By Larry Kahaner I applaud corporate leaders who take responsibility for their company’s transgressions even when they’re not directly involved in malfeasance. I believe that even if they’re not holding the smoking gun, they should have known what was going on. CEOs who offer the excuse that they don’t know about their subordinates’ actions are not running a tight ship, and they should not be in the top spot in the first place. I’m not talking about a few rotten apples on the lower limbs of the corporate tree, but severe ethical and legal lapses close to the top.  Now the federal government is moving the idea of corporate responsibility into high gear as it applies to leaders who run companies in the food and drug sectors. The “responsible corporate officers doctrine,” or Park Doctrine which gets its muscle from the passage of the Food, Drug and Cosmetic Act of 1938 holds executives personally responsible for illegal actions even if they didn’t know that a crime had been committed. Congress’s reason for such severe action was that companies engaging in food and drug production and distribution had the potential for killing or injuring thousands, even millions of consumers. The Supreme Court has upheld these types of ‘I didn’t know what was going on” prosecutions – punishment can include fines and incarceration - and the federal government had invoked the doctrine during the 60’s and 70’s against food warehousers and distributors. They didn’t use it much in the following decade but are revving up activity again mainly because of the large-scale and increasing cases of salmonella, mislabeled pills and harmful medical devices being put on the market. A recent case was that of KV Pharmaceutical which produced and distributed morphine sulfate pills that were larger doses than labeled. In March, a judge fined then former CEO and Chairman Marc Hermelin $1 million, forfeit $900,000 and serve a 30-day jail sentence. So, where does this new government emphasis leave corporate leaders? Claiming ignorance is simply not going to work anymore. Just as captains take responsibility for everything that happens on their vessel, company leaders must step up as well and take responsibility for what occurs on their watch. - Don’t forget; you can become a follower of this blog by using your existing Google, Twitter or Yahoo! logon. -- The William G. McGowan Charitable Fund provides grants in three program areas including Health care and Medical Research; Education, and Community Programs for Those Most Vulnerable. It gives priority to programs that have demonstrated success, measurable outcomes, have a plan for sustainability, and aim to end cycles of poverty and suffering. --- Larry Kahaner has been a business journalist for more than 20 years, a former Business Week Washington correspondent, and the author of many books about business ethics including: Values Prosperity and the Talmud: Business Lessons from the Ancient Rabbis; Competitive Intelligence: How to Gather, Analyze, and Use Information to Move Your Business to the Top; and Say It and Live It; The 50 Corporate Mission Statements that Hit the Mark, (co-auth |
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Where Does the Buck Really Stop?posted Sep 20, 2011 7:32 AM by Jacqueline Lara [ updated Sep 20, 2011 7:48 AM ] |