Parents sue Sanlu for milk scandal

The families of 118 Chinese children poisoned during last year's contaminated milk powder scandal are planning a class-action lawsuit against former Fonterra subsidiary Sanlu.

Six children died and more than 300,000 were made sick by infant milk powder deliberately tainted with industrial chemical melamine to artificially increase its protein levels.

Sanlu, of which Fonterra had a 43 per cent stake, was among 22 dairy producers implicated in the scandal, revealed last September.

The China Daily News reported this week the families were planning the lawsuit because they were unhappy with the Chinese Government's compensation scheme. The Government has offered 200,000 yuan ($45,511) to the families of babies who died and 30,000 yuan ($6827) for infants made severely ill.

The compensation scheme has been largely funded by Sanlu, which went bankrupt after the scandal. Fonterra said the Chinese Government had carefully considered the compensation.

"Fonterra contributed to this compensation package indirectly as Sanlu itself paid $205 million into the scheme and, of course, we are a 43 per cent shareholder in Sanlu."