Black Mirror’s fourth season continues the themes of the previous three series of the show. As discussed in this post, the show makes often uncanny connections between human life and technology, frequently covering the ways in which social media, AI, biometric devices, and other advanced technological systems and devices affect and change society. What makes Black Mirror so effective, and often so disturbing, is that in each of the anthologized stories it contains not only a vision of the future but also a warning about the disruptions that would happen to people along the way. The reality depicted in Black Mirror is like an amped-up version of the world that seems to be already nearly within reach, with technological advancements abound to make life easier or more entertaining. However, the point of view in the show is markedly dystopian, forcing viewers to consider the addictive or even dangerous influence that immersive technologies could have.
Tag: compliance culture
This is the fifth in a series of seven posts about regulatory compliance priorities and enforcement trends. The first post was about the Commodity Futures Trading Commission (CFTC). The second post was about the Federal Trade Commission (FTC). The third post was about the Securities & Exchange Commission (SEC). Last week’s post was about the Food & Drug Administration (FDA). Today’s post will be about the U.S. Department of Agriculture (USDA). Next week’s post, on Thursday January 25, will be about the Environmental Protection Agency (EPA). Finally, on Thursday February 1, the post will be about the Federal Communications Commission (FCC).
One of the hottest topics of 2017 was cryptocurrencies. The blockchain-derived digital currencies such as Bitcoin, Ethereum, and Ripple were the subject of seemingly endless interest and speculation, in both the media and the markets. In an excitement reminiscent to many of the dot-com boom, cryptocurrency companies rushed to become issuers via initial coin offerings (ICOs). Companies that were previously unrelated to blockchain or any product of the technology changed their names or indeed their entire operational purposes to attract market interest. Investors searched for information and guidance, experimented with the digital currency as both a payment service and a securities holding, and filled social media and dinner table conversation with curiosity and enthusiasm for the disruptive potential cryptocurrencies hold for banking, technology, and the markets.
Retraction Watch is a blog that started in 2010 with the objective of publicizing, studying, and contributing to the investigation of retractions in scientific journals of academic research and writing. The validity of academic papers is often held to a vaulted status because of the famed system of vetting through peer review and editorial boards before publication. Identifying mistakes in this context, then, whether through inadvertent technical errors, minor or major, or some intentional misrepresentation or fraudulent conduct, is an interesting and necessary practice in order to uphold academic integrity.
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Happy Martin Luther King Jr. Day!
Happy Martin Luther King Jr. Day from Compliance Culture!
In honor of the holiday, please check out the below selections from some sermons and speeches delivered by Dr. King which are especially pertinent to ethics and morality. These profound and incisive words can inspire not just spiritual and philosophical observations, but are also useful to consider in formulating individual and organizational values and cultural identity.
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This week on Compliance Culture
Be sure to visit Compliance Culture this week for posts on these topics.
- Monday: Happy Martin Luther King Jr. Day!
- Tuesday: Retraction Watch round-up
- Wednesday: Business compliance priorities for cryptocurrency
- Thursday: USDA enforcement priorities
- Friday: Compliance in series four of Black Mirror
Don’t miss it!
Check out last week’s posts on Compliance Culture, in case you missed or want to revisit them.
- Monday: The moral hazard of “future-proofing” your business
- Tuesday: Fraud in sports: Doping scandals
- Wednesday: Regulatory and compliance omissions in the Volkswagen emissions scandal
- Thursday: Round-up on FDA compliance
- Friday: Selected TED/TEDx talks on integrity
Many thanks for reading!
Integrity as both a personal and an organizational value is one of the central and recurring themes of this blog. Promoting and supporting integrity in individuals as well as in the groups in which they live and work is essential to encouraging cultures of compliance and ethical decision-making. Indeed, the foundation of the moral conduct people wish to see in each other and in their institutions in order to enhance the stature of truth and honesty in today’s complicated, interconnected world starts with placing personal emphasis on integrity and character ethic. With a strong and well-articulated individual commitment to moral engagement, people can purposefully contribute to the integrity of the communities in which they live, the groups in which they gather, and the organizations in which they work.
- Aligning integrity with identity (Lester Tanaka) – Commitment to any character ethic value must be authentic. A person cannot decide to have integrity without actually embracing the honesty, judgment, fairness, transparency, and credibility that goes along with possessing this trait. Claiming to have it, without actually genuinely imbedding it, goes against the grain of the entire concept of integrity itself. Therefore individuals must, as Lester Tanaka suggests, make concrete and meaningful for themselves the interrelationship between the mental and the moral. A person’s identity should be aligned with and connected to the value of integrity and their intention to live with it. Therefore, all the other traits for which an individual has an affinity should be consistent with the goal of integrity. Self-examination and self-reflection will be both necessary to identify these corresponding characteristics as well as important for thoughtful and organic personal integrity.
