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    Corporate Disasters: Health, Safety and Environment in Peril
    Corporate Disasters: Health, Safety and Environment in Peril
    Corporate Disasters: Health, Safety and Environment in Peril
    Ebook179 pages2 hours

    Corporate Disasters: Health, Safety and Environment in Peril

    By Gale and Cengage

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    About this ebook

    Corporate Disasters: What Went Wrong and Why profiles the biggest corporate mistakes or misdeeds throughout history -- covering the people, the times, the decisions made. This volume covers Health, Safety and Environment in Peril. Each essay puts the business and its operators in the context of its own time, explaining the market, social, and technology forces at play, and each explores the key make-or-break decisions that led to disaster.
    LanguageEnglish
    PublisherCengage Learning - Gale
    Release dateNov 3, 2013
    ISBN9781535821162
    Corporate Disasters: Health, Safety and Environment in Peril

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      Corporate Disasters - Gale

      Learning

      Aventis and Tainted Corn

      Aventis entered the genetically modified plants business, marketing, for example, the corn variety Starlink, which was engineered to generate its own pesticide, a chemical to which humans are allergic. Americans were slower than Europeans and Japanese to worry about negative health and environmental effects of genetically modified organisms (GMOs). But as U.S. federal agencies moved slowly, GMO producers in the United States gained market share ahead of growing consumer concerns. By the time organic growers and concerned consumers were having an impact on consumer choices, Aventis had moved on to the pharmaceutical industry.

      This case was prepared for classroom discussion rather than to illustrate either effective or ineffective handling of an administrative, ethical, or legal decision by management. Information was gathered from corporate as well as public sources.

      After analyzing this case study, students should be able to do the following:

      Explain how federal protection agencies can fail to protect consumers and the environment

      Evaluate the strengths and weaknesses of consumer-interest groups in their efforts to check profit-driven industries

      Birth of a New Industry

      Ever since biologists James D. Watson and Francis Click unveiled the double helix model of DNA structure in the early 1950s, followed by subsequent discoveries that confirmed the replication mechanism of DNA, efforts have been underway to create marketable products from these genetic discoveries.¹

      These efforts were further encouraged following the 1980 U.S. Supreme Court decision in Diamond v. Chakrabarty, 447 U.S. 303, which cleared the way for patents on living organisms. The law, and subsequent clarifications, allowed patents only in cases where an individual or company could make substantial, specific and credible claims for the usefulness of their proposed genetic intellectual property. In the years following this decision, genetic engineering and the biotechnology industry evolved and grew with a rapidity similar to the meteoric rise of the computer microprocessor industry.

      Controversies Multiply

      One of the sectors that biotechnology companies viewed as the most potentially profitable was the food and agriculture industry. Faced with a rapidly growing world population and well-warranted concerns over increased pesticide use, the industry looked at biotechnology as a means to reduce its dependency on such dangerous chemicals. Not incidentally, the industry also hoped these advances would increase its potential profits as well.

      Aventis, an early pioneer in agribusiness biotechnology applications, was formed through the merger of two of Europe’s largest and most venerated pharmaceutical companies, Hoechst and Rhone-Poulenc. In the 1990s, engineers at Aventis realized they could, by manipulating the genetic properties of existing food crops, create new plants that might have profitable characteristics for agricultural production (such as plants that could produce their own pesticides). Such products, under development throughout the industry, became widely known as genetically modified organisms (GMO). Seen as a potential gold mine by genetic entrepreneurs, GMOs were viewed with considerable skepticism by other groups in society, particularly in Europe. Companies hoping to promote GMOs were not helped by publicity that their products sometimes contained genes derived from insects or rodents, something given wide circulation by advocates for organic food. Such points were received by an increasingly queasy general public. Various anti-GMO advocacy groups quickly formed around the issue and began to pressure food companies to resist the modified seeds.

      Among the issues anti-GMO groups frequently raised was the difficulty of containing a GMO plant product, given the airborne propagation of pollen. Companies quickly brought forward studies that demonstrated there was little risk from such propagation, but anti-GMO concerns were not allayed by these industry-funded studies.

