China firms 'to pay milk victims'

The firms also agreed to create a fund to cover victims' medical bills

Chinese dairy firms involved in the tainted milk scandal are to compensate the families of the nearly 300,000 affected children, state media said.

Twenty-two companies will make an undisclosed one-off cash payment to the families, Xinhua reported quoting the China Dairy Industry Association.

It comes as the first defendants from the food industry went on trial accused of making and selling melamine.

The industrial chemical was added to milk to make it appear high in protein.

"The enterprises offered to shoulder the compensation liability. By doing so, they hope to earn understanding and forgiveness of the families of the sickened children," Xinhua cited the Chinese dairy association as saying.

The firms have also agreed to create a fund to cover the medical bills for any potential after-effects of the poisoning, it said.

The company at the centre of the scandal, Sanlu, which has filed for bankruptcy, will be among the firms to make payments, Xinhua reported.

Sanlu is partly owned by New Zealand's Fonterra group. No other companies were listed.

So far, the courts have been rejecting lawsuits filed by families seeking compensation.

Lawyers for the families have criticised this pay-out plan, saying it was drawn up behind closed doors without the victims' input.

Dairy chain

A man accused of making 600 tonnes of "protein powder" composed mainly of melamine - with a sale value of almost $1m (£685,000) - appeared in court on Friday.

Kidney damage was reported in hundreds of thousands of people

On trial with him was a colleague accused of selling the powder. Four others are being tried for adding it to dairy products.

These are the first cases to come to court. Correspondents say other defendants are likely to face more serious charges, and if found guilty could be executed.

When the scandal broke in September, a chain of melamine producers and middlemen was found to have been supplying milk dealers with the product.

The dealers added the melamine to products that were then bought by major dairy companies, which failed to test the milk for purity and nutritional value.

The result was widespread poisoning of babies, the group most vulnerable to tainted milk as it was their only food source.

Kidney damage was reported in hundreds of thousands of people and at least six babies died.

The scandal has tarnished China's food industry far beyond its borders.