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Danone enmeshed in China milk scandal
After days of stories in Chinese newspapers saying that some children were sickened by infant formula produced by the French food and beverage giant Danone, the government said Thursday that it would investigate whether the company's Dumex formula was tainted with melamine.
The newspaper accounts provided no evidence of contamination and Danone executives Thursday rejected the assertions. The executives said their infant formula is made entirely from imported milk and that in 2,600 government inspections since April 2007 no traces of melamine have ever been found.
Alejandro Rivas, managing director of Dumex Baby Food in Shanghai, said there was no evidence to back up allegations that infants had been sickened by its formula. "We want to, once and for all, clarify to Chinese consumers that our products are 100 percent safe," he said.
Since September, inspectors have found melamine contamination in the milk products of 22 Chinese companies that was believed to have sickened almost 300,000 children and left six dead. The scandal prompted a global recall of products made with Chinese dairy ingredients and devastated the nation's dairy industry. This is the first time a foreign majority-owned producer has been accused in the scandal.
An industrial compound used in the manufacture of plastics and fertilizers, melamine can cause kidney stones and other health problems if consumed in large quantities. In China, melamine was illegally used to raise the apparent protein content of watered-down milk.
The 21st Century Business Herald reported that at least 53 children have been sickened by Dumex milk across China, though it provided no evidence except for quoting Jiang Yalin, a mother in Guizhou Province, as saying her 20-month-old daughter was diagnosed with kidney stones in September after drinking Dumex.
"As it's a foreign brand, the price is high and the money we spent on baby formula each month is one-tenth our monthly income," she said, according to the paper.
The state-run Xinhua news agency said that the General Administration of Quality Supervision, Inspection and Quarantine would investigate batches of Dumex produced before Sept. 14.
Danone is embroiled in a long-running legal battle with its Chinese-partner, Hangzhou Wahaha Group. The joint venture was once hailed as a model, but the two companies are currently in arbitration over ownership of the Wahaha brand, the best-selling beverage in China. In a series of lawsuits, Danone has claimed that its Chinese partner secretly set up parallel companies that sold water and other beverages under the Wahaha name but did not share revenues. Wahaha executives say Danone knew of the side ventures all along.
The battle has been unusually acrimonious, playing out in courts across the world since 2007.
Wahaha's former executive, Zong Qinghou, has accused Danone of slandering his family and spreading lies about his company's business practices. In a letter he posted on the Internet last year, Zong vowed to punish Danone for its "evil deeds."
Also Thursday, Sanlu Group, the dairy company at the heart of the melamine scandal, which is partly owned by a New Zealand dairy cooperative, was declared bankrupt by a court in Shijiazhuang.
In its bankruptcy filing, executives said their company was crippled by $161 million in debt, much of that in medical expenses for children sickened by Sanlu products. Sanlu's chairwoman, Tian Wenhua, received a life sentence for her role in the scandal and two others were given suspended death sentences.
