A conflict of interest (COI) generally can occur when an individual or an organization, private or government is involved or is in a position to exploit another individual or organization so as to affect their motivation or capacity, for their own personal or official benefits.
A conflict of interest may not always be a wrong doing or a matter of legal liability. Holding two jobs is not illegal, but it may be cause of conflict of interest in many situations compromising duties of both the jobs. A conflict of interest can be illegal when an individual or an organization try to influence or instigate a decision to gain personal or corporate benefits by affecting another organizational or official motive. Complication and confusions can occur in proving the evidence of conflict of interest as the accused does not necessarily have to use improper or unethical methods.
An organizational conflict of interest OCI can occur when an individual or corporation holds two roles- especially in the realm of private sector who provide to the government. For example - if a certain individual holds stock and is a government official inspecting in the same field - so his two jobs can conflict and put him in a position where his personal interest may affect his official duties.
When an individual or organization holding two roles -one in private sector and one in the government office - are involved in a deal the outcome may be in favor of the involved parties so as to hinder official gains for personal gains When an individual discriminates official powers for personal gains organizational conflict of interest occurs, which affects the competiveness pricing and many other factors of a certain private sector.. In another situation a certain government official can abuse the power and official information given to him so as to gain personal benefits and position or stocks in the private sector that he used to regulate so as to making a seat for him in the private sector while serving in the government sector is a form of conflict of interest know as revolving doors. This affects the loyalty of the official for its government office while benefiting the private individual or organization giving it release from rules and regulations of the regulating government department and all this in exchange of position in the BENEFITING company .
Revolving doors is that form of conflict of interest where in an individual in a government office with power which can be used impartially uses his power to help an individual or organization to gain benefits by breaching government regulations. The official here in doesn't get a bribe but in return is provided with a position or benefit in the benefitted organization or an association that is affiliated to the organization. The official leaves his public sector job and gains a placement in the private sector.
An example of revolving door and conflict of interest can be seen in the dealings of Monsanto a company that has marketed an artificial growth hormone. They have breeched ethical codes to ensure a boom in their sales. Michael R. Taylor was working at King& Spalding, a law firm helping Monsanto with their policies. He left the firm to join the FDA as Deputy Commissioner for Policy, where he passed approval for the rBHG hormone. Then he started working in the USDA as an Administrator for Food and Drugs Safety & Inspection Services, here also he did not administer the health risks and adverse effects of rBHG in milk and thus benefited Monsanto. After that Taylor left his public sector job to seek a position as Vice President for Public Policy in Monsanto.
Monsanto and its Use of Revolving Doors
Monsanto Corporation is an American based agricultural company specializing in biotechnology. Its main source of revenue is generated from producing genetically modified seeds and distributing them to farmers all over the world. Employing more than 22 thousand employees worldwide, Monsanto has proved its domination over the agricultural industry raking in annual revenues of more than $11.5 Billion (2008). Though the company's success in earning a solid bottom line is obvious, it's business practices that lead to these high profits is not so clear. Monsanto is regularly accused of engaging in highly unethical and border line legal business practices (Monsanto website, 2010). Aside from adding cancerous growth hormones to the milk supply of the United States and producing sterile seeds which were conveniently named Terminator Seeds, Monsanto has also become very close to US government by its use of revolving doors.
