Aweek before the Beijing Olympics began on Aug. 8, officials in Shijiazhuang, China, learned that baby formula made by one of the city’s biggest companies was tainted with a toxic chemical. They said nothing.
It wasn’t until five weeks later that they notified the provincial government, spurring the recall of Sanlu Group Co milk, says Andrew Ferrier, chief executive officer of Auckland-based Fonterra Cooperative Group, which owns 43 percent of Sanlu.
The scandal, now involving 22 dairies and at least four deaths, shows the extent to which local officials protect large employers to create jobs, tax revenue and momentum for their political careers, says Peter Cheung (張贊賢), a professor at the University of Hong Kong who studies policy making in China.
“Local governments are always watching out for their local companies, and the bigger the company, the bigger the sway they’ll have,” says Bruce McLaughlin, a Shanghai-based consultant who investigates patent infringement in China.
“We never go to the local government when we investigate a company. They’re no help or they’ll leak information to the company,” he said.
Authorities have arrested 18 people in connection with the milk scandal. Sanlu chairwoman Tian Wenhua (田文華) was detained by police, fired and removed from her Chinese Communist Party (CCP) post, Xinhua news agency reported last week. Five Shijiazhuang city officials, including the mayor, have been fired.
Sanlu apologized to consumers and promised to recall all milk powder produced before Aug. 6, Xinhua reported last Monday.
More than 1,300 children have been hospitalized after drinking milk formula contaminated with melamine, a toxic chemical normally used in making plastics and tanning leather.
“These companies are too disgusting,” Li Chunling, 60, said at a Shanghai market while returning milk powder she bought for her nine-month-old grandson. “I don’t have any sense of direction anymore about what to buy. I don’t trust any of these products.”
The CCP announced plans in June to fight corruption with increased scrutiny of state-owned companies and local officials.
“Firmly punishing and effectively preventing corruption relates to the popularity and survival of the party, and is a political task the party must fully grasp,” the party’s Central Committee said on June 22.
Corruption costs the Chinese economy as much as US$86 billion a year, or 3 percent of its GDP, the Washington-based Carnegie Endowment for International Peace said in a report last October.
In the run-up to the Beijing Olympics, international media featured several reports about fish spiked with antibiotics and cancer-causing chemicals; chicken and duck eggs laced with a carcinogenic red dye; and frozen dumplings injected with pesticide. Melamine-laced pet food from China was blamed for killing as many as 4,000 dogs and cats in the US last year.
This is the second time in four years that unsafe infant formula has killed children in China. Thirteen babies died of malnutrition in 2004 and almost 200 were hospitalized in Anhui Province after drinking milk powder with no nutritional content. Two Fuyang city officials received two-year and six-month jail terms for dereliction of duty in that case.
“I don’t doubt there is corruption and collusion at the local level between governments and companies,” Cheung said. “China needs to give more resources to regulators, and it needs more transparency.”