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For Chinese, tainted milk compensation remains elusive

Zhao Lianhai and his family at his 39th birthday dinner. His son, six years old, still has kidney stone from melamine tainted milk.

BEIJING – Three years after one of China's biggest food safety scandals, compensation for tainted milk victims remains a mystery.

The whole country was shocked in late 2008 when the tainted milk scandal broke out. Dozens of dairy companies were discovered to have sold baby formula made with milk containing melamine – a nitrogen-rich chemical, normally used for industrial purposes, aimed in this case at fooling quality controllers about the milk's protein level.

Almost 300,000 babies who had been fed melamine-tainted milk formula became victims with varying levels of kidney damage. Many of the babies developed kidney stones, and at least six died.

Chinese across the country were outraged and an investigation was launched. Sanlu Group Co., one of China’s biggest state-owned dairy companies, went bankrupt, and its CEO was jailed for life because their baby formula was the most seriously contaminated. Twenty other company staffers and middlemen were arrested, two of whom were sentenced to death.

As for the compensation for the hundreds of thousands of sick children, a fund was set up by China Diary Industry Association with capital from the 22 dairy companies involved in the scandal, including Sanlu. Out of the fund of roughly $170 million, $140 million was used for the medical treatment of the sickened babies and the remaining $30 million was designated for any future medical complications the child victims might develop before reaching 18 years old.

A standard compensation plan was set up by China’s Ministry of Health: $31,000 for a death; $4,600 for the seriously ill; and $300 dollars for those slightly ill. 

Many parents were not happy with the compensation plan and refused to sign the agreement. Their chief concern was the future health risks their children might develop that nobody could predict.

Zhao Lianhai, the father of a tainted milk victim and leader of a campaign fighting for the children’s rights, expressed outrage about the compensation plan. “Three hundred thousand babies were affected. The compensation of $30 million for ‘future medical complications,' if divided by all the victims, means each only gets 100 dollars! What can you do with 100 dollars? A check-up costs more than that,” Zhao told NBC News.

The operation of the fund has been a mystery since the day it was set up. Three years have passed, but no one has ever received any information regarding whether the promised compensation was distributed to any parents.

Just two months ago, Oriental Outlook Weekly, a magazine that is part of the government-run Xinhua News Agency, called the China Diary Industry Association and China Life, an insurance company that is the fund's trustee, to try to learn more details about the fund operation. They were told, “This fund is well managed, but we don’t want to tell you what’s not supposed to be public” and “it is confidential information." No data base has been set up to track the children’s health development or any medical complications.

NBC News’ request to interview the China Dairy Industry Association received no response.

Peng Jian, a lawyer who’s been representing the parents told NBC News in a phone interview: “The government said most of the parents have received compensation. But I know at least 400 parents who refused to sign the agreement. Some of them don’t agree with the terms, and some of them think a further investigation into these children's future health should be included.”

Zhao was arrested in late 2009 for his role in leading the parent's campaign under a so-called charge of “disturbing social order." In late 2010, he was released under a medical parole but now he’s under constant surveillance from the police.

"I know too many parents who have never received a penny from this so-called fund. We don’t even know if the money is there or not,” Zhao said.  “The government has made many mistakes, and we hope they will correct these mistakes so they don’t go on like this forever. We want them to solve the problem instead of cracking down on us.”

Zhao spoke about the challenge of continuing his campaign. “I feel so helpless and disappointed. The only solution I can think of is to sue, but the court is on the side of the government, too. I can only hope more people stand out and criticize them. We are too weak and they completely don’t care and bully us. The enterprises must pay a price for the wrongs they have done to us, but that price is too small now."

He added that he really considers it his responsibility as a good citizen to continue the fight. "If we give up, our children will suffer again in the future, not just from tainted milk, but from a lot more other damages. This is a public duty and we parents are responsible for creating a safe and fair society with justice for our children.”

Many people worry Zhao could be thrown in jail again, but he said he’s determined to carry on his campaign even if he faces the danger of losing his freedom again.