In 1999, Peter Khaled published an article called "Monsanto Employees and Government Regulatory Agencies Employees are the Same People!" where he identified more than 10 top level executives that had once worked for Monsanto now work for government regulatory agencies or that they had worked with the government before and now are working for Monsanto. Good examples of Monsanto's use of revolving doors would be its relationship with Linda J. Fisher and William D. Ruckelshaus. Linda Fisher was the Assistant Administrator of the United States Environmental Agencies Office of Pollution Prevention, Pesticides and Toxic Substances and later became the Vice President of Government and Public affairs for Monsanto. William D. Ruckelshaus was the former chief administrator for the Environmental Protection Agency and simultaneously was also a member of the board of directors on Monsanto(Khaled, 1999). However, the most pristine example of Monsanto's influence over regulatory agencies would be the corporation's support of a man named Michael R. Taylor. Michael Taylor, a lawyer by profession, was the legal advisor to the FDA (Food and Drug Administration) and later represented the FDA as the assistant to the commissioner. Taylor has also held positions in the law firm King & Spaulding and Monsanto Corporation. It is worth stating Monsanto is a client of King & Spaulding. Recently, in January 2010, the Obama Administration named Taylor as the Deputy Commissioner of the FDA. As part of the FDA, Michael Taylor has helped pass many of Monsanto's products through inspection, the most prominent being the growth hormone "rBGH." (Khaled, 1999)
Monsanto's unique relationship with US regulatory agencies has a created a conflict of interest for many of the executives working at Monsanto as well as those working for the government itself. This culture of rotating employees through the government and the corporation not only gives an unfair advantage to Monsanto in pass its products through regulations, it also dangers the lives of millions. Later in this analysis, we will examine the consequences such revolving doors in the government.
Parties affected
Consumers
The consumers are denied the freedom of choices between "organic milk" or "rBST-Free" and milk containing rBGH. People are exposed to health risk by consuming milk containing rBGH.
State and central government
The government is responsible for health risks exposed by rBGH. They are also answerable to their citizens in regard of allowing producers to gain more benefits at the cost of public welfare. The government loses its goodwill, and also the trust of the citizens who have elected them.
Food and Drugs Association FDA
The FDA is one of the key factors in regulating and control food and drugs for the United Stated. Any inaccuracy, oversight and irresponsibility on their regard can adversely affect the health and lives of millions of the citizens of the United States. Foods and drugs legalized by the FDA are popularity consumed. Episodes like this corrupt the reputation goodwill, trust and popularity of the FDA. Their safety measure will be questioned and accepted as substandard in the eyes of the basic consumer.
Dairy businesses
By the ban on labels of hormones free milk Monsanto tried to affect the sales of other milks which affected the dairy business in general. Producers who use rBGH to increase their profits by an average of about $3000-$10,000 also affect the competitiveness of the market and the demand of hormone free milk. Advertising in form of labels on products is a major promotional activity which can enhance sales. Freedom of choice for consumers and producers is a right granted to all in a democracy, Monsanto's policy is a breach to this freedom of choice.
Monsanto's Defence Against the Ethical Argument of Revolving Doors
The dilemma of revolving doors serving as a conflict of interest is not an issue that hasn't been raised and one that Monsanto hasn't been questioned about several times. In fact, it is such a common debate that Monsanto has posted their views on the subject of revolving door on the corporate website. Their views are as follows:
"These allegations ignore the simple truth that people regularly change jobs to find positions that match their experience, skills and interests. Both the public and private sectors benefit when employers have access to the most competent and experienced people. It makes perfect sense that someone in government who has concluded biotechnology is a positive, beneficial technology might go to work for a biotech company, just as someone who believes otherwise might find employment in an organization which rejects agricultural biotechnology." (Taylor, 2008)
In this statement published by Monsanto, they seem to ignore the ethical concept of a Monsanto employee going to work at a place that creates the laws Monsanto must follow. Furthermore, the company implies that after an employee has left Monsanto, the corporation has no connection with the employee. This may not be true as people like Michael Taylor seem to jump across corporate and government institutions regularly.
In the documentary The word according to Monsanto Michael Taylor was questioned about working for both the government and Monsanto and weather felt he had a conflict of interest. He stated "the rules are the rules and I work within them." It seems Monsanto and its employees seem to only work within the realm of legality, while they do not realize, or choose to ignore, that this is a highly unethical practice. (Taylor, 2008)
Consequences created by Monsanto's Revolving Doors.
rBGH (recombinant Bovine Growth Hormone)
Bovine growth hormone is a protein hormone that is produced by cattle. A genetically engineered version of this hormone was approved by the Food and Drug Administration in November 1993. This was produced by Monsanto and was marketed under the name "Posilac". This product aimed at the dairy industry. This hormone when injected into cows would result in increase of milk productivity from 4.2 to 11 pounds per day. Research shows that on an average the increase in milk production is in the range of 8.5 to 17.6 percent. Approximately 17% of cows in the USA are given the artificial growth hormone (Nolan n.d.).
