Loss of interest on melamine milk claims is unknown

A few days ago, the official website of the China Dairy Association reported the use of an infant milk powder incident totaling 1.11 billion, but it has attracted more questions.

On June 8, following the newspaper's publication of “1.11 Billion Indemnity Revealed by the Breast Association,” this reporter further investigated and found that China Life was the protagonist of the incident.

"In theory, the role played by the China Dairy Federation is more of a leader in this matter. Actually, the compensation situation and the fund operation are handled by China Life Insurance. More news China Life should be more clear." Beijing Dacheng Lawyer Liu Xiaoyu, an attorney of the firm, said in an interview with a reporter from Securities Daily.

The fund operator is China Life Insurance. On January 8, 2009, the General Office of the Ministry of Human Resources and Social Security, the General Office of the Ministry of Health, and the General Office of the China Insurance Regulatory Commission issued the “Relevant Work for the Payment of Medical Expenses Related to Children’s Milk Powder Incidents. "Notice" (No.10 [2009] of the People's Club) [2009] clearly stated that "China Life Insurance Co., Ltd. shall formulate management methods for the use of medical compensation funds for children, establish and improve a medical compensation fund management and payment information database, and all branch offices shall reimburse medical expenses." .

On April 22, 2009, the General Office of the Ministry of Health and the General Office of the China Insurance Regulatory Commission issued the “Notice on Further Reimbursement of Medical Expenses for Responding to Medical Treatments and Related Diseases for Children with Milk Powder in Infants” (Willed Medical Affairs Development Co., Ltd. [2009] No.66), it is clearly required that "China Life Insurance Co., Ltd. shall strengthen the management of the medical compensation fund to ensure that the special account is managed and the funds are earmarked to ensure the safety and integrity of the medical compensation fund."

“From the perspective of the public channels, did China Life establish the management and use of the medical compensation fund for the child, whether it administers the medical compensation fund in accordance with the above-mentioned measures, whether it established a medical compensation fund management payment information database, and whether the medical compensation fund is safe? And complete, these are still not clear answers for the public. China Milk Association, China Life Insurance should carry out a detailed and clear answer on these issues." Liu Xiaoyu said.

Liu Xiaoyu also stated: "The management, use, and publication of relevant medical compensation funds are the duties of the China Dairy Association and China Life."

According to the notification, the one-time compensation for paying the victim’s child and the medical treatment fee and follow-up fee for the acute treatment period of the child totaled 920 million yuan. In the milk federation notification, in addition to the 920 million already paid, it will be 1.92. Billion Medical Treatment Fund entrusted to China Life Insurance to manage it. Since the fund was formally launched on July 31, 2009 to April 30, 2011, China Life Insurance has handled 1,794 person-times in total, with a payment amount of 10.48 million yuan and a fund bank account balance of 192 million yuan.

But two years later, this part of the fund is still 192 million yuan?

Wang Dingmian, the deputy director of the China Former Dairy Association, questioned: “With such a large sum of money, the interest on light should be a large sum for several years, but this notification has not been explained.”

The interest on the remaining funds has not announced that the so-called fund has a broad and narrow sense. In a broad sense, the fund refers to a certain amount of funds established for a certain purpose. For example, trust investment funds, unit trust funds, provident funds, insurance funds, retirement funds, funds of various foundations. Funds in the existing securities market, including closed-end funds and open-end funds, have the features of profitability and value-added potential. From an accounting perspective, the fund is a narrow concept, meaning funds with specific purposes and uses. Because the funders of government and public institutions do not require investment returns and investment recovery, they require funds to be used for specified purposes according to legal provisions or the wishes of funders, and funds have been formed.

"From the point of view of the establishment of the fund, this 'fund' subordinate to the Dairy Association belongs to the liability for advance payment. It is a company that bears liability for damages in order to avoid the negative influence of a large-scale loss, and it is raised by the industry association to the responsible companies. It is used to compensate the victim for a prepaid compensation that is targeted at an unspecified victim affected by melamine, and since it is a prepayment for unspecified objects, the fund should be set up on the date of its establishment. From then on, it announced to the society its own purpose of setting up, specific ways of using funds, information distribution channels, decision-making bodies and decision-making methods for the use of funds, supervision institutions for the use of funds, etc.” Yang Zhaoquan, a member of the Legislative Council Advisory Committee of the Beijing Municipal People’s Congress Standing Committee. In an interview with the "Securities Daily" reporter said.

Yang Zhaoquan said at the same time: “The information released this time, lack of a lot of basic information on the nature of funds, compensation standards, application process, etc., can not meet the relevant public understanding of the necessary information.”

According to the annual report of China Life Insurance in the past two years, the total investment income of China Life Insurance in 2009 was 5.78%, which was significantly higher than the 3.46% in the previous year. As of December 31, 2009, the company's investment assets reached RMB 1,172.093 billion, an increase of 25.0% from the same period in 2008. The proportion of debt-based investments decreased from 61.43% in the same period of 2008 to 49.68%, but the interest on investment in debt plans increased by 175.1% year-on-year, and the proportion of equity investments increased from 8.01% in the same period of 2008 to 15.31%. However, the transactional financial asset income decreased by 92.4% year-on-year, and the time deposit and currency fund interest decreased by 5.0% year-on-year.

In 2010, the company achieved operating revenue of 388.79 billion yuan, a year-on-year increase of 13.7%, total investment income of 64.9 billion yuan, and an investment return rate of 5.11%. It can be seen that China Life's investment income is in good profit.

So even if you do not take investment, putting the compensation fund in the bank will also have some interest. The "Securities Daily" reporter made a calculation for this amount of money. Even if the 192 million yuan was put into the bank for 2 years without any capital operation, the interest generated will also reach 15.93 million yuan.

"I don't know, I don't understand the specifics." The relevant person in charge of China Life responded when interviewed by a reporter from Securities Daily.

“From the initiative of reporting, this notification was obviously made under the pressure of social media and the media. The China Dairy Federation and China Life should have actively published relevant information and made information management work. However, it is currently Passive response.” said lawyer Liu Xiaoyu.