There’s a television commercial depicting beautiful scenes of wildlife in Florida that includes the admonition, “Leave the world a better place than you found it.”
I’ve been reflecting on this while considering news reports of recent corporate disasters that have caused great loss of life and resulted in great cost to investors and consumers. I wonder how the CEOs involved in these misfortunes measure their actions against that standard.
There’s been so many cases of corporate irresponsibility it would take many blogs to recount them all. I’ve selected just six to illustrate what can happen when governments fail in their oversight of corporate behavior, and corporations and their leaders pursue profit at the expense of the public good and corporate reputation.
- Pacific Gas & Electric, the California utility that failed to properly maintain its deteriorating transmission lines, has been responsible for 1,961 fires since 2014. On Nov. 8 2018, a live wire broke, falling onto tinder-dry bushes. The resulting fire wiped out the town of Paradise, killing 85 people. Shareholders were financial victims – the company’s market value dropped from US$25 billion to US$3 billion, and Pacific Gas declared bankruptcy. Does CEO Geisha Williams feel that she made the world a better place?
- In the past fifteen years, 400,000 people have died in the United States from opioid overdoses. The count in Canada is also in the thousands. A major reason for this crisis has been bribing by drug companies of doctors – via direct payments and other benefits – to prescribe massively more doses than their patients needed. One CEO, John Kapoor of Insys Therapeutics, has been found guilty of racketeering and sentenced to 5 ½ years in prison. Did he make the world a better place?
- The Canadian engineering firm SNC-Lavalin won contracts around the globe, sometimes by bribing authorities. The son of the ex-Libyan dictator enjoyed boats and planes furnished by the company. On January 9, 2020 former company executive Sami Bebawi was sentenced to 8 ½ years in a Canadian jail on fraud and corruption charges. Did he make the world a better place?
- In England, the architect, builders and fire engineers who refurbished the Grenfell Towers apartment building in London installed cladding that they knew would fail in the event of a fire. Seventy-two people died in the June, 2017 blaze that destroyed the structure. “Metal cladding always burns and falls off,” an architect emailed a fire engineer two years before the disaster. An official inquiry is now underway. Will it determine whether these executives have made the world a better place?
- In Alberta, Canada, oil and gas companies have abandoned 3,406 inactive wells, leaving them to send toxic leaks onto farmers’ fields. The companies escaped responsibility by declaring bankruptcy. A government agency that was supposed to oversee an industry fund to cover the costs failed to do its job. An official inquiry has begun. Have the executives who ran the oil companies, or the bureaucrats who failed to properly regulate them, made the world a better place?
- Perhaps most famously, the CEO of the Boeing Company, builders of the MAX-737, two of which crashed after it had failed to inform or train pilots in the use of its software, was fired but left the company with US$62 million in compensation. Does Dennis Muilenburg feel he has made the world a better place?
I am sorry to have to single out individuals by name, but one of the problems of corporate capitalism is that it allows its management class to avoid, ignore, or otherwise evade responsibility for actions they know – or should know – invite social or financial disaster.
Does this mean we should abandon corporate capitalism? No, but it does mean there’s an urgent need for tighter, more disciplined, more firmly enforced regulation. Unfortunately, governments in Europe and the United States have been moving in the opposite direction, throwing out or watering down regulatory regimes. The Trump administration is dedicated to eliminating or reducing pubic oversight, especially of the environment. Based on the examples above, we can expect further and more frequent assaults on the public interest, leading to even more horrendous consequences than we’ve seen in the past.