      Aventis and other biotech firms found a more receptive regulatory environment and a less concerned public in the United States than in Europe or Japan. The regulatory players in the United States, including the Environmental Protection Agency (EPA), the Food and Drug Administration (FDA), and the U.S. Department of Agriculture (USDA), were often staffed at the highest levels by former members of the food industry whom anti-GMO advocates maintained were too cozy with the agribusiness interests they were charged with regulating.

      Starlink Goes Supernova

      In 1998, Aventis applied for, and received, permission to market one of its patented plant products, a modified corn seed named StarLink. StarLink was genetically modified to produce its own pesticidal protein, Cry9C. Cry9C was a toxin derived from the Bacillius thuringiensis (Bt) bacterium. Bt toxin is effective in controlling several insect pests, and StarLink’s ability to produce it internally would reduce the need for pesticide spraying during the growing season. Concerns about the human allergenic potentiality of this new protein were raised, given that it was 50 to 100 times more potent than other Bt-spliced GMOs, and proteins humans have not eaten before can potentially set off dangerous food allergies, leading to skin rashes and more serious conditions, even including sudden death. However, Aventis was able to secure approval for the product from a compliant FDA, provided it was used only for animal feed and other nonfood industrial uses.

      One public advocacy group, the Genetically Engineered Food Alert (GEFA) coalition, was not so sanguine regarding industry assurances over the use of StarLink and other GMOs. GEFA began a program of testing various food sources to detect any presence of genetically altered products produced through cross-pollination or other sources of contamination. In September 2000 GEFA found such a connection in a U.S. consumer food product, Kraft taco shells, which contained traces of StarLink. This news made worldwide headlines and generated extensive coverage in U.S. media outlets in particular.

      GEFA and other groups pointed out that this naturally occurring gene mixing was precisely what they had been warning the public about for years. Public concerns about the food supply were already multiplying before the StarLink controversy and anti-GMO momentum had been gaining traction. These concerns were sharply outlined when world organizations concerned with public heath expressed their own reservations. One, the New England Journal of Medicine, warned in March 1996 that GMOs are uncertain, unpredictable, and untestable.

      Meanwhile, other GMO products were also withering under the spotlight. A genetically altered soybean developed by chemical giant du Pont was pulled from the market when it was discovered it could set off a deadly allergy in human consumers. Despite this, Plant Genetic Systems, the company that had helped du Pont develop the dangerous soybean GMO and helped Aventis develop StarLink, continued to use the same Brazil nut DNA that had proven deadly in the du Pont soybean tests.

      At first, Aventis, the EPA, and Kraft Foods denied the finding of GEFA regarding StarLink, but further testing forced Kraft to withdraw 2.5 million boxes of the corn tacos from the market. Further recalls ensued as StarLink was discovered in other corn products manufactured by Mission Foods, Safeway, and Western Family, and sold in thousands of supermarkets in the United States and abroad. The Iowa attorney general criticized Aventis and seed sellers for not properly informing buyers about the need to keep StarLink out of the human food chain. Animal food processes next came under fire, and firms such as Kellogg, Archer Daniels Midland, and Tyson Foods were forced to shut down grain mills or announce mandatory testing for the Cry9C protein. In September 1996, Aventis suspended sales of all seeds containing Cry9C. The USDA followed suit by recalling all 350,000 acres of corn planted that year using the StarLink seed.

      International reaction was also swift as Japan and European countries suspended corn shipments from the United States. Diplomatic missions were dispatched from the White House to reassure concerned international authorities that the StarLink issue was being dealt with effectively. Things got particularly unpleasant when the U.S. government and the grain suppliers announced they would allow major grain exporters to send StarLink-contaminated corn to overseas markets, even though U.S. poultry suppliers were declining to feed it to their chickens raised in North America. European and Asian politicians were split between the growing chorus of demands from their own citizens to suspend all U.S. agricultural imports, and the problems this could pose in trade relations with the United States.

