A former chief executive of Van Diemens' Land Company described ongoing effluent and animal welfare complaints against Van Dairy as "a complete regulatory failure" by government authorities.
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Evan Rolley, who resigned from VDL in 2018, said both the Tasmanian and federal governments had failed in their responsibility to properly audit the commitments made by Van Dairy owner Xianfeng Lu when he purchased the farm in 2015.
"What this has shown is that everything is coming home to roost ... the FIRB [Foreign Investment Review Board] process is inadequate," Mr Rolley said.
However, a Van Dairy spokeswoman said the company took animal welfare and effluent management seriously and was working with the authorities to remedy their concerns.
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It follows a damning media report that showed effluent management systems at VDL farms were not meeting industry standards.
The VDL spokeswoman said the company was in constant communication with authorities.
"We are in constant communications with the TDIA [Tasmanian Dairy Industry Authority] and are using both contractors and staff to undertake necessary remedial work," she said.
VDL is Australia's largest and oldest dairy company and was founded in 1825.
It is made up of 23 separate farms running more than 30,000 cows. The bulk of the farms are located at Circular Head on the North-West.
Chinese businessman Mr Lu purchased the company in 2015 after setting up the investment group Moon Lake for the purpose.
Moon Lake then re-branded to Van Dairy to allow the company to leverage on its commitment to freight milk directly to China.
At the time of purchase, Mr Lu promised an additional $100 million investment, over five years, with the aim of increasing job numbers from 140 to 235.
Current staff numbers at the company are sitting at 189, which is shy of the commitment they made in 2016.
The deal was approved by then-treasurer and current Prime Minister Scott Morrison subject to annual updates sent each April to Treasury.
Mr Rolley said the federal government should intervene to ensure Mr Lu achieved full compliance across all his farms, and took steps to deliver on the promises he made and the FIRB conditions.
"The federal government, through the FIRB process, has the power to manage compliance and conditions," he said.
"What needs to happen is an independent, transparent audit process to ensure full compliance."
Mr Rolley said both the Tasmanian and Australian authorities had a role to play in holding the investors at Van Dairy to account and so far they had failed in that duty.
The investigation into effluent management concerns at VDL was being managed by the Circular Head Council in conjunction with the Environment Protection Agency and the TDIA.
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A fortnight ago, the TDIA sent a response to The Examiner regarding the investigation, saying they were happy with the progress to date.
However, in an audit report, obtained by The Examiner and also in other media reports, showed that TDIA "had no faith in the management of VDL" in relation to the concerns.
The audit report, published in February, noted 83 per cent of VDL's farms did not meet the Effluent Management Code.
Mr Rolley said there had been no transparency from the regulatory bodies to ensure Van Dairy was meeting the commitments required of it under the FIRB approval of the sale.
Treasury was contacted for comment.
VDL has been under turmoil and scrutiny since the sale of the company to Van Dairy, with mass staff departures.
In 2018, five independent directors quit, citing a failure by the owner to invest in irrigation systems and maintenance for sustainability.
The Van Dairy spokeswoman said today there were three permanent Australian residents on the board of the company.
Mr Rolley also followed suit after the board's departure. He said that it was due to a lack of progress on the commitments made.
He said parliament should legislate conditions to be imposed on foreign investment.
"If this leads to those changes, then that's the best outcome, frankly, from what's been a very, very poorly managed investment, over the last three or four years."
Another former chief executive, David Beca, said the issues facing the dairy company under Mr Liu were "very sad to see".
"Unfortunately he has only invested a fraction of the capital that he initially committed to invest," Mr Beca said.
"Over time, there appears to have been a continuing deterioration in performance with the recent problems relating to effluent management being the latest manifestation of this."
The Van Dairy spokeswoman said the company was working to address effluent management and animal welfare concerns but the farms were under constant development.
"Our farming operations are under constant development, as are our activities with regard to wildlife protection and commitment to First People, their sites and customs," the spokeswoman said.
Greens candidate for Braddon Darren Briggs said the issues facing Van Dairy could only be described as a crisis that could have been avoided if the Liberal government hadn't failed to monitor it.
"It is shocking that the Liberals have not responded to such a devastating report," he said.
"As a former dairy veterinarian, I've seen firsthand how hard Tasmanian dairy farmers have worked to maintain high industry standards. It's atrocious that a big corporation can swoop in and jeopardise their reputation under the government's watch."