then the punishment should encourage the remaining businesses to spend even more and actually get it right. Clearly those millions weren’t enough.
Unfortunately under capitalism we aren’t allowed to hold people personally responsible for harming others via corporations. The only thing we can do is to hold the shareholders responsible. In other nations it’s not uncommon for the CEO or even the board to be arrested and jailed for harming the public.
This might be an agree to disagree situation but if the company runs for 50 years and has one mistake like this, I don’t think the intent should be to bankrupt them because they screwed up.
I screw up in my job from time to time and no one is firing me because mistakes happen and we learn from them.
Depends on the mistake. If worked for a company for 50 years and your mistake killed a person you’d most definitely be fired. If you cost the company a significant client or a significant amount of money you’d most definitely be fired.
A corporation mistake could kill a thousand people or ten thousand people so they should be held to an even higher standard.
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!
