Philip Morris exec knows how ethics go up in smoke
The other week, a senior executive from the Philip Morris companies told a Colorado Mountain College Speaker Series audience his company may be the most reviled in America.
Now comes a $28 billion jury verdict against the company in a California case of a 64-year old woman who sued because smoking, which she started when she was 17, gave her lung cancer.
It appears senior vice president and chief compliance officer David Greenberg, who sits on the Keystone Center board, knew of what he spoke.
Greenberg sat bravely on a panel for the CMC Speaker Series, co-sponsored by the Keystone Center, speaking on “Corporate Crisis of Confidence – A Few Rogue Executives or a Deeper Systemic Problem?”
Greenberg noted the “irony” of a senior executive from Philip Morris, the maker of Marlboro, Virginia Slims and 16 other brands of cigarettes, talking about ethics.
“We are the most reviled company in America,” he said.
“We know what it means to lose society’s trust. The problem is that we still have not gained it back, and it is an open question on whether we will or not.”
Twenty-eight billion dollars in punitive damages, on top of $850,000 in compensatory damages in the California case, says the answer is that the company will not. Philip Morris is the world’s largest maker and marketer of packaged foods and cigarettes, employing 169,000 people in 150 countries. Annual revenues last year were $72.9 billion.
While the CMC forum targeted the Enrons and WorldComs of corporate America for falsifying financial reports and because executives cashing out stock options on share prices based on the bogus sales figures, Philip Morris’ problem is a past history of denying that smoking is dangerous, even though its own research showed otherwise.
That history became the California woman’s superhighway into the Philip Morris checkbook. Philip Morris didn’t try to defend its past. Instead, it focused on the woman’s personal decision to smoke.
Philip Morris, at this point, has a case. If Americans smoke, they are suckers for a bad habit, and the consequences should be theirs to bear.
At the CMC forum, Greenberg addressed the core question about smoking: whether it should remain a personal decision with attendant consequences, or whether society should snuff out cigarettes all together.
Greenberg said no country has chosen to ban tobacco, and as long as tobacco is legal, Philip Morris will make cigarettes “in a responsible way.”
Knowing the words “responsible” and “cigarettes” don’t go well together, he delved deeper.
“Responsible” means volunteering to be regulated by the federal Food and Drug Administration. It means not encouraging children to smoke, he said.
“The issue of kids smoking, if uncontrolled, will destroy our business. We will roll the dice with the adult market,” Greenberg said.
The executive also said that if society rules cigarettes cannot be advertised whatsoever, so be it.
“We run a profitable business in countries where there is no advertising,” he said.
Greenberg said if Philip Morris were to face total loss of the “hearts and minds” of society, it would get out of the cigarette business.
No country, however, is ready to ban tobacco because of the larger implications, he noted.
“Most societies stop at the brink. They wonder, if they do that, what’s next?” he said.
Tobacco ethics aside, Greenberg offered some insights into general corporate ethics. At Philip Morris, he is the ethics cop. And get this: he is a former Nader Raider.
He said chief executive officers must be champions of ethics for the concept to be understood by organizations.
He also said corporations “must have a genuine system that protects whistle-blowers.” Had Enron had such a system, the collapse might have been prevented, Greenberg said.
Another way to inoculate a corporation with ethics protection is to give people decision-making powers to judge if an issue is legal, or if it is, if it’s the right thing to do, Greenberg said.
He advocated a “front-page test” – will a decision stand the glare of a front-page newspaper story? In Summit County, that is one of new county manager Ron Holliday’s operating standards for his staff.
The next CMC-Keystone Center Speaker Series presentation is Thursday, Oct. 24, and the subject is the tension between national security and civil liberties. All forums take place at 7 p.m. at the Breckenridge campus auditorium. They are free.
Summit Daily News notes: Our regular Thursday columnist, Gary Lindstrom, will reappear after the Nov. 5 election.
Jim Pokrandt can be reached at (970) 668-3998 ext. 227 or firstname.lastname@example.org.
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