- Integrity as a currency for leadership (Barth Nnaji) – Integrity is also a core value for leadership. When faced with opposition or adversity, challenge or doubt, ethical leaders can always rely upon their integrity to represent themselves as credible, rise above the fray, and maintain a firm grip on ethical standards for decision-making and conduct. One of the differences between a manager and an ethical leader is, in fact, this commitment to their sense of integrity and the feeling of a strong responsibility to resist negative temptation or becoming overwhelmed by the magnitude of their tasks. True leaders stick to their own values and indeed promote their own integrity as the “currency” needed to get things done in collaboration with other people and organizations. Leaders who consider their reputations as one of their main assets would seek to protect the way they are seen by others by staying true to the expectations for their credibility and reliability. This way, people who lead with integrity become people with whom others wish to be associated, compared, and involved.
- Building integrity – keeping promises (Erick Rainey) – Establishing integrity does not have to be an academic or theoretical challenge with abstract and lofty metrics by which its success is measured. Having integrity is as simple as keeping promises. Walking the walk, taking responsibility, and following through are simple but incredibly impactful actions which, when repeated, establish a pattern of integrity and worthiness of trust and reliance. This goes for individuals as well as for organizations. Delivering on commitments or being honest and transparent about it when it’s not possible to do so puts the value of integrity into powerful action.
- Integrity and authenticity don’t make you trustworthy (Struan Robertson) – As noted in this earlier post, expectations for and ideas about trust, honesty, and the truth are all being transformed by today’s digital society. Shifting moral evaluations and perceptions of what is or is not true too often promote a convincing and compelling brand of dishonesty over difficult or complicated truth. In this environment there are many complex factors against true credibility and integrity. Simply appearing to be “good” or wanting to identify others as “evil” is not sufficient. Being relied upon is also not the same as being trusted or trustworthy. As discussed above, commitment to integrity has to be both authentic and practical. An individual and all the individuals which make up organizations have to have an organic, real commitment to integrity in order to truly act with it, rather than to just pretend or attempt at it.
- Integrity and the Life of the Planet (Zale Zeviar) – Apart from the integrity of individuals in both private life and the work place, corporate integrity is so important in society’s attempts to solve huge challenges, such as making environmentally-friendly consumer choices. The transparency and openness that acting with integrity and moral certitude can bring is also applicable to business core values. Accountability for earth-friendly business practices and products is just one expression of corporate social responsibility that exhibits business integrity. Small changes by consumers can be enabled by community and business values which can help the whole system to aspire to a higher level of integrity. This “corporate consciousness” is an active expression of integrity that spreads, aligning all the players in the chain universally around integrity as the common theme.
As shown above, defining integrity as a core value in all areas of life – self-identification, leadership, relationships with others, community engagement, social responsibility – is a powerful, purpose-driven approach. A commitment to recognizing integrity as a virtue and using a strong internal sense of its importance for one’s personal moral code enables individuals to be credible and responsible and to model these values to each other. With time, institutions and organizations will reflect the integrity promoted by the individuals within them, elevating the ethical register of society.
This is the fourth in a series of seven posts about regulatory compliance priorities and enforcement trends. The first post was about the Commodity Futures Trading Commission (CFTC). The second post was about the Federal Trade Commission (FTC). Last week’s post was about the Securities & Exchange Commission (SEC). Today’s post will be about the Food & Drug Administration (FDA). Next week, on Thursday January 18, the post will be about the U.S. Department of Agriculture (USDA). On Thursday January 25, the post will be about the Environmental Protection Agency (EPA). Finally, on Thursday February 1, the post will be about the Federal Communications Commission (FCC).
The Food & Drug Administration (FDA) is the US regulator charged with supervising and enforcing federal laws concerning food, tobacco, dietary supplements, medications and medical treatments and devices, cosmetics, and animal and veterinary products, among other related products and devices related to public health and food safety concerns. The FDA was created in 1938 by the Federal Food, Drug and Cosmetic Act, which gave the FDA oversight on food, drugs, and cosmetics and now constitutes of the major bodies of federal securities law it is responsible for enforcing. Other significant statutes within the purview of the FDA – either wholly or partially, in collaboration with other federal supervisory and regulatory entities – include the Public Health Service Act (from 1944, concerning the prevention of foreign communicable diseases within the US) and the Controlled Substances Act (from 1971, creating federal US drug policy).