The following table indicates the % increased milk production and % feed conversion rate of injected cows
Location of research
% Milk production increase
% Feed conversion rate increase
Utah/Utah State U.
14.6
5.3
United Kingdom
19.2
5.4
Missouri/Monsanto
21.8
8.2
Side effects on cows
In 1991 Monsanto financed a study of injected cows at the University of Vermont. The study revealed a lot of problems that exhibit risk on the cows and people who consume the milk. Problems included a rise in the number of cows being deformed, painful bacterial infection in the udder that causes inflammation, swelling, pus, and blood secretion into milk. The injected cows being forced to produce more milk become malnourished because they loose more nutrients in milk production, and are more prone to diseases.
Side effects on Consumers
The increased milk produced is infected because of the side effects that the hormone has towards the cow. This in turn leads to an increased risk of cancer in humans.
Keeping all these things in mind, it is hard to believe how such a harmful product was passed by the regulating authorities. At this point the issue of "revolving doors" comes into picture. Monsanto has good links with the US government, the FDA, and other environmental agencies, which further helps in its wrongdoings. The people involved in the approval of the product at the FDA, were at some point in time employees at Monsanto.
Following were the employees who played a role in the revolving doors issue:
Margaret Miller: She was a laboratory supervisor at Monsanto in 1990's, and she was then working as a Deputy Director of Human Food Safety and Consultative Services at the FDA (Organic Consumers Association 2001).
Michael Taylor: in 1976, Taylor was an attorney for the FDA. In 1981 he worked for a firm known as King and Spaulding whose clients included Monsanto (he was a lawyer for Monsanto). During his work in Monsanto he also created strategies to restrain labeling information on rBGH. In 2009 he was once again appointed as senior advisor at the FDA (The issues rBGH 2008).
What are the obligations of Monsanto?
In general a business is responsible to all of its stakeholders: customers, employees, government, and the community. This is basically known as corporate social responsibility and applies to Monsanto as well.
Economic responsibility: Monsanto is one of the oldest and the biggest producer of bio-agricultural products. As of 2008, its revenue was $11.36 billion which shows that it is a healthy profitable company, which justifies its duty towards its owners.
Legal and Ethical responsibility: Monsanto's human rights policy is based on the Universal Declaration on Human rights, and it focuses its effort on issues like child labour, harassment, discrimination etc. Similar to other companies, Monsanto has its own code of ethics which serves as a guide for its employees in aspects such as use of company resources, safety, health, behaviour, financial information etc so as to function efficiently, at the same time abiding by the law.
Philanthropic responsibility: Monsanto is quite active in terms of philanthropic activities.
In 1964 Monsanto created its own fund (Monsanto Fund) and in the period 2008-2009 it had distributed over $30.2 million. (http://www.monsantofund.org/asp/Contribution_Rpts/2008-2009/grants.asp)
Monsanto also offers numerous scholarships for students to pursue or continue their studies in the agricultural field.
Monsanto also gives students chance to gain professional experience by providing internship opportunities.
Potential Actions
Frankly, we can say that Monsanto Company is the largest provider of patented genetically modified seeds for crops such as corn, soybeans and specially cotton with bringing in $11.7 billion in 2009. Indeed, Monsanto won a partial victory in January 2010. As a result federal judge ruled that the license barred DuPont from creating the gene stack. But the judge said that DuPont could move ahead with its antitrust claims.
According to biotech cheerleader Rajiv Shah" After years of complaints from the OCA and our allies, the Department of Justice is investigating how big biotech and food corporations, including Monsanto, are monopolizing and controlling our seeds, food and farming. The Obama Administration is specifically seeking comments and information about how corporate control of the food system affects average Americans. Because Monsanto and Big Food corporations have inordinate and dangerous power over where your food comes from and how it's produced". (Rajiv Shah, Dec 18 2009)
For instance, the Bill and Melinda Gates Foundation which is definitely one of the Monsanto's key non-profit partners forcing harmful Genetically Modified Organisms (GMOs) on farmers and consumers worldwide.
