BIZCHINA> Top Biz News
22 dairy firms to pay $160m in compensation
By Zhu Zhe in Beijing and Cui Xiaohuo in Shijiazhuang (China Daily)
Updated: 2008-12-30 07:35

Related readings:
22 dairy firms to pay $160m in compensation Lessons from Sanlu scandal
22 dairy firms to pay $160m in compensation Six on trial over Sanlu tainted milk scandal
22 dairy firms to pay $160m in compensation Sanlu in $160m debt, assets up for grabs
22 dairy firms to pay $160m in compensation Sanlu goes into bankruptcy proceedings

Twenty-two dairy firms whose products were found contaminated with the industrial chemical melamine are likely to pay 1.1 billion yuan ($160 million) to compensate families of babies who died or fell sick after drinking the tainted milk, official sources confirmed yesterday.

About 900 million yuan ($131 million) of the amount will be paid in cash as one-off compensation, the China Business News reported yesterday.

The remaining 200 million yuan ($29 million) will go to a new medical fund to cover bills for any lingering health problems related to the tainted milk, a source from the China Insurance Regulatory Commission said.

China Life, the country's biggest life insurer, has been appointed to manage the compensation fund, the source said. The insurer would not disclose any details of the latest move yesterday.

22 dairy firms to pay $160m in compensation

Families of children who died after drinking the contaminated milk will each get 200,000 yuan ($29,000), and seriously sickened children will get about 30,000 yuan ($4,400) each. Those suffering minor kidney problems from the tainted milk will each receive 2,000 yuan ($292), Guangzhou Daily reported yesterday, quoting unnamed directors of health bureaus in Dongguan of Guangdong province.

At least six babies were killed and 294,000 others suffered kidney problems after drinking the tainted milk products, most of which were produced by the Shijiazhuang-based Sanlu Group in Hebei province, figures from the Ministry of Health showed. Illegal milk dealers used melamine as an additive to boost false protein levels in dairy products.

Lawyers for the families of children sickened by the tainted milk said they welcomed the move to help victims, but said the compensation plan would likely be inadequate and lacked transparency.

A number of families in Hebei and Shandong provinces have already received calls from local governments, asking them to sign an agreement to accept the 2,000 yuan of compensation, Xu Zhiyong, a Beijing lawyer who led about 200 families asking to be compensated for drinking the tainted milk, told China Daily yesterday.

"We consider the solution to be a process of moving toward the right direction it's not a one-off move," he said.

Zhao Lianhai, founder of a website offering help to babies suffering from the kidney ailments, said the decision to set up such a fund to cover victims' future medical costs was "necessary but insufficient".

"Most parents found the 2,000 yuan too inadequate to accept," he told China Daily yesterday.

A number of afflicted families from Jilin, Shandong and Chongqing reportedly said yesterday they had not been notified of any kind of compensation.

"If the compensation is just 2,000 yuan, I won't accept it," said Yang Yanli, a mother of a 4-year-old girl who still has serious urinary problems after drinking Sanlu's milk since 2006. "That is far below the amount I need to treat my child."

Many families of babies affected by the tainted milk are not included in the latest compensation, website founder Zhao said.

Li Yijuan, a 34-year-old mother from Hunan province, said her son, who went through surgery for kidney-stone ailments last week, is not covered in the plan. She said her son had taken milk powder from Sanlu for seven years before the scandal broke out.

"We cannot enjoy free medical care, let alone any compensation, because my son is already 8 years old. The local government said only babies suffering from kidney problems could receive free medical care," Li, who lost her husband years ago and has been laid off, told China Daily yesterday.

"I borrowed most of the 30,000 yuan needed for surgery costs from my relatives," Li said. "And there are still two stones in my son's kidney."

More on trial

Nine more suspects involved in the tainted milk scandal stood trial in four courts in Hebei, following the trial of the first batch of six suspects last Friday.

The four suspects tried at the Shijiazhuang Intermediate People's Court yesterday included a couple, Gao Junjie and Xiao Yu, both 32. Prosecutors said they designed melamine-tainted "protein powder" last year in an underground factory in Zhengding county near Shijiazhuang.

The couple, together with two other suspects, Xue Jianzhong and Zhang Yanjun, were accused of employing workers to produce about 200 tons of the powder, adding the chemical to raw milk and selling supplies to Sanlu for a profit of more than 1 million yuan.

The other five suspects facing similar charges stood trial in courts in Zhaoxian and Xingtang counties, as well as Luquan city. All suspects face the maximum death penalty.

(For more biz stories, please visit Industries)