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Our huge challenge is the lack of oversight, regulation over firms

COMMENTARY
By Maina Kiai | September 8th 2019

A few weeks ago, a court in Oklahoma in the US, found the company Johnson and Johnson — the makers of brands including Actified, Listerine, BandAid and numerous baby products — culpable in driving America’s opioid epidemic and fined the company US$572 million (or Sh572,000,000,000) for its role in Oklahoma’s crisis. The judge ruled that Johnson & Johnson ran a “false and dangerous” sales campaign that contributed to the opioid crisis in the state, claiming that using the drugs carried a low level of abuse and addiction, even though they knew the highly addictive nature of the drugs. It is inevitable that other states will follow the lead in Oklahoma and sue Johnson and Johnson for damages, fines and restitution.

This case came on the heels of yet another case by 45 states against Purdue Pharma which has been sued for its role in driving the opioid epidemic that has claimed about 400,000 lives in the last 20 years, and untold damage in addictions, crime and treatment. Again, false advertising is central to the case against Purdue Pharma, one of whose slogans was “we sell hope in a bottle.”

Purdue Pharma is in big trouble and it faces damages of up to $12 billion to settle more than 2,000 claims. Moreover, the negotiations include stripping the Sackler family of its ownership of the company, and turning the company into a public beneficial trust, with profits going to pay off the claimants.

These cases, and others against US pharmaceutical companies, expose the lie that the American drug crisis has been fueled by foreigners. Donald Trump said that one of the reasons he wants to build a wall with Mexico is to stop drugs from coming to the US, but clearly the problem is more about the lack of oversight and regulation over businesses.

The American fixation with profits for shareholders no matter what, which has been the orthodoxy for the last fifty years, is the problem. In addition to causing deaths and destruction as clearly as pharmaceutical companies have done, this orthodoxy has led to dangerous levels of inequality, weakened public education, and destroyed public health and infrastructure across the US. Indeed, this orthodoxy is the reason why the US (and the UK) have even privatised prisons, which are paid by how many prisoners they hold, thus fueling incarceration rates and corruption so that judges send prisoners their way.

Worse, because of the dominant role of the US economy, the profit for shareholders approach has also became the orthodoxy across the world, driving down the role of the public sector across the world in education, healthcare and other public services. There is growing recognition of the dangerous role that companies have played and continue to play. In fact, this is one reason that CEOs of US Business Roundtable, an association grouping most of the big corporations, released a statement declaring that henceforth they would focus on “stakeholder capitalism” rather than “shareholder capitalism.”

I understand “stakeholder capitalism” to mean that companies will do more now to lift their workers and customers. Of course, this could be just a statement by the CEOs aimed at changing public perceptions. But if ever there was a time to focus on workers it is now. There are horror stories of workers at Amazon.com, having to get welfare and food stamps just to survive, while employed at a company owned by the world’s richest man. Winnie Byanima, soon the new head at UNAIDS, tells the story of workers at a chicken processing plant in the US wearing diapers so that they do not require breaks to use a restroom.

The easiest way for companies to uplift workers would be to facilitate and encourage trade unions in the US, which sadly is something that they have consistently worked against the last fifty years. Union membership has never been as low, and some states — especially in the South of the US — have passed laws that essentially outlaw unions leaving workers at the mercy of employers. Yet, the role of unions in collective bargaining, reducing the power gap between employers and employees can’t be gainsaid.

But what has this got to do with Kenya? Plenty, as it turns out. First, even though the regulatory systems in the US are outrageously weak, ours are pathetic. So much so that the Competition Authority of Kenya refuses to declare Safaricom and Brookside as effective monopolies despite their gigantic market shares. And when companies become this big, it is near impossible to hold them accountable for anything. Secondly, fake drugs, mercury in sugar, bad roads and contaminated meat have become common. Yet, have we ever heard of big companies taken to court?

Third, anyone with a bank account shivers when we must deal with our banks, knowing how much we pay in fees and charges. Our banks complained about the interest-rate cap which should have reduced their profits, but instead we see growing profits. If these banks would put half their net profits into improving staff salaries and reducing the costs of banking, Kenya could be a trendsetter in “stakeholder capitalism.”

- The writer is former KNCHR chair. [email protected]

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