      Before the end of the year, consumer confidence in GMOs had taken a severe beating, even in the once benign U.S. market. Business losses from the controversy totaled hundreds of millions of dollars, and class-action suits by consumers against principals for millions of dollars were filed in Chicago, Illinois, courts. Growers and other business interests in the food distribution network, particularly in the hard-hit corn-belt states, joined in the opposition, criticizing and denouncing Aventis and other biotech concerns. The shifting of blame continued as Kraft Foods, various supermarket chains, and others lashed out at U.S. regulatory agencies for failing to provide adequate supervision of GMO products.

      Finally, Aventis announced it intended to sell its agrochemical and seeds business to focus on its faster-growing pharmaceutical development business. Eventually, both the crop science and herbicide divisions of Aventis were sold off to other international companies.

      Postharvest

      By January 2001 the vast sums of money at stake in the development of GMOs had produced a variety of attempts to minimize the public relations damage from the entire StarLink scandal. Industry groups spoke out in trade publications such as AgriMarketing, where in a January 2001 article it was maintained that federal agencies had reacted promptly and that consumer confidence in the food chain was not shaken. Generally, the article painted a picture of an industry properly chastened that would take greater care in the future. In keeping with industry statements, the article suggested that the whole controversy was overblown and that the public just needed to be better informed about the benefits of GMO products. Industry groups pointed to the fact that further tests were unable to find any provable adverse reactions in consumers who had used StarLink-tainted products.

      However, anti-GMO forces took a different view. The EPA held a hearing on the subject in which an international food expert associated with the Consumer Union pointed out that the EPA, in granting approval for StarLink, ignored studies the agency had funded that showed signs of allergenicity in farm workers who handled Bt-spliced crops. The agency also ignored accepted testing regimens used to determine the allergenicity of such products. Furthermore, the EPA did no adequate safety testing of StarLink and other Bt-spliced crops.

      In further studies it was found that Bt corn did pose a major hazard to Monarch butterflies that fed on pollen from milkweed plants in cornfields throughout the corn-growing season. Other critics have demonstrated that Bt products were also damaging to beneficial soil microorganisms and insects, such as ladybugs and lacewings, that help to control more harmful insects. Organic farmers have also expressed fears that use of such plant products will eventually produce a spray-resistant super bug, in much the same way the overuse of antibacterial agents have produced dangerous bacteria that are immune to conventional treatment.

      Studies of public attitudes, undertaken by Unilever and Angus Reid, make a mockery of food industry claims that the public has confidence in the use of bioengineered products. Even before the StarLink scandal, a majority of consumers in both Canada and the United States were already opposed to such products being introduced to the food chain. Since then an overwhelming majority consider that labeling to warn people of GMOs in a product should be mandatory. In the European Union, such labeling became compulsory in 2003. In the United States, labeling has been proposed but had not been enacted as of late 2011.

      The Future of GMOs

      What went wrong in the StarLink case is certainly nothing new in international business. Company executives, eager to produce short-term profits, rushed a product to the market without serious testing or proper reviews of its potential hazards. Government regulatory agencies failed to head off efforts to push these products through their regulatory pipeline. The FDA eventually deflected a lawsuit over the issue filed by the Center for Food Safety but only after it was forced to admit in court that it had failed to put in place any real policy regarding GMOs and other genetically engineered foods. In the article More Bad News for Biotech, by Ronnie Cummins, Center for Food Safety attorney Andrew Kimbrell noted: This court decision means that for over a decade these novel foods have gone virtually unregulated in the United States. American consumers have been used as unknowing guinea pigs.

      Others have pointed out that too many U.S. agencies are involved in the decision over products such as StarLink, and the government needs to reorganize its efforts to coordinate the activities of these agencies regarding testing and approval of agricultural biotechnology. Institutional complexities are also aggravated by the intervention of various state agencies in the approval process.

      The future of genetically engineered crops is likely to become a more compelling issue during the 2010s. In the United States, food conglomerates have thus far resisted labeling, and other methods of controlling or identifying, use

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