The recent shutdown of the Abbott Nutrition plant in Sturgis, Michigan highlights an all too familiar problem that companies and their counsel need to address: the consequences of ignoring internal whistleblowers. For more than two years, an Abbott Nutrition employee repeatedly voiced his concerns about quality control failures and food safety violations directly to company management, with no response. The employee then sent a report to the FDA in October 2021 – but this letter also went ignored. The FDA is now the target of public criticism, as is Abbott Nutrition, for their alleged failures, which already have had deadly consequences – four infants were hospitalized, and two ultimately died, as a result of a Cronobacter sakazakii infection linked to bacteria found in baby formula products produced in the Abbott plant. As experience has demonstrated, in addition to tragic personal consequences, deliberately ignoring whistleblowers often has serious financial ramifications in the form of shareholder suits and increased financial penalties from regulators, the Department of Justice, and the courts.
Historically, cases like Enron, Madoff, and Wells Fargo, show how criminal activity often is detected and reported with surprising precision but, even when reported to regulators as well as to the C-suite, can go unaddressed and ultimately result in the downfall of a business and jail time for the executives. Although regulators who miss the cue generally suffer little more than...
Police say Nepal’s rescue fraud case is real, but claims that guides poisoned tourists remain unproven. Nepal’s mountain tourism industry is facing fresh scrutiny after a major investigation into f...