From China Digital Space
三鹿 (sān lù): Sanlu
In September 2008 Sanlu came to international attention due to product concerns regarding its infant milk formula, which was discovered to have been contaminated with melamine, a non-alimentary chemical which causes kidney stones. An estimated 300,000 babies became ill, and six cases resulted in death.
The Xinhua News Agency reported that Sanlu received its first complaints about baby milk in December 2007. Fonterra was alerted to the contamination on 2 August. There was an immediate trade recall, but Fonterra said that local administrators refused an official recall. Fonterra notified the New Zealand government on 5 September. Three days later, Prime Minister, Helen Clark had Beijing officials alerted directly. Clark accused the company and officials of covering up to avoid an official recall.
On 15 September, the company issued a public apology for the contaminated milk powder; Sanlu was ordered to halt production, and to destroy all unsold and recalled products. Authorities reportedly seized 10,000 tons of product.
After testing samples from 491 batches of products sold by all 109 companies producing baby milk powder, the National Administration of Quality Supervision, Inspection and Quarantine said that all 11 samples from Sanlu failed the melamine test. Sanlu, whose products sell at half the price of equivalents on the market, recorded the highest levels of contamination among all the samples tested, at 2,563 ppm.
Tian Wenhua (田文華), Chairman and General Manager of Sanlu and Party Secretary was stripped of her party and functional posts during an extraordinary meeting of the Hebei provincial standing committee of the Communist Party of China; four Shijiazhuang officials, including vice mayor in charge of food and agriculture, Zhang Fawang, were reportedly removed from office. Mayor Ji Chuntang reportedly resigned on 17 September; Tian was charged under Articles 144 and 150 of the criminal code.
Since Sanlu, the region's largest purchaser of milk, was ordered to halt production, throwing many small dairy farmers into hardship. On 24 September, Fonterra announced that it had written down the carrying value of its investment by NZ$139 million (two-thirds), reflecting the costs of product recall and the impairment of the 'Sanlu' brand "as a direct consequence of the criminal contamination of milk in China". Chairman Henry van der Heyden said that the contamination was a criminal act which Fonterra could not have prevented. On 26 September, Fonterra CEO denied that Fonterra is selling its stake of 43% of Shijiazhuang Sanlu Group Co.