Big Payouts for Milk-Powder Victims

CHINA - Families of tainted milk-powder victims could receive up to 200,000 yuan ($29,000) compensation from major dairy companies in the coming weeks, media reports said.

30 December 2008

2 minute read

Asia

The China Dairy Industry Association, a coalition of about 600 dairy manufacturers nationwide, said on Saturday that 22 Chinese producers will provide one-time compensation payments to victims' families, whose infants contracted kidney stones and urinary problems from baby milk formulas tainted by melamine.

The contaminated milk products have killed at least six babies and infected another 294,000 infants. As of last month, 861 babies still remained in the hospital.

Although the association did not release details regarding the amount of compensation the families will receive, Caijing Magazine reported over the weekend that families of children killed by the tainted milk will receive 200,000 yuan ($29,000).

Families of babies hospitalized will receive between 30,000 and 50,000 yuan and compensation will be paid from mid January, the magazine revealed. The payout could be more than 13.5 billion yuan.

The milk companies have also set up a special fund to cover medical bills for future health problems.

"If the babies suffer from relevant after effects, all medical fees will be covered by the fund," the China Dairy Industry Association said.

The association did not name all 22 companies, but 22 is the same number of manufacturers whose milk products were found to have contained excessive toxic chemical.

The association said Hebei-based Sanlu Group, which filed a bankruptcy petition to a local court last week with a debt of 1.1 billion yuan, was among the 22 companies providing compensation.

The company, whose milk products caused the most widespread damage to infants, borrowed 902 million yuan ($132 million) to pay the medical fees of the sick children.

Tian Wenhua, former chairwoman and general manager of the fallen dairy giant, will stand on trial on Dec 31 for producing and selling substandard products. The 66-year-old faces the death penalty because the defective products caused deaths.

Li Xiongbing, a lawyer leading a group petition for the victims' families, told China Business News that Sanlu's bankruptcy should not sidetrack compensation procedures.

The petition group has urged for a compensation fund to be set up nationwide.

Illegal milk dealers used melamine, a industrial chemical used to produce plastic, as a "protein powder" to boost false protein readings in the milk products.