The food, medical, and veterinary products that fall under the regulatory purview of the FDA represent a significant proportion of the consumer goods imported into, purchased within and used in the United States, meaning that the FDA has broad reach into people’s everyday lives and therefore wide oversight duties to ensure adequate protections. Food, drugs, cosmetics, and vitamin supplements are the largest categories of consumer products regulated by the FDA. The FDA’s regulatory powers are broad in scope, including a huge array of business practices, from development, testing, and manufacturing to advertising, labeling, marketing, sales, and supply chain safety. Enforcement of standards, oversight and monitoring of practices, approval of products, and handling of violations gives the FDA a heavy footprint in its covered industries.
- Homeopathic drugs: The mandate of the FDA to regulate a variety of medicines and related treatments extends to addressing homeopathic drugs. These products are widely available to consumers but previously have been lightly regulated. Given burgeoning consumer protection concerns due to public harm from products that do not have any value as medical treatment and can in fact injure people or make them sick, the FDA is planning to take a more active role in the homeopathic drugs market. Since the 1980s, the FDA has had a policy of not using the full weight of its enforcement authority with homeopathic drugs because their impacts were thought to be so minor that they could not be dangerous. However, as more people have started using these homeopathic remedies, the risks and need for protection, especially for infants, children, and elderly people, have grown. Last year children were sickened and even died from using homeopathic teething remedies sold at CVS due to poisoning from belladonna, which the medicines contained in dangerous proportions. Testing, approval, oversight practices, or some combination of the above are apparently necessary for ensuring that these products do not hurt people, contain the ingredients they are supposed to in the amounts they should, and can provide medical benefit to support the health-related claims made by the manufacturers to consumers: FDA to target ‘potentially harmful, unproven’ homeopathic drugs under new proposal
- Cryotherapy: On a similar note, cryotherapy – immersion in a chamber cooled to as low as -132 degrees Celsius to treat inflammation and all kinds of other ailments and discomforts – has been spreading in popularity and caught the attention of the FDA. Cryotherapy is often billed as a kind of spa treatment and has won the endorsement of athletes and celebrities for its health benefits. However, the FDA has reacted skeptically to these claims, especially as people have been injured by unprofessional service providers or attempts to administer cryotherapy “treatments” to themselves. If people continue to view cryotherapy and other popular science type activities and procedures as giving them some medical or curative benefit, which seems likely, then the need for the FDA to intervene by setting standards and providing oversight will grow alongside the popularity: The spread of cryotherapy
- Opioid epidemic: The FDA is well-positioned to contribute to efforts in containing the public health emergency of opioid drug abuse. The FDA is responsible for overseeing both the number of prescriptions issued and the introduction of drugs to curb and treat addiction. Overhaul of the system in which opioids are prescribed, and the rationale behind the length of prescriptions, is in the reform jurisdiction of the FDA. This system would likely be funded by the pharmaceutical companies that make opioids, similar to what is already done to pay for other similar programs covered by the FDA’s enforcement authority. Prescription intervention as well as the expedition of new versions of drugs to treat addiction will be priorities of the FDA on its upcoming regulatory agenda: FDA plans to curb prescriptions to fight opioid epidemic
- Gene therapy: Apart from approval of drugs, the FDA is also tasked with approving medical treatments. Gene therapy has been a hot topic in bioethics for years, with questions about the use of stem or other cells from humans having dogged the technology’s development for years, but having promising treatments for genetic diseases now finally in its pipeline. The FDA recently approved the first genetic therapy for an inherited disease, a rare form of childhood blindness. The price of the approved treatment is currently astronomical, at almost $1 million, but the hope is that the FDA approval will open the door for further development that could lead to lower prices and improved benefits over a lifetime. FDA openness and speed in considering and approving these technologies will certainly have an encouraging impact on the innovation within the field and the introduction of further treatments using gene therapy and improving upon knowledge and practices around it: FDA approves first gene therapy for an inherited disease
- Food safety and recalls: Finally, the FDA’s food safety and recall programs may be an active area for reform and extended consumer protections going forward. The FDA’s broad authority for food safety inspections has been critiqued in the past for culminating in uneven enforcement efforts. Most recently, the Office of the Inspector General at the Department of Health and Human Services and the Government Accountability Office have both exposed shortcomings in the FDA’s enforcement of food safety policies. Inspections, follow-up on food safety violations, and supervision of and collaboration with state-level regulatory personnel have all been found lacking: Watchdog audits fire warning shots at the FDA’s food safety program
Addressing these deficiencies in the oversight process, and following with substantive improvement in the food recall process, has major implications for consumer safety. The recall process in particular is crucial for ensuring that any gaps from the production and distribution processes oversight that are not filled, are caught before contaminated and dangerous food and supplements are sold to consumers. However, audits have found that the recall process is not up to muster, indicating that they take way too long to kick off and that the FDA does not do enough to compel companies to cooperate with their warning letters and issue recalls: The FDA Is Still Scary Slow at Food Recalls
Be sure to check back next week for a round-up on USDA regulatory compliance.
