Tuesday, February 17

The Peanut-Salmonella Oubreak: Who's the culprit?

Every CEO talks about how his company practices ethical business practices; every company website has a page dedicated to promoting corporate social responsibility and explaining how the company plans to take a role in it. Yet, with the recent news of milk powder produced in China caused kidney failure in over a thousand babies; the issue of miniature bonds in Hong Kong from Lehman Brothers without clearly explaining the risks to investors, mostly middle-aged men and women, left investors without a penny as the company filed for bankruptcy towards the end of 2008; Two partners from PricewaterhouseCoopers in India was arrested for knowingly approving an overstated profit statement and creating a fictitious cash balance of more than one billion for Satyam Computer Services Limited; the Salmonella outbreak in peanut butter that sickened hundreds and caused the deaths of nine; and so on, the term “business ethics” rises to fame once again.

Jerry Greenfield, along with his partner Ben Cohen, were the founders of the all-time famous ice cream shop Ben & Jerry’s (see right). The company is considered by the public as one that exemplifies corporate social responsibilities. During an interview with Greenfield, he explained that the mission of Ben & Jerry’s was “to make quality ice cream, always conduct business responsibly and have fun doing both.” Every year, aside from financial profit and loss statements, the company produces an equally scrutinized report that measures its philanthropic work. When he was asked to comment on the recent outbreaks of unethical practices in the business realm, he said, “Traditional businesses measure success by how much money they make. Even in business schools today, students are taught that the only legitimate purpose of business is to maximize profits. I think that’s what leads to companies doing essentially anything, whether legal or unethical, in their single minded pursuit of profits.” As with the scripture of Confucius, greed, among other emotions, “dominate the soul, causing blindness and leading to destruction.”

But is that the whole story? Should the company involved in unethical business practices be the sole culprit for causing societal disruption and breach of customers’ trust? Take the Salmonella outbreak in peanut butter case as an example. It is definitely one of United States’ most high-profile tainted food cases in decades. The outbreak began on December 21, 2008 when Shirley Mae Almer, 72, died in Brainerd after eating peanut butter tainted with salmonella. Her relatives filed a lawsuit against the distributor King Nut Cos. saying Almer’s death was a direct result of eating peanut butter infected by a salmonella strain linked to the nationwide outbreak. In the weeks following, the Food and Drugs Administration and other federal agencies immersed in vigorous investigation and were able to trace the contamination source to the Peanut Butter Corporation of America (PCA), a peanut processing (see left) company and maker of peanut butter for bulk distribution to institutions, food service industries, and private label food companies. Evidence showed that Stewart Parnell, president of the PCA, emailed his employees and urged them to ship out products that he acknowledged as salmonella-tainted foods. As Greenfield said, it was his “single minded pursuit of profits.” With no doubt, such unscrupulous act by the PCA was heavily criticized. Numerous lawsuits were filed against the PCA and the company eventually filed a Chapter 7 bankruptcy petition in the U.S. Bankruptcy Court for the Western District of Virginia.

This might be the story most people know about. However, there is another side of it. In fact, dating back to 2006, there were already issues concerning the PCA. Four inspections by the Georgia Department of Agriculture cited repeated violations at the Georgia plant of the PCA. The violations included food residue buildup and improper storage on floors. In 2008, seven samples taken at the PCA were tested positive for salmonella. In both cases, in addition to various minor issues discovered during the period, the Georgia Department of Agriculture did not take concrete actions or report the PCA’s violations to a higher level of bureaucracy. In cases where samples were tested positive for salmonella, the products were shipped out after a retest of negative. The nationwide salmonella outbreak exposed the fact that nobody was required or believed it was necessary to notify health officials at the sight of deadly salmonella turning up repeatedly at the Georgia plant. It is definitely an imperative loophole that needs to be addressed before worse happens. In addition, the outbreak brought about attention to the responsibilities and efficiencies of health officials. It was discovered that some food manufacturing plants were almost never inspected. Health officials were insensitive to shady operators who tried to keep dangerous outbreaks confidential and lack the authority to order recalls. Various health related agencies also failed to carry out their roles effectively.

In all likelihood, companies committing in unethical practices are not to be defended, yet it is crucial to acknowledge the fact that they might not be the sole culprit who brought upon various societal impacts. In the peanut-salmonella case, the PCA received its punishment of filing bankruptcy. For health related agencies, the case is a wake up call. A call to step up and take actions with respect to food plant quality control, the autonomy agencies should have when coming across food contamination issues and violations in plant operations. In the world of business, suppliers are responsible to satisfy customers’ needs. Governmental agencies should act as a support to assure customers’ needs are adequately satisfied and that their rights and well-being are protected. The two need to work hand-in-hand. With respect to corporate social responsibility, as suggested by Greenfield, it ultimately boils down to how a company measures success, and social responsibility should be as high a priority as corporate profits.

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