BEIJING (Reuters) - The chairwoman of a Chinese dairy company went on trial on Wednesday over a tainted milk scandal that has killed at least six children and made thousands ill.

Tian Wenhua, 66-year-old former general manager of the now bankrupt Sanlu Group, pleaded guilty to charges of “producing and selling fake or substandard products,” state-run Xinhua news agency said.

Tian appeared with three other company executives at a court in Shijiazhuang, capital of northern Hebei province. It was unclear whether they could face the death penalty.

“(Tian) may face a maximum penalty of death for producing and selling contaminated baby milk food, along with three of her senior managers at the Shijiazhuang Intermediate People’s Court,” the official China Daily said on Wednesday.

But the Xinhua report said the maximum sentence for the charges was life imprisonment.

Executives at Sanlu, partly owned by New Zealand’s Fonterra group, failed to report cases of Chinese children developing kidney stones and other complications from drinking milk adulterated with melamine for months before the scandal broke in September.

Melamine, an industrial compound used in making plastic chairs, countertops, plates, flame retardants and even concrete, has been added to food to cheat nutrition tests due to its high nitrogen content.

Another 17 people involved in producing, selling, buying and adding melamine in raw milk have gone on trial in the last week.

At least six children have died and more than 290,000 made ill from the contaminated milk, battering already dented faith in China-made products and prompting massive recalls around the world.

Taiwan Department of Health officials pack a milk powder sample to test for melamine contamination in Taipei September 22, 2008. REUTERS/Nicky Loh

Tian told the court on Wednesday she learned about the tainted milk complaints from consumers in mid-May, Xinhua quoted her as saying.

The company set up a working team led by Tian to handle the case, but did not submit a written report about the milk powder to the Shijiazhuang city government until August 2, Tian said.

The Shijiazhuang government did not report the case to higher government authorities until a month later, prompting speculation authorities sought to avoid a scandal upsetting Beijing’s Olympic Games in August.

STIFF SENTENCES LIKELY

China, seeking to restore battered credibility in its food, drugs and products, is likely to pass stiff sentences if the four are convicted.

Zheng Xiaoyu, former head of the food and drug watchdog, the State Food and Drug Administration, was executed last year for taking bribes and dereliction of duty in the wake of a series of drug safety scandals.

In the lead-up to the high-profile trial and after repeated promises that China has put a lid on the problem, fresh quality scares have surfaced.

The melamine scare has also prompted quality inspectors to test tableware “following reports that some products contained poisonous ingredients,” Xinhua said on Wednesday in a separate report.

More than 1,500 boxes of Chinese biscuits exported to Hong Kong and Singapore had also tested positive for melamine, local media reported on Tuesday.

China’s Health Ministry on Wednesday promised to build a “pre-emptive” monitoring system to stamp out the use of black-listed non-food additives that have led to health scares involving eggs, seafoods, and sweets in recent years.

“We used to rely on crackdowns (to solve food problems) ... but now we are combining punishment with prevention with more stress on the latter,” Su Zhi, a senior quality supervision official in the Ministry of Health, told Xinhua.

But the baby milk formula scandal has also opened up a festering debate about appropriate compensation for victims and their families.

Along with Sanlu, 21 other local dairy companies that were found to have produced melamine-tainted milk have pledged 1.1 billion yuan ($161 million) to compensate victims and cover medical costs for affected children, a report posted on the Dairy Association of China website (www.dac.com.cn) said.

Some 900 million yuan would be paid in cash compensation to victims, and the rest placed in a fund for medical treatment, the report said.

But terms, which include a 2,000 yuan ($293) one-off payment for victims with “mild symptoms,” have been greeted with skepticism.

“I’ll never accept that amount,” Wu Yanfang, a mother whose 16-month-old girl still has a stone in her kidney, told the China Daily.