China Dairies to Compensate Families Victimized by Melamine Tainted FormulaDec 29, 2008 | Parker Waichman LLP
Late last week we reported on a BBC piece that discussed the trial taking place in China over melamine-tainted milk. At that time, the BBC said the courts were rejecting lawsuits filed by families whose children were sickened by the milk, even though kidney damage was reported in hundreds of thousands of cases. Now, 22 firms involved in the scandal have offered victims a settlement, said MarketWatch.
According to MarketWatch, the firms, which are part of the China Dairy Association will make a one-time cash payment to the families of the nearly 300,000 children sickened by melamine-tainted milk, Xinhua—China's state-run news agency—reported. "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," said the Association, reported MarketWatch. The 22 will also create a medical fund to pay for long-term effects of the melamine poisoning, said the BBC, according to MarketWatch.
Six men are being tried and have been accused of making and selling melamine, said the BBC, which noted that melamine-tainted milk formula has been blamed for sickening hundreds of thousands of children and killing six infants there. The men have been accused of adding melamine to raw milk to raise its protein levels, said the BBC.
The Associated Press (AP) noted that the melamine scandal was first reported early this fall; however, China’s government confirmed that the Shijiazhuang Sanlu Group Co., a dairy firm and key participant in the melamine scandal, knew last year its products were tainted and also was aware that company and local officials were involved in a cover-up. The BBC recently reported that Sanlu was declared bankrupt and, according to Xinhua, said the BBC, has 1.1 billion yuan ($160 million) of net debt. The BBC also said Fonterra, New Zealand's largest dairy conglomerate and former holder of a 43 percent stake in Sanlu, said Sanlu would be managed by a court-appointed receiver that would sell off Sanlu’s assets and repay creditors over the next six months; Fonterra wrote off its $114m investment in Sanlu. Sanlu will contribute to the recently-announced payments to injured families, the BBC reported, pointing out that lawyers representing the families say the settlement was drawn up secretly and without feedback from
Melamine, an industrial chemical used in the manufacture of fertilizer, fire retardants, and plastics, has been used in a number of food industries in China to falsify protein levels. Because melamine contains such high nitrogen contents, it can be used to make certain foods—for instance intentionally diluted milk products—appear high in protein in certain tests, enabling producers and manufacturers to pass off sub-standard products as protein-rich. In sufficient quantities, ingesting melamine can cause kidney problems, including kidney stones and kidney failure, and in the case of at least six children, death. Melamine has been found in dozens of products exported globally from China including milk teas and coffees, cocoas, yogurts, candies, cookies, biscuits, cheeses, eggs, and crackers, prompting international recalls. It is believed eggs became contaminated following feed contamination, which has since been linked to certain livestock, including chickens and pigs, and now, experts are looking at possible contamination in seafood grown in China.