Tainted milk scandal company declared bankrupt

(Agencies)
Updated: 2008-12-24 11:24

WELLINGTON - A Chinese court has declared bankrupt the company at the center of a scandal over tainted milk - blamed for killing six children and sickening almost 300,000 more, one of the company's owners said Wednesday.

New Zealand's Fronterra Group said that a court in Shijiazhuang, in China's Hebei province, issued a bankruptcy order against Sanlu Group Co. in response to a petition from a creditor.

"Sanlu will now be managed by a court-appointed receiver who will assume responsibility for an orderly sale of the company's assets and payment of creditors," Fonterra chief executive Andrew Ferrier said in a statement.

Sanlu was one of 22 Chinese dairy companies whose products were found to contain high levels of the industrial chemical melamine, leading to the deaths of six babies and causing 294,000 others to suffer urinary problems.

Fonterra, a New Zealand farmer-owned cooperative, owns 43 percent of Sanlu.

China's government has promised free medical treatment to the children who fell ill, plus compensation to them and families of the dead.

The Health Ministry said earlier this month that some Chinese dairy companies would likely have to pay for a compensation plan, the details of which have not been released.

Fonterra, which controls more than 95 percent of New Zealand's milk supply, is the country's largest multinational business, its second-biggest foreign currency earner, and accounts for more than 24 percent of the nation's exports.