Chinese Tainted Milk Company Accused Of Cover-Up

BEIJING, Sept. 24, 2008 — -- Two weeks since it first became apparent that contaminated baby formula was sickening thousands of Chinese infants, a portrait of individual greed, lax government regulation and corporate cover-ups has emerged.

Baby milk powder spiked with the industrial chemical melamine has sickened 53,000 infants and killed four. Millions of Chinese parents are scratching their heads over which formulas are safe. The dairy industry has been brought to its knees, as the government overhauls the milk collection system and identifies where in the supply chain the melamine was added.

Lawyer Bill Marler, who has represented clients in some of the largest food-safety cases in the United States, says this latest food scare will inevitably do further harm to the "made in China" brand abroad.

"Clearly, you have to think about things from a moral perspective. There are [53,000] children sick," said Marler. "But you also think about it from an economic perspective. If this product had gotten into the United States, it would have been 'game over' for a lot of products in China."

Marler was invited to share his expertise at a food-safety conference that had been scheduled before the tainted milk was discovered. Several government officials scheduled to attend did not show up at the opening session, including the head of the General Administration of Quality Supervision, Inspection and Quarantine Li Changqiang. He resigned Monday as the recalls spread to include liquid milk and other products made by the country's largest dairy companies. The baby formula scandal has taken center stage at the conference.

"It somewhat surprised me," said Marler. "Every Chinese speaker at the conference spoke about the crisis. I thought it would be avoided."

Xiang Yuzhang, the nation's chief quality inspector, told The Associated Press at the sidelines of the conference that the problem was "more or less" under control.

"At present, there is basically no melamine problem in the Chinese market," said Xiang. "As far as I know, there will be no more bad news."

But there has already been enough bad news that mothers such as Joy Jia are skittish about what is safe on Chinese grocery shelves. Jia had been feeding her two children, 9 months and 3 years old, yogurt from one of the companies implicated for selling tainted milk.

"I've started to question every product around us," said Jia. "Is the formula safe? Is the yogurt safe? … It is affecting my daily life."

Tests have shown that several of China's largest dairy companies sold products tainted with melamine.

Sanlu, the company whose baby formula is believed to have sickened most of the ill infants, is now accused of covering up the problem for months, along with local government officials.

China's state-owned Xinhua news agency has reported that Sanlu began receiving complaints about sick infants as far back as December 2007. According to Xinhua, Sanlu didn't begin testing for melamine until June 2008.

After the presence of the contaminant was found, Sanlu reported the results to the government of Shijiazhuang on Aug. 2. Officials didn't take public action until six weeks later when the recall was reported in Chinese media.

"It's clear that this formula issue was kept quiet for awhile during the Olympics," said Marler. "Obviously it's a big deal and would have been an international black eye."

The Chinese government has taken control of Sanlu, and according to Xinhua, one of the company's leaders has been arrested on criminal charges related to the milk contamination. Sanlu's Web site is down.

During a news briefing reported by the AP, the chief executive of the company's New Zealand partner, Fonterra, said that there's "no indication" the company lied about when it first heard of the problems but that "the [Sanlu] brand cannot be reconstructed."

Speaking to an audience in New York, Chinese premier Wen Jiabao sought to offer reassurances that "China will fundamentally improve its product quality and food safety."

But such reassurances have been offered before.

It was only a year ago that the same substance, melamine, killed dozens of dogs and cats in the United States. It had been found in pet food imported from China.

Government officials have placed blame for the tainted baby formula on milk dealers who collect raw milk from small dairy farms and sell it to companies. It is believed that these dealers, desperate to make a buck with substandard milk, watered down the milk and added melamine to make it appear higher in protein.

Twelve countries in Asia and Africa have placed some form of a ban on Chinese dairy products, including candies, chocolates, coffee drinks and other products that contain some form of milk.

Morler says that food-quality problems are also common in the United States, but that in China, which lacks a free press and transparency in government, the problems are exacerbated.

"Regulation is still required," said Marler. "But I think the transparency, when you have the ability for the media to get at issues quicker so companies are forced to make decisions sooner, when consumers know they have rights by taking a company to court and getting compensation, that can change the economic dynamic."

The central government has fired a slew of officials and company heads have been forced to step down. But many say that the baby formula scandal is an example of how China's regulatory bodies have not kept step with its runaway capitalism. As a result, tens of thousands of babies are paying the price.