Melamine Scandal Compensation Scheme Under Study

By Wang Biqiang, Zhu Xiyan, Hewen
Published: 2008-12-16

From Cover, issue no. 398, Dec 15, 2008
Translated by Zuo Maohong
Original article
: [Chinese]

A compensation scheme worth some four billion yuan for those killed and sickened by melamine-tainted milk was being considered by China's Health Ministry, a source from the dairy industry told the Economic Observer.

The source revealed that of that amount, the government would fork out 2.6 billion yuan for medical fees, with the remainder to be shouldered by the 22 companies found to have produced tainted milk, the consumption of which caused tens of thousands of children to develop kidney stones.

The source said he gained access to the scheme recently but was unsure if it was the final version.

On December 10, the Ministry's spokesperson Mao Qun'an confirmed on a routine press conference that a compensation package for tainted milk victims was under study, but he did not reveal the details.

The EO learned that the 22 tainted-milk producers would be asked to pay varying amounts of compensation based on the number of children sickened by their products, the level of melamine in their products, their market share, and other related factors.

Sanlu Group, the dairy producer at the center of the scandal, might be required to pay some 90,000 yuan according to the scheme.

The source said part of the four billion yuan would be used to buy insurance to take care of follow-up costs for victims.

He said under the scheme, the victims were classified into three categories – the dead, the seriously ill, and the sickened; and each type would be compensated differently.

Latest statistics from the Health Ministry showed that as of November 27, over 290,000 children had been diagnosed with abnormal urinary systems due to consumption of tainted baby formula.

Eleven deaths were registered, of which six were deemed by the authorities as "could not be ruled out as unrelated".

The scheme purportedly mentioned that victims could take legal action if they were dissatisfied with the compensation offered.

Previously, lawsuits against milk producers, whether initiated by individual or collective actions, were rejected by Chinese courts.

When inquired about the authenticity of the scheme on December 11, Health Ministry's Mao Qun'an refused to comment, saying he "was not given the authority" to response to the matter.

None of the major dairy companies the EO contacted, including Mengniu, Yili, Sanyuan, Sanlu, and Shengyuan, confirmed knowledge of this scheme either.

As civil compensation being mapped out, investigation into criminal responsibilities has also progressed.

Li Xiongbing, a member of the legal aid team to tainted milk victims, said the team had handed over a civil suit collateral to criminal proceedings against Sanlu on December 8 to the Shijiangzhuang Municipal People's Prosecuting Office.

He added the prosecuting attorney who received them had said that the municipal public security bureau planned to submit a prosecution recommendation and all the evidence it had collected to the prosecuting office the same day.

According to China's Criminal Procedure Law, this meant the police had ended investigation into the Sanlu case, which sparked off the nationwide melamine scare in September.

It also indicated that the prosecuting office had entered the preliminary stages of public prosecution and should decide whether or not to prosecute within one and a half months.

On December 11, in an attempt to find out whether the prosecuting office had received the police's prosecution recommendation for further action, this reporter called the attorney who received Li, but he declined to comment.