Danone milk powder brand named in China TV expose

SHANGHAI, Sept 16 Mon Sep 16, 2013 7:15am EDT

SHANGHAI, Sept 16 (Reuters) - The official China Central Television (CCTV) said on Monday that French food group Danone SA had bribed doctors and nurses to recommend its Dumex milk powder brand at a hospital in a northern Chinese city.

In a TV report, it cited an unidentified former Dumex sales manager as saying that the firm had paid medical staff at the hospital in Tianjin to give its products to newborn babies.

"Every year we would co-operate with the hospital, and give them gifts of money, each year amounting to several hundred thousand yuan," the former sales manager was quoted as saying in the report.

"We would come to tacit agreements, because in Tianjin competition is now so fierce. Every (hospital) floor would be divided up between milk powder brands, and if you didn't give a suitable amount of money, then perhaps the next month they would switch brands to someone else," she said.

Danone is headquartered in France and the company was not immediately available for comment. Danone officials in China could not be reached for comment.

Chinese authorities have been cracking down on graft in a number of industries, most notably the pharmaceutical sector. China handed down a record fine in August to a number of local and foreign-owned milk powder firms, including Danone, for price fixing.

Danone told Reuters in July it was co-operating with China's top planning agency, the National Development and Reform Commission (NDRC), and it had reduced the sales prices of its main products by between 5 and 20 percent.

Corruption in China's healthcare industry is widespread, fuelled in part by low base salaries for doctors at the country's 13,500 public hospitals.

International guidelines, used in China, say doctors should promote breastfeeding as the first resort unless there are medical reasons not to.

CCTV said the former sales manager had a document detailing payments to particular doctors, with specific bank card details and payment amounts.

The document, which CCTV said it had seen, showed staff at the hospital had received around 300,000 yuan ($49,000) in total each month from Danone, with individual payments ranging from several hundred yuan to around 10,000 yuan.

Milk powder has long been a sensitive topic in China, since a melamine scandal in 2008 caused the deaths of at least six infants and left many thousands ill. This dragged on local firms while boosting the market share of international brands. ($1=6.12 yuan) (Reporting by Adam Jourdan; Additional reporting by Shanghai Newsroom and Christian Plumb in Paris; Editing by Kazunori Takada, Neil Fullick and Alex Richardson)