When corporations are not held accountable it is the consumer that suffers

Packaged goods company Tiger Brands said on Thursday that its food revenue declined 52 percent to R1.1 billion for the year ended 30 September. Reuters

Journalists and members of the public often ask why Richard Spoor Inc Attorneys (“RSI”) decided to pursue a class action against Tiger Brands, for the listeriosis outbreak widely reported in the media in 2018. The simple answer is that many victims of the outbreak individually approached RSI to help them claim damages suffered as a result of contracting listeriosis from eating listeria tainted polony and other processed meat products produced by Tiger Brands.

These individuals approached RSI on the strength of our reputation for litigating against big corporations on behalf of large numbers of often vulnerable people. In particular miners harmed from lung disease. At a different and arguably higher level, RSI accepted this brief because we strongly believe that corporations must account to those they have wronged when they transgress.

If Tiger Brands is found responsible for the Listeriosis outbreak, no reasonable persons would argue that Tiger Brands should not take responsibility – financially or otherwise – for the harm caused by the listeria tainted polony. The question of responsibility however is often not the primary obstacle when it comes to corporate accountability; often, the difficulty is the inability of victims to litigate and enforce their rights against well-resourced corporations like Tiger Brands.

This is because litigation is expensive and risky and large corporation are formidable opponents, armed with deep pockets to pay lawyers, accountants, consultants etc. This is a privilege that many people, particularly the average consumer, does not have. Even when individuals wronged by corporations are privileged enough to afford to litigate they may encounter other problems such as a firms unwillingness to accept a brief as they do not want to taint their names with corporations, which are a source of income for many firms.

For the majority who cannot even afford to brief the lawyers willing to accept briefs against powerful corporations, not many of the available lawyers are willing to act on a pro bono or contingency basis. This power disparity makes it very difficult, and often impossible, for the average person to hold corporations accountable when they have been wronged. As a result, corporations often operate with impunity.

When corporations are not held accountable for their transgressions, which is often the case in South Africa, then consumers are left vulnerable, with nothing stopping corporations from ignoring health and safety standards and/or any other regulatory standards set to protect consumers. If Tiger Brands is not to compensate victims of the listeriosis outbreak, what is stopping them, or any other corporation, from committing similar transgressions in the future? Put differently, if large corporations are not held accountable for their transgressions, it is the innocent individuals affected as well as the general public who suffers, as scarce public resources are directed towards the individuals harmed.

Corporations are driven by profits and the highest health and safety standards influence these profit margins. In the mining sector for example, dust control is a hugely expensive exercise, but essential to protect health, lest the costs of disease fall on employees. The situation may be said to be even worse when the costs of production fall on consumers.

Tiger Brands is a major food producer with obligations to ensure its products do not harm the public. The scale of the business is seen in the company’s 2017 turnover of R2.2 billion from the Value Added Meat Products business which is made up of processed meats, including canned meats and ready-to-eat processed meat products such as polony. For the 2018 financial year, which overlapped with the listeriosis outbreak, it is reported that Tiger Brands paid its chief executive officer R9.08 million, representing a 6 percent increase compared to his remuneration for the 2017 financial year.

The need for corporate accountability is becoming increasingly important globally. In South Africa this importance has recently been highlighted in the corporate scandals involving Naspers and Steinhoff, to name but a few. These being examples of corporate greed and an absence of ethical and responsible leadership. There is light at the end of the tunnel though. This does not have to be the norm, when Corporations are found wanting they can own up and make amends. This is what good corporate citizenship looks like.

Thami Malusi is an Associate Attorney at Richard Spoor Inc Attorneys.