Actually, the multi-billion dollar Gates Foundation is helping Monsanto to penetrate markets in poor African countries by claiming that GMOs are able to feed the world and also they can reduce rural poverty with high-priced GM seed diversity which assumed, but in fact do not, increase yields, resist drought or improve nutrition.
Compare Monsanto to a competitor
As a matter of fact, DuPont is the second largest chemical company in all over the world. Furthermore, Agricultural and Nutrition segments are the key performance drivers. Indeed, DuPont's second quarter profit of $417 million missed the Zacks Consensus Estimate of 53 cents, due to lower sales volumes and adverse currency impact.
According to Dow Chemical scientists who are marketing their own line of Bt-containing crops" Within 10 years BT will have lost its usefulness because so many insects will have developed resistance to its toxin. Thus Monsanto and Dow are profiting bountifully in the short term, while destroying the usefulness of the one natural pesticide that undergirds the low-pesticide approach of IPM and organic farming. "
Dow Agro Sciences, which makes genetically modified seeds, has seen robust growth in recent years and added to the parent company's first-quarter profit. Most recently, the unit is facing tough competition from the industry leader Monsanto Company. In addition, it is going to pay off the loan from the sale of its Morton Salt and Optimal businesses.
Actually, we can say that probably some of the most pointed accusations have come in a court battle between Monsanto and DuPont. Recently, Monsanto sued its rival, saying that DuPont had used a Monsanto trait to create a gene combination that was not permitted in its licensing agreement.
Other ethical issues:
Aside from the obvious ethical issues mentioned, Monsanto also had problems due to dumping poisonous waste in the UK. This issue happened in between 1965 and 1972. Monsanto had paid parties to unlawfully dump poisonous waste in dumping areas, although the company had known that they will cause extreme harm to local wildlife and the local populace. The dump was so toxic that the Environment Agency said that this waste would continue to affect the locality even after 30 years.(Vidal, 2007)
One of the quarries appeared in 2003, causing toxic fumes to spread over the area, although the locals were not aware about this, so no precautionary measures were taken. It would cost 100 million to cleanup the site, according to reports by the Environment Agency.(Vidal, 2007)
Also, in January 2005, Monsanto was fined 1.5 million for bribing Indonesian officials in the environment ministry to avoid any environmental valuation by the Indonesian government. Monsanto had pro offered the bribe as consulting fees. Monsanto also had paid bribes to other officials between 1997 and 2002. Consequently, Monsanto was prosecuted by the US Department of Justice and the SEC, where it had to pay fines worth $1.5 million. By 2008, Monsanto had abided by these decisions and paid the fines.(BBC, 2005)
Monsanto was also fined in France $19000 in 2007, because Monsanto misguided the public about its environmental damage. It was caused by it's high selling pesticide Roundup. It was found guilty of false advertising for presenting the herbicide as biodegradable and claiming that it did not harm the soil in any way.(AFP, 2007)
Consumer pressure groups and environmental agencies said that Roundups main ingredient was classified as "dangerous for the environment" and "toxic for aquatic organisms" by the European Union. The french distributor for Monsanto was also fined 15000 euros. They also had to pay damages to The water and river association and the CLCV consumer group.(AFP, 2007)
In conclusion, it is likely that Monsanto has used its position and financial strength as a multinational to avoid government regulations and falsely advertise its products without any legal liability. Its relationship with the US government was first revealed in 1999 by Peter Khaled. This revelation was shrugged away by the company as having no bearing on its operations. But with time, more information on its unethical practices was revealed. It also tried to stifle its competitors by unethical litigation. Monsanto also avoided its obligations such as economic, legal and philanthropic obligations through various legal or semi-legal means. Thus, the company continues to operate unethically despite and prosecution by the governments of various governments.
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