Self-regulation is not effective: reconsider

From the recent horsemeat scandal, to the frequent withdrawals of medicines which have seriously damaged the health and the banking collapse, it can be seen that self-regulation of food, pharmaceutical and banking corporates is not working. Many other sectors are failing – notably accountancy and the trade in illicit armaments, but a blog is not the medium for a detailed exploration. In the words of Bloomberg Business:

It appears that the standard practice of hiring for-profit inspection companies — third-party auditors, who aren’t required by law to meet any federal standards and have no government supervision – doesn’t work in the public interest. At least five of the requirements for a civilised society are being compromised.

cdcMore information is available about the American food industry’s self-regulation, which has been described as a ‘spectacular failure’. In 2011, the FDA inspected 6% of domestic food producers and just 0.4%of importers. The FDA has had no rules for how often food producers must be inspected.

The Centers for Disease Control and Prevention estimate that 48 million Americans fall ill each year ‘sickened’ by food, with 128,000 hospitalized and 3,000 killed. The rate of infections linked to foodborne salmonella, rose 10% from 2006 to 2010. The U.S. had 37 recalls of fruits and vegetables in 2011.

UK: strong on ‘trends’ and strategies’ but weak on fact

fsa header

Inferior record-keeping, the rule rather than the exception in Britain, prevents the public from getting a clear picture of levels of food-borne infection.The government’s microbiology website explains that in its statistics table:

  • The title has been changed to reflect that these are laboratory confirmed cases of infectious intestinal disease and not foodborne illness as previously labelled in the old stats provided.
  • The new figures supplied are ‘all cases’, including UK acquired and those that are acquired abroad.

Many chemical companies, including Pfizer and AstraZeneca, have signed up to the industry’s self-policing Pharmaceutical Supply Chain Initiative, which has clear guidelines on wastewater management, but in light of recent revelations (summarised below) it seems that the majority are failing to observe these guidelines.

The Financial Times reports on the dumping of untreated antibiotic waste affecting the health of local communities and contributing to the global rise of antibiotic-resistant bacteria. A major UK government-backed review into antimicrobial resistance (more here) estimates that by 2050, drug-resistant infections could kill 10m people per year globally and reported that the UK’s chief medical officer has spoken of this as a “catastrophic threat”.

“Disturbing” environmental damage in India and China by ‘trusted brands’

An earlier article in the FT reports institutional investors’ concerns over the “disturbing” environmental damage resulting from multinational drug companies manufacturing in India. Many other reports show that pharmaceutical pollution is a huge problem in China, where between 80 and 90% of the world’s antibiotic raw materials are manufactured. In both countries, multinational pharmaceutical plants are failing to treat and manage toxic and drug-rich waste, while their clients – including trusted brands – are ‘turning a blind eye to the problem’. Read more here.

water pollution america

To a lesser extent, European countries, Canada and America (above) also have chemically polluted water.

According to Emma Rosi-Marshall, the lead author of a new Cary Institute study, pharmaceutical pollution in waters has been tracked across the globe leading to disruption of ecosystem of streams, including American rivers in New York, Maryland and Indiana. She said when waste water is moved to sewage treatment facilities it is not treated for the removal of pharmaceuticals. Consequently, streams and rivers are exposed to synthetic compounds including antibiotics, stimulants, antihistamines and analgesics.

Concern about the problem in Eastern Europe is evident in the EU Guidelines on waste disposal and, in 1999, the UNO World Health Organisation issued detailed guidelines in a more readable document, including disposal methods. In section 1.8 it stresses many dangers from ‘improper disposal or non-disposal of expired pharmaceuticals, including contamination of water supplies or local sources used by nearby communities or wildlife’.

The FT on banking: “self-regulation is no regulation”

Banks will never regulate themselves other than cosmetically.  Even if each bank were to agree that it would make collective sense to for each and every bank to observe certain practices and to desist from others, the temptation to defect from the agreement will prove irresistible as soon as the next financial boom starts to purr seductively and the next sure-thing money machine is touted by a new vintage of charlatan quants . . .”

The un-named writer ends: “Self-regulation in the financial sector has been a joke.  It has turned out to be an expensive joke.  Those paying the bill are, unfortunately, not those who were laughing when the joke was told.  It is time to get serious about regulation again”.

prem sikka 4Professor Prem Sikka summarises: “Unchecked, corporate power will continue to result in abuses, scandals and a destruction of the economy. We face a decision: we can have democracy and accountability, or rampant corporate power with enormous private wealth and power concentrated in the hands of a few business executives – but we can’t have both”.

 

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