Thursday, March 26, 2009

Peanut Butter kills if companies don't qualify their vendors

More information about companies who audited Peanut Corporation of America and looked the other way because cost was more important than their customer's lives.

Nestlé's Inspectors Saw Rat Droppings, Rejected Peanuts

Nestlé USA, considering whether to buy ingredients from Peanut Corporation of America, twice sent its own inspectors to check out the company. Both times, they rejected the company after finding sanitary problems at its facilities in Georgia and Texas, noting rat droppings, live beetles, dead insects and the potential for microbial contamination.

What if Nestle Had Told the FDA?

FDA now accepts whistleblowers through its homepage

Saturday, March 21, 2009

Financial institutions have been paying bonuses for bad behavior for 5 years

Compliance officers have noticed. See the article March 20 on

Chevy Chase Bank passed by the get-rich-quick schemes, just as it did in the 1980s when the Republican Keating Five brought down the American Savings & Loans. The reason? - SnLs were issuing the same kind of "liar loans" that brought on the financial crisis today. Those loans would never be paid back and the institutions knew it. The difference in banks who survived versus those that didn't, then and now, was the existence of strong compliance departments who looked out for the long term health and survival of the company.
The Corporate Library, which researches and reports on corporate governance, began criticizing the [Countrywide, the first and leading subprime lender] in 2004, when it was a Wall Street darling with a surging stock price.

What did the Corporate Library notice? The CEO's pay package... wasn't the long-term sort that governance consultants recommend; his bonus was calculated in part by the rise in the stock price from the previous year.

Why make such a big deal over pay? Nell Minow, The Corporate Library's co-founder, says that CEO comp is "overwhelmingly" the most consistent predictor of poor performance. As her Countrywide report explained: "Any board which can make such poor decisions about a CEO's compensation package is almost certain to be making poor decisions elsewhere in its range of responsibilities." In fact, all the companies that received bailout funds to date were rated D or F by her group, ratings based in large part on skewed executive compensation, she adds.

Monday, March 2, 2009

Industry: "Regulatory Incentives languish" for safety and efficacy

The gold standard in the regulated product industry, The Gold Sheet (Vol 43, No 1) has some advice for Regulatory and Quality staff. (RAQA are those staffers who told Peanut Corp of America that it would be illegal and dangerous to sell deadly contaminated peanut butter. ) Last month's Gold Sheet says death and jail is not enough to stop criminal profiteers - RAQA now has to show how complying with the law saves money. Why? because "regulatory incentives languish."

That means for the last 8 years, FDA has not been allowed to do its job. And regulated companies know it.

"FDA officials encourage industry to concentrate on the business benefits of [Quality by Design or] QbD. [Controlling manufacturing or] CMC pilot [program]s raised questions about cost effectiveness."