KEY POINTS:
Some milk collection stations in China may have been adding the chemical melamine to milk since 2005, a Chinese official has said.
Four people have now died after consuming milk powder contaminated with the industrial chemical, while 6244 babies have been poisoned and 158 have acute kidney failure.
San Lu was the first of 22 companies to be linked to the contamination. The company is based in the capital of China's Hebei province Shijiazhuang but has been 43 per cent owned by New Zealand dairy giant Fonterra since December 2005.
Yesterday, Hebei provincial police said a dozen more arrests had been made over the milk powder contamination, bringing the total number of people in custody to 18.
Hebei's vice governor Yang Chongyong told the Hong Kong Standard that some of those arrested had said melamine had been added to milk since 2005.
The China Daily, reported Mr Yang as saying San Lu had adopted measures to cover up the situation before reporting to the Shijiazhuang government.
A Chinese investigative magazine, Caijing also quoted him as saying an investigation had shown San Lu had concealed the melamine contamination since 2005.
Mr Yang had also said that the governments of Hebei Province and Shijiazhuang City should both bear responsibility for the problems with San Lu milk powders, Caijing reported.
China's quality control watchdog yesterday said 5,000 inspectors would be sent to monitor companies after government testing showed that 20 per cent of the companies making milk powder had dairy products containing melamine.
Melamine - used in the manufacture of flame retardant, counter tops, glues and fertilisers - can boost the apparent protein content of food.
It is believed the chemical may have been added to watered-down milk in order to get it through food quality tests.
Anne-Marie Brady, senior lecturer in political science and a specialist in Chinese politics at the University of Canterbury, said: "People are outraged because Chinese people value children so much and they're only allowed to have one."
Fonterra has three directors on the San Lu board - New Zealanders Bob Major and Mark Wilson, plus Chinese national Patrick Kwok.
The chairwoman of San Lu had been sacked and detained by police. Foreign national directors were generally treated more leniently, Ms Brady said.
FONTERRA'S SAN LU DIRECTORS
BOB MAJOR
* Fonterra China managing director.
* Looked after China for the Dairy Board in the 1990s.
* Fonterra's Chinese revenue was $401 million in the year ending July 31.
MARK WILSON MD
* Asia-Middle East.
* Joined Fonterra in February.
* President and chief executive of East Asiatic Company from 1998-2005.
PATRICK KWOK
* General manager of business development in China.
- NZ HERALD, AGENCIES
