Chinese dairies to compensate victims of tainted milk

Contamination sickened or killed nearly 300,000

BEIJING - Chinese dairy companies that sold melamine-tainted milk are ready to pay compensation to the families of the nearly 300,000 children who became ill or died from drinking contaminated infant formula, a state news agency reported yesterday.

Twenty-two dairy producers will make a one-time cash payment to the victims' families, China's Dairy Industry Association announced, although it did not disclose an amount, the official Xinhua News agency said.

"The money for compensation is in place now and will soon be handed to the people who have custody of the sickened children through various channels," the association said. The group did not specify a date.

In one of the worst food-safety scandals ever to hit China, at least six babies died and some 294,000 other children suffered kidney and urinary problems from drinking formula contaminated with the industrial chemical.

The issue of compensation for the young victims has been a highly sensitive one, with Chinese courts so far not accepting any lawsuits filed by the families.

The crisis highlighted a widespread practice among dairy suppliers who watered down the milk they bought from farmers and then added melamine to it to artificially boost its protein levels. The tainted milk was then sold to dairy companies.

The report did not name the companies involved, but some of China's largest dairy producers, including Sanlu Group, Mengniu Dairy, Bright Dairy, and Inner Mongolia Yili Industrial group, have been implicated.

"The enterprises offered to shoulder the compensation liability. By doing so, they hope to earn understanding and forgiveness of the families of the sickened children," the association said.

Sanlu, which was at heart of the scandal, was declared bankrupt in recent days with a reported $160 million of net debt.

The association also said that the 22 companies have set up an extra fund to cover medical bills for future health problems, according to Xinhua. "If the babies suffer from relative aftereffects, all medical fees will be covered by the fund," the association said.

As of late November, 861 babies remained in the hospital, Xinhua said.

On Friday, the first trials associated with the scandal opened. Six men, including the owner of a workshop that was allegedly the country's largest source of melamine, appeared in four different courts, where they are accused of producing and selling melamine.

Sanlu's chairwoman and general manager, Tian Wenhua, will go to trial Wednesday.

In one case, police alleged that Zhang Yujun, 40, ran a workshop on the outskirts of Jinan in eastern Shandong Province that manufactured and sold a "protein powder" composed mainly of melamine and malt dextrin, Xinhua reported.

Prosecutors in the Shijiazhuang Intermediate People's Court accused Zhang of producing 776 tons of the additive powder from October 2007 through August 2008, making it the largest source of melamine in the country. He allegedly sold more than 600 tons with a total value of $1 million, the court heard.

In the same case, a second man, Zhang Yanzhang, 24, was accused of buying and reselling 230 tons of powder to others.

Zhang Heshe and Zhang Taizhen were accused of adding 77 pounds of the powder to 70 tons of raw milk and then selling it to Sanlu. Yang Jingmin and Gu Guoping were charged with adding 53 pounds and 37 pounds of melamine, respectively.