China dairy boss delayed reporting quality issues

[December 31, 2008]  BEIJING (AP) -- A former dairy boss who could face the death penalty in China's tainted milk scandal testified Wednesday that she began investigating product quality issues in May but did not notify authorities until August, a state news agency said.

Tian Wenhua, former board chairwoman and general manager of Sanlu Group Co., pleaded guilty to charges of producing and selling fake or substandard products, the Xinhua News Agency said. Three other executives faced similar charges after being linked to infant formula contaminated with the industrial chemical melamine.

They could be executed if convicted, the China Daily newspaper reported.

Melamine, commonly used to make plastics and fertilizer, has been blamed for the deaths of at least six children and sickening nearly 300,000 others.

Authorities say milk suppliers mixed the nitrogen-rich powder into raw milk to fool quality tests for protein. When ingested in large amounts, melamine can cause kidney stones and kidney failure.

The high-profile defendants and the release of details in a 1.1 billion yuan ($160 million) compensation plan signal that authorities hope to end what was widely seen as a national disgrace, highlighting widespread food safety problems and corporate and official malfeasance.

In a move underscoring public concerns, China's top product quality watchdog said it was testing tableware made of melamine after reports that the products could be toxic when heated, Xinhua said late Tuesday. The utensils were sold in domestic supermarkets and wholesale markets, the report said, citing the General Administration of Quality Supervision, Inspection and Quarantine.

In the trials that began Wednesday, Tian and her colleagues appeared before a three-judge panel after being escorted into the courtroom by police. Defendant Wang Yuliang, a former deputy general manager at Sanlu, used a wheelchair because he lost use of his legs during a suicide attempt, Xinhua said.

Tian told the court she learned of consumer complaints about problematic milk in mid-May, and led a team set up to handle the case, Xinhua said. But she also said she did not submit a written report on the situation to the government in Shijiazhuang, the northern Chinese city where Sanlu is based, until Aug. 2.

The trial in the Shijiazhuang Intermediate People's Court was expected to finish Wednesday night, Xinhua said.

Seventeen others have gone on trial over past few days, Xinhua has said. The defendants included people accused of producing melamine and marketing it to milk producers, as well as milk collectors who mixed the chemical into raw milk sold to major dairies. No verdicts have been announced.

But the court cases offer little consolation to some parents who felt the government breached their trust after their children died or were sickened from milk powder certified by authorities as safe.

Some families have said the planned payout by dairies was too low, and their lawyers pledged to continue attempts to sue for more compensation.

The 22 Chinese dairy companies found to have sold tainted products would contribute to the 1.1 billion yuan ($160 million) compensation fund. Children who suffered kidney stones would get 2,000 yuan ($290) while sicker children would be paid 30,000 yuan ($4,380), the paper said. The one-time cash payments total 900 million yuan ($131 million), while another 200 million yuan ($29 million) will go to a fund set up to cover bills for lingering health problems.

The fund would pay medical costs related to tainted milk until victims turn 18, China Daily said Wednesday.

Sanlu, which filed for bankruptcy and faces 1.1 billion yuan ($160 million) in debt, has leased its plants to a subsidiary of Beijing Sanyuan Foods Co. Ltd., Xinhua reported. Production will start soon at the plants, which have been shut down since Sept. 12, shortly after news of the baby formula contamination broke.

Sanyuan emerged from the scandal with its reputation largely intact because its products were never found to contain melamine.

[Associated Press; By ANITA CHANG]

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