Providing What It Says on the Label

By: James Kallman, Founder of FIHRRST
This article  was published in the Forbes Indonesia, November 2015. You can also read this article on Forbes Indonesia

With the big salary must come the responsibility to do things right.

Maybe I’m a little old-fashioned, but I’ve always believed that corporate responsibility includes ensuring what a consumer receives is what it says on the label. Of course, things may occasionally go wrong, but in such cases the company should shoulder the responsibility of advising the public accordingly and implementing the steps to remediate the problem in the shortest possible time.

Yet in the cutthroat world of modern business this is increasingly does not occur and rarely does a week go by without another case of corporate malfeasance hitting the headlines. More worryingly, these are generally not mere lapses in oversight, but deliberate efforts to mislead the public, as well as regulators, in attempts to protect the company’s bottom line.

Of course, money talks and never is that more obvious than in the treatment accorded to corporate trespassers. Following a national salmonella outbreak in the U.S. linked to nine deaths, the owner of the company responsible was sentenced to 28 years detention for knowingly shipping tainted products. Although remorseful and apologetic at his trial, the judge deemed that his actions had been “driven simply by the desire to profit.”

No less desirous of profit was General Motors (GM) in concealing an ignition-switch failure first suspected of being problematic in 2002. For over a decade the denials continued and by the time GM finally admitted culpability and began recalling cars last year, 124 people had died. GM’s final bill to clean up the mess could exceed $10 billion, including the $900 million plea deal with the U.S. government. Yet of the 15 people dismissed, and presumably most responsible, not one is threatened with criminal prosecution at this time.

In contrast, a young Texas woman was convicted in 2004 of the negligent homicide of her fiancé after the GM car she was driving hit a tree. Just 21 years old, she suffered the wrongful imposition of a fine, community service and being placed on probation, plus on conviction lost her job. Ten years later, following GM’s admission in 2014, a Texas judge overturned her conviction; yet no amount of money could ever repair her life.

The motor industry appears to be a serial offender, with Toyota also having reached a delayed-prosecution deal this year, Volkswagen admitting guilt in rigging emission tests, and millions of cars being recalled due to a lethal problem with airbags that may date back to 2004. Yet even staid organizations can flout regulations—Toshiba recently admitting it overstated earnings by some $1.2 billion over the past seven years.

Going forward, it will be interesting to see what effect the latest U.S. Department of Justice memorandum, “Individual Accountability for Corporate Wrongdoing” has in such cases, as under U.S. law a criminal act by an employee criminalizes the company. If that is the stick, the carrot approach would be to encourage companies to put in place a management system that includes due diligence to protect all stakeholder rights. For with the big salary must come the responsibility to do things right and give the consumer what it says on the label.
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