Dark Days For Corporate Ethics
I watched in some measure of horror this week as three stories came out about corporate ethical lapses that appear to indicate that our society needs to do better in preparing leaders ethically. The three stories all leave me feeling a bit in bewildered disbelief that they could happen in an enlightened day and age. I think these three stories represent a wake-up call for us all.
The first story was a gut-wrenching tale of a company called the Peanut Corporation of America that had some control and hygiene problems that led to manufacturing plant rodent and insect infestations. Allegedly, the CEO of the company, a Mr. Stewart Parnell, was informed that some of the company’s food products had been tested and found to be infected with Salmonella bacterium. Given the chance to destroy the products, he chose instead to send them into the market. This week, in the aftermath of many tragic salmonella illnesses and numerous fatalities, the trial concluded and the judge sentenced Mr. Parnell to 28 years in prison, which is effectively the rest of his expected life. As I write this, I’m wondering what planet Mr. Parnell thought he was living on when he made that unbelievable decision to let people become desperately ill and die a horribly painful death.
The second story really amazed me. A company called Turing Pharmaceuticals recently bought the right to manufacture a medicine called Davaprim. The CEO of Turing, Mr. Martin Shkreli, was interviewed this week and gave a haughty pharmaceuticals 101 lecture to a naive public, warning us that pharmaceutical companies need to be profitable on the drugs they market and sell. In general, I agree with Mr. Shkreli’s position. However, he lost my support when I realized that he was lecturing us a day after his company announced that the price of Davaprim was being increased by 5000%. That price increase was calculated out to over $700.00 PER TABLET. Of course, in the furor that had ensued in the wake of the price increase, Mr. Shkreli and Turing Pharmaceuticals have reconsidered their price increase and determined that a more moderate increase would be more appropriate. I’d be shocked by a 50% price increase for a drug. I’d be incensed by a 500% price increase. To be honest, I cannot get my head around anyone suggesting a 5000% price increase. Seriously, Mr. Shkreli, what were you and your colleagues thinking?
The third story was a surprise that has kept the news channels buzzing this week. It is the story of the emissions testing software cheat at Volkswagen. As I write this, the latest estimate is that nearly 11 million automobiles and trucks were manufactured with engines and emission systems designed intentionally to cheat. Documented specifications would suggest that these VW “Clean Diesel” engines were eco-friendly, and they were certainly marketed and sold that way. (Full Disclosure: I purchased a VW “Clean Diesel TDI SUV in 2012 and do not know if it is affected by this alleged fraud) The unsuspecting, adoring public of fanatic VW consumers was told that these cars and trucks were designed to impact our world less via this great technology. We learned this week that VW intentionally cheated. They make a decision not to try to make their engines perform as advertised, and covered up their tracks by designing software to sense when the emissions testing was being conducted and to put the engine into a mode where it would defeat the emissions testing and give a result that matched the specifications. The problem is that when the emissions test concludes and the vehicle drives away, it resumes polluting the environment by up to 40X more pollutants than advertised. Wow! I couldn’t conceive of a company like VW doing something so obviously wrong until this week.
Now, before you all begin to call me Opie Taylor, let me say that I’ve been around the block a time or two. I’m not some naive knucklehead living out here on the prairie in denial. I realize that bad things can and do happen in this world, I really do. I just never imagined a week where company after company would get caught with their fingers in the cookie jar like this. I really never imagined that someone would be so heartless to send tainted food into the market knowing full well that it would likely sicken and kill human beings. I couldn’t conceive of a corporation so greedy and so conceited, that they would try to perpetuate a 5000% price increase overnight, for a medication that helps people with weakened immune systems. And I certainly never imagined that Mr. Martin Winterkorn, the CEO of Volkswagen would have to resign after admitting that his corporation knowingly cheated millions of consumers and attempted to engineer software to cover their tracks. We don’t know whether Mr. Winterkorn was involved or whether he was just incompetent and unaware.
So, it’s been a hell of a week in the world of ethical corporate behavior, or should I say misbehavior? Clearly, our universities and our corporate leadership development efforts are missing the mark with this type of behavior becoming so frequent. It’s time to get back to some decent core values, folks. It’s time to put the customers first again, folks. It’s time to pull on the big boy pants and begin to behave like grown-ups again, folks. These events this week are nothing short of a wake-up call for me. Now that I’ve been shaken from my slumber I am sounding the alarm. We need to do better! We need to stop this type of nonsense immediately! We need our leaders to demonstrate some class, and some character, and to follow some principles like honesty, integrity, and making customer safety a primary objective that cannot be compromised. I’m disappointed. That may be the understatement of a lifetime. I’m appalled. We can do better, can’t we?
I’d love to know whether any of you are as deeply troubled by such events as I was this week. I’d love to know that there are more people out there who believe that corporate ethics matter, and who will pledge to treat their responsibilities to humankind as paramount, and not as something subservient to profits. Please, let me hear what you think….