The Volkswagen emissions scandal, also known as “Emissionsgate,” kicked off in 2015 when the US Environmental Protection Agency (EPA) notified the carmaker that it was in violation of the Clean Air Act. With the altered engine emissions controls, the programming misrepresented nitrogen dioxide output so that it appeared to meet US market standards. In reality, however, the real performance of the vehicles on the road without the altered programming for the testing environment resulted in output that exceeded the regulatory limit by up to 40 times. For a basic overview of the Volkswagen emissions scandal as it unfolded since 2015, check out this primer from the BBC: Volkswagen: The scandal explained.
The altered emissions results were ultimately exposed due to re-testing. The International Council on Clean Transportation accumulated research from a variety of sources which upon study showed additional emissions in road tests from those recorded in the regulatory testing environment. Once these non-conforming results were provided to the California Air Resources Board in 2014, they were ultimately escalated to the EPA, resulting in the investigation and enforcement action which led to the Clean Air Act notice of violation. The investigation conducted by the EPA demonstrated that from 2008 to 2015, Volkswagen had intentionally modified many diesel engines in its vehicles to fraudulently “pass” regulatory testing.
In the aftermath of the EPA notice, Volkswagen was subjected to investigations in various countries. The fix for the emissions issues to bring them into true compliance with the regulatory standard may cost the company as much as $15 billion or more, with fines so far in the US alone of almost $3 billion and several executives facing personal criminal charges for their role in the fraud.
One of the striking aspects of this particular corporate scandal is that as the corporate misconduct was exposed, it showed that Volkswagen took advantage of the regulatory testing by exploiting design and engineering knowledge in making engine construction choices expressly in order to deceive it. In many cases of consumer safety or standard violation recalls, the manufacturer merely fails to make required changes or delays doing so, resulting in unsafe conditions or violation of regulatory and legal requirements. Similarly, defeat devices which “trick” regulatory testing systems (actually codes programmed into the vehicles’ computerized control panels) are nothing new in the automotive industry, as explained in this Ars Technica piece.
In the Volkswagen’s case, however, as explained in this Investor’s Business Daily article, the carmaker made redesign choices to its emissions system that were not practical for business purposes but directly enabled the testing manipulation. Then, when faced with a need to demonstrate compliance in order to access the market, instead of altering planned performance or gas economy standards, the company opted to game the system with installing defeat devices on the very system it installed knowing it would need to be defeated and would enable doing so.
So why would a company make all of these conscious choices to dupe the system and spend money on deceptive systems instead of making the same amount of effort to establish real compliance and avoid the dishonesty? At its root is most commonly what was referred to in lawsuits against Volkswagen by several states as a business culture of “corporate arrogance.” As this NPR article explains in a nutshell, Volskwagen thought it could get away with the fraud because others in the industry did it too and because it was Volkswagen. The company rigged its vehicles after going to great lengths to determine that it was definitely illegal to do so, against clear legal advice and in light of full knowledge of the consequences, and in a culture of non-compliance which rewarded cheating and did not take responsibility or model appropriate conduct.
Nowhere is this values deficiency in the Volkswagen corporate culture more evident than in the reaction by the CEO, Matthias Mueller, to the public outcry in response to the fraud. This interview with NPR shows how problematic the tone and conduct at the top was in the public handling of the scandal. Rather than modelling accountability and transparency, Mueller instead insisted that there were no ethical issues at Volkswagen and that rather the emissions fraud was due to a technical problem in the company’s interpretation of US law. Mueller repeatedly asserted that the company did not lie or deceive but instead misunderstood US legal requirements, a disingenuous and unconvincing defense for a major global corporation which must contend with a complicated fabric of regulatory and legal frameworks all over the world to meet its duties in doing business.
The gap created by this purported legal misinterpretation could and should have been filled by a values-based approach, where taking corporate social responsibility for environmental impact and making business decisions based upon best collective outcome rather than ease and expediency, with some enablement of future cheating as a side benefit. Demonstrating integrity is not as simple as apologizing once you get caught, and portraying violations as mistakes is not an example of ethical leadership or sustainable business values.
For more on EPA compliance, check back on Thursday, January 25, for a round-up on current rule-making and enforcement trends at the agency.