Business Ethics

Oxy

2016.05

Oxy out_Selling a death-dealing poison
Business Ethics
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It was recently found that humidifier disinfectants that were being sold from 2001 in South Korea contained toxins. So far, 1,528 lung disease patients and 239 deaths have been confirmed.

  • 1997 Dongyang Chemical Group founds and starts the sale of Oxy, a humidifier disinfectant.
  • 2001 British multinational consumer goods company Reckitt Benckiser acquires Oxy.
  • 2001 Beginning with Oxy “Ssak Ssak,” Oxy enters home goods retail chains Homeplus and Lotte Mart, and as credibility in the brand increases, Oxy dominates 80% of the humidifier disinfectant market.
  • Post-2001 The number of lung disease cases of unknown origin, especially among infants and pregnant women, increases drastically.
  • April, 2011 Seven patients are hospitalized in Seoul Asan Medical Center for lung disease. The medical team, unable to find the cause of the disease, reports the cases to the Center of Disease Control (CDC). CDC identifies the disinfectants as the cause of the lung disease and recommends the ban of their sale and use.
  • August, 2012 Families of nine victims bring criminal charges against the executives of Reckitt Benckiser and ten other major corporations.
  • 2012 Oxy Reckitt Benckiser with Kim & Chang (law firm) challenges the lawsuit, identifying issues about the animal tests conducted by the CDC.
  • April, 2014 The Ministry of Environment rules that the diseases associated with the humidifier disinfectants are actually induced by environmental causes.
  • 2016 Suspicions that the experiment reports were fabricated and that a Seoul University professor may have been bribed arise. Prosecution investigation begins, and as the public catches on, a nationwide boycott of Oxy products ensues.
  • April, 2016 Oxy’s Korean and US representatives formally apologize and offer $850,000 in compensation funds. 2016 Oxy as a company has not yet issued a formal apology nor has it offered posterior measures (related product recall, etc.), and victims are currently preparing to take legal action against Oxy.
  • From 2001 to the present, approximately 10 million units of humidifier disinfectants (worth $850K-$1.7M) have been sold and caused the death of 238. Of the deceased, 80% had used Oxy.

The prosecution investigation found that the source of the problem had occurred in 2001, when the company switched one of the materials for a cheaper alternative.

  • humidifier disinfectants produced before 2001 did not contain toxins.
  • In order to reduce production costs, Oxy had changed one of the raw materials for a cheaper alternative offered by SK Chemicals, bypassed safety tests, and the government had also cleared the disinfectant for production and sale without a proper examination.
  • At the time, the disinfectant had been just one of 300 Oxy products, composing a measly 1% of their sales. In addition, it was revealed that there had been a severe lack of oversight over Hanvit Chemical, which was the OEM in charge of producing the problematic chemical.
  • In 2011, when the humidifier disinfectant was pointed out as the cause of the lung disease cases, the British headquarters had ordered the Korean branch to proceed in compliance with the law.
  • After 2011, the legal team at Oxy began responding to the crisis. Oxy partnered up with Kim & Chang and proceeded to tackle the CDC’s regulations regarding humidifier disinfectants. Oxy also conspired with a Seoul University professor to fabricate reports that would suggest that the disinfectant was harmless.
  • However, it is now evident that this is a clear case of fraud headed by Oxy in collaboration with Kim & Chang and the university professor.

Oxy Reckitt Benckiser’s irresponsible behavior contrasts greatly with how Johnson & Johnson responded to a crisis in the 1980’s, and they remind us about the importance of companies’ ethical and societal responsibilities.

  • The Johnson & Johnson case: In 1982, seven people died from consuming Tylenol capsules that had been tampered with and laced with potassium cyanide. In order to protect the safety of its consumers, Johnson & Johnson recalled $240M worth of drugs and suspended production until a new, anti-tampering packaging method was developed.
  • The Oxy Reckitt Benckiser case: In the process of replacing the chemical ingredients in order to reduce costs, the company failed to conduct necessary experiments to test the safety of the revised disinfectant. Even after they discovered that the disinfectant was toxic, rather than apologizing and taking preventative measures, Oxy attempted to bury the evidence beneath false reports in order to minimize the company’s loss.

Furthermore, the Oxy disaster shows that South Korea is in dire need of reform in its political/administrative/social systems.

  • Shabby administration within government sectors: The government had approved the license for the product even though tests had not been conducted on the revised disinfectant.
  • Ethical corruption of academics and lawyers: Kim & Chang, the best law firm in the country, and researchers from Seoul University, the best university in the country, had fabricated various documents in order to help clear Oxy’s name.
  • Government’s tepid countermeasures: The government, seeking to protect Oxy Reckitt Benckiser, did not take appropriate legal action against Oxy Reckitt Benckiser.
  • For over 16 years, over 10 million poisonous disinfectants have entered the lungs of Korean citizens. Ultimately, those who have been hurt are the victims’ families and the nation.

Please discuss the Oxy humidifier disinfectant case with your tutor. What do you think are the responsibilities of our society and government regarding this case? We encourage you to take the time to think through this case and work on your English.

  • Shabby administration within government sectors: The government had approved the license for the product even though tests had not been conducted on the revised disinfectant.
  • Ethical corruption of academics and lawyers: Kim & Chang, the best law firm in the country, and researchers from Seoul University, the best university in the country, had fabricated various documents in order to help clear Oxy’s name.
  • Government’s tepid countermeasures: The government, seeking to protect Oxy Reckitt Benckiser, did not take appropriate legal action against Oxy Reckitt Benckiser.
  • For over 16 years, over 10 million poisonous disinfectants have entered the lungs of Korean citizens. Ultimately, those who have been hurt are the victims’ families and the nation.

Please discuss the Oxy humidifier disinfectant case with your tutor. What do you think are the responsibilities of our society and government regarding this case? We encourage you to take the time to think through this case and work on your English.

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