A Canadian dairy's herd is slaughtered over fears of a viral infection that officially does not exist on the mainland On a green slope in Yunnan's Yiliang county, a modern dairy farm stands empty. Two months ago, its herd of Holsteins was destroyed on suspicion the 87 heifers and two bulls had foot-and-mouth disease. Its manager, Jack Tang, is still looking for an explanation. 'It sends a chill to all future foreign investors. You wonder if the Chinese government can enforce and honour any commitment,' he said. Mr Tang, executive director of Canadian-backed company I-Can, says his stock came from breeders in north China with health certificates. Furthermore, the mainland claims to be free of foot-and-mouth disease, a highly infectious condition that causes blisters in the mouth and on the feet of cattle, sheep, pigs and other cloven-hoofed animals. 'We find this a strange situation in a country where foot-and-mouth disease does not [officially] exist,' he said. The Yiliang county government declared on June 30 that foot-and-mouth disease had been found in the 71 newly arrived animals and those already on the farm. It ordered the immediate destruction of the entire herd. Mr Tang demanded to see the test reports and laboratory data, the results of which would normally need endorsement by central government scientists approved by the World Trade Organisation. Instead, police came to the farm and trucked away the cattle. Mr Tang's request to have the culling process videotaped was denied. The Yunnan livestock and veterinary bureau defended its actions, citing rules under which culling orders may be issued once two veterinarians have determined that animals are infected or suspected of infection. It said that since information on foot-and-mouth disease was confidential, the local government was not authorised to confirm the outbreak. Meanwhile, the Agriculture Ministry in Beijing still says there are no cases of foot-and-mouth disease in China. A frustrated Mr Tang, who is Canadian and whose company is a subsidiary of a Vancouver firm, sought help from the Canadian consulate to recoup losses of more than US$5 million. 'Our firm's multimillion-dollar investment was made in the belief that China was free of foot-and-mouth disease and that transparency and fairness would be practised and laws obeyed at all levels of government, now that China has become a member of the World Trade Organisation,' he said. With memories of the cover-up of the Sars epidemic still fresh, it might be thought the handling of the case was another instance of government bungling. But Mr Tang suspects the incident could be a conspiracy to put a modern, foreign competitor out of business. The Yunnan provincial government offered to pay 2,400 yuan (HK$2,256) compensation for each dairy cow slaughtered - a fraction of their market value of between 12,000 and 15,000 yuan.. I-Can is seeking damages to cover the cost of the cattle culled and of construction and administration of the farm, the loss of the value of contracts signed for milk supply, plus interest charges and legal fees. Li Jutao, deputy director of the Yunnan Overseas Federation, which handles inward foreign investment, attributed the confusion to the inexperience of local officials. 'Overseas investors are one of the driving forces of China's economic reform and opening,'' he said. 'Their rights must be protected.' Mr Li expected a negotiated settlement would be reached, and he urged Mr Tang to be patient. But Mr Tang notes that six weeks have passed since the Canadian consulate in Chongqing issued a diplomatic note to the Yunnan government. If no explanation for the culling is received by the end of the month, I-Can will refer the dispute to the Agriculture Ministry in Beijing. Under WTO rules, the Canadian authorities can file a report to international agricultural and health agencies on the outbreak of foot-and-mouth disease.