New Zealand dairy giant Fonterra says someone sabotaged its raw milk products in China, leading to the deaths of two babies from the toxin melamine in baby formula.
Fonterra chief executive Andrew Ferrier told a media conference on Monday afternoon that Fonterra and the Sanlu Group, which is 43% owned by the co-operative, had rigorous testing procedures but it was impossible to exclude sabotage of a product.
Melamine is a toxic chemical compound found in plastics, fertilisers and cleaning products.
Mr Ferrier says investigations so far have ruled out contamination from the production, storage and sales process, but he says it appears the raw milk which Sanlu buys from a third party has been contaminated.
Police in China say two traders have been arrested for selling up to three tonnes of contaminated milk a day.
China reported on Monday the death of a second infant from tainted milk powder in a growing scandal has left hundreds more ill but only led to a product recall after the New Zealand Government raised the alarm.
The latest death blamed on infant milk powder was in Gansu province, a poor northwest region where the first infant fatality linked to the chemical-laced milk was also reported, the official Xinhua news agency said.
One of the infants was a five-month-old boy who died in May. The other was an eight-month-old girl who died in July after her parents removed her from hospital, health ministry official Wang Yu told a news conference.
1,200 children ill
By Monday, 1,253 children had been diagnosed with illnesses linked to the milk powder, with 340 still in hospital and 53 "relatively serious", Vice-Minister of Health Ma Xiaowei told the news conference. At the weekend, officials said 432 children were ill.
The number of Chinese infants made sick by the milk powder is likely to rise as more parents take their children in for check-ups.
There is growing criticism of the length of time it took for Sanlu to respond to the problem, with reports suggesting it knew about it as far back as March.
Last week, the company halted production after investigators found melamine in the milk powder was causing kidney stones and complications in infants. Kidney stones are crystallised minerals such as sodium and calcium and the condition is extremely rare in babies.
Sanlu vice-president Zhang Zhenling offered an apology at a news briefing in Hebei's capital, Shijiazhuang, state-run news agency Xinhua reported. "The serious safety accident of the Sanlu formula milk powder for infants has caused severe harm to many sickened babies and their families," he said.
Two brothers surnamed Geng were arrested for "producing and selling toxic and hazardous food," police in Hebei, the north Chinese province where Sanlu is based, told Xinhua on Monday.
From late last year they added melamine to the three tonnes of milk they sold on from farmers every day, the report said. "Geng did so because he suffered losses after milk from his station had been rejected several times by Sanlu Group," it said.
Farmers or dealers may have diluted milk with water and added melamine to make the protein level appear higher than it really was. Melamine is rich in nitrogen, the element often used to measure protein. Nineteen people have been detained on suspicion of breaking food safety laws in China.
Fonterra accused of acting unethically
The Green Party on Tuesday accused Fonterra of acting unethically, with MP Sue Kedgley saying the dairy giant had a moral and social responsibility to go public as soon as it knew about the contamination.
Ms Kedgley says she finds it "incomprehensible" that Fonterra capitulated to a local Chinese government trying to cover up.
But Prime Minister Helen Clark says Fonterra could not get local authorities to issue a public recall until New Zealand alerted the Chinese government at the beginning of last week.
Miss Clark said on Monday New Zealand officials had to go to the Chinese government to get action over the contaminated formula. She says she was first briefed about the contamination issue 11 days ago, then convened a meeting with senior ministers and officials.
She told Television New Zealand on Monday that officials were directed to go through the New Zealand ambassador to alert Chinese government ministries.
Miss Clark says New Zealand could not have it on its conscience that the joint venture was manufacturing tainted product. She says Fonterra had been trying for weeks to get a recall of the milk formula, but local authorities had refused.
The Prime Minister says once the Chinese government had been alerted, a heavy hand had descended on those authorities to act.
Milk production stopped
Fonterra bought its stake in the Sanlu Group in 2005 for $153 million and says it is seeking a meeting with the Chinese government to discuss the contamination.
A Fonterra spokesperson says its priority is ensuring that the welfare of consumers is being put first. The company says it is pushing hard to make sure Sanlu is working closely with the Chinese government to ensure that everything possible is being done.
Sanlu has been ordered to stop production of the formula, which it says has been sold only in China. More than 8,000 tonnes of baby formula have been pulled off shop shelves and authorities are checking supplies and companies producing milk powder throughout the country, Chinese officials said.
NZ tests for melamine
The Food Safety Authority says it expects to publish test results on Tuesday, showing there is no melamine in baby formula in New Zealand.
The authority's deputy chief executive, Sandra Daly, says though no milk formula is imported directly from China, it tested 72 different infant, follow-on and toddler formulas as a precautionary measure to reassure parents.
She says preliminary tests on those products have come back negative, meaning they are safe.
The authority broadened its investigation to include other Chinese-imported items which may contain dairy products, such as coffee whiteners, chocolate and sports drinks.
Ms Daly says test results will be published on the authority's website.