Johnson & Johnson Firm’s Liability, Fraud, and Bribery

Introduction

It is important to note that Johnson & Johnson is one of the largest pharmaceutical companies globally. The company was founded in 1886 in the United States, with its headquarters in New Brunswick, New Jersey (Johnson & Johnson, 2022). It currently employs more than 130000 workers across the globe. The company claims to adhere to the strictest standards of corporate social responsibility and ESG, despite its history of failure to warn about its unsafe products, international bribery, and fraudulent bankruptcy maneuvers.

Overview of Johnson & Johnson’s Virtue Signaling: CSR and ESG

In order to properly observe the key problems of Johnson & Johnson, it is critical to learn how the company presents itself. Johnson & Johnson is a massive organization, which is why it is of paramount importance for the company to adhere to the highest corporate social responsibility standards CSR as well as environmental, social, and governance or ESG principles. In 2020, the company stated that it had committed $100 million for people of color to reduce healthcare inequalities (Johnson & Johnson, 2020). In addition, Johnson & Johnson allocated $800 million “to advance our Healthy Lives Mission, to make our Consumer Health products more sustainable” (Johnson & Johnson, 2020, p. 4). In other words, it invests heavily in the problems of global health and health equity. In the case of Johnson & Johnson’s impact, the most notable statements include COVID-19 contribution, such as a vaccine, HIV scientific breakthroughs, Ebola prevention, and anti-smoking campaigns (Johnson & Johnson, 2020). Thus, the organization is aware that it has a significant impact on the world, which makes it act in accordance with core CSR expectations.

It should be noted that Johnson & Johnson is heavily focused on acquiring high ESG scores. Firstly, its environmental initiatives involve $2.6 billion contributed to the relevant charities, with an additional $50 million allocated for frontline healthcare professionals in order to address the COVID-19 pandemic (Johnson & Johnson, 2020). Johnson & Johnson consumes 54% of its energy needs from renewable sources, and it decreased its CO2 emissions by 45% from 2010 to 2020 (Johnson & Johnson, 2020). Secondly, its social and governance initiatives focus on its employees and their corresponding communities. 46% of Johnson & Johnson’s top management is comprised of women, with 53% of new hires being female as well (Johnson & Johnson, 2020). In addition, the company invests over $12 billion into research and development and spends over $7 billion to buy the latest innovations through partnerships (Johnson & Johnson, 2020). In other words, the company has a clear goal to preserve its high image in terms of its CSR objectives.

Product Liability: Failure to Warn

Despite the claims of the company that it is responsible and adheres to the highest quality standards, Johnson & Johnson designed many flawed and harmful products with adverse health outcomes. Among these failures, the most outrageous and well-known one is Baby Powder and other talc products. It is reported that “J&J faces nearly 40,000 lawsuits alleging its Baby Powder and other talc products contained asbestos and caused cancer, which the company denies” (Spector, 2021, para. 2). In addition, “the plaintiffs include women suffering from ovarian cancer and others battling mesothelioma” (Spector, 2021, para. 2). In other words, the talc scandal is a case of product liability. However, the most problematic aspect of the problem is the fact that Johnson & Johnson knew about its product liability, which constitutes to failure to warn. It is reported that “a 2018 Reuters investigation found J&J knew for decades that asbestos, a known carcinogen, lurked in its Baby Powder and other cosmetic talc products” (Spector, 2021, para. 12). At the moment, “J&J maintains its consumer talc products are safe and confirmed through thousands of tests to be asbestos-free” (Spector, 2021, para. 12). Therefore, the company failed to warn its customers about the harm its products can cause.

Moreover, one should know that Johnson & Johnson was found guilty. It is reported that the U.S. Supreme Court ruled mandating the company to compensate the victims, such as women, with $2 billion settlement for the damages manifested in ovarian cancer cases due to talc product (Spector, 2021). In the section’ Risks Related to Product Liability, Litigation, and Regulatory Activity’ of the Annual Report, it is stated that one of the risks includes product efficacy or safety concerns (Johnson & Johnson, 2021). Even the company itself acknowledges that its products can be unsafe.

Criminal Law: Bankruptcy Fraud

The talc and Baby Powder scandal led to another major problematic move by Johnson & Johnson. It is reported that “Johnson & Johnson is drawing criticism after using a controversial bankruptcy maneuver to block roughly 38,000 lawsuits linked to claims that its talc baby powder was contaminated with cancer-causing asbestos” (Mann, 2021, para. 1). In other words, the company is using bankruptcy to avoid litigations and legal liabilities by going bankrupt, which can be considered an example of bankruptcy fraud. The company created a new company called LTL in Texas, which transferred all of its talc products to it, making it legally liable for the lawsuits and not Johnson & Johnson itself (Mann, 2021). At the moment, the company “has asked a federal bankruptcy judge to halt progress on talc-asbestos claims while LTL’s bankruptcy filing is under review” (Mann, 2021, para. 33). In short, the outcome will be revealed in the near future, but it is evident that bankruptcy is being used in a fraudulent manner to deflect lawsuits from Johnson & Johnson to LTL.

Criminal Law: Bribery

Another major violation of conduct by Johnson & Johnson is centered around the Foreign Corrupt Practices Act FCPA, which is being investigated by the Department of Justice (DOJ) and the U.S. Securities and Exchange Commission (SEC). It is reported that “in 2011, Johnson & Johnson paid more than $70 million to resolve criminal and civil FCPA offenses” (Cassin, 2020, para. 6). The case involves the company’s subsidiary DePuy Inc., which paid public-sector healthcare professionals in Greece, and thus, the DOJ charged Johnson & Johnson with violation of the FCPA (Cassin, 2020). In other words, Greece is only one example of the global bribery schemes of the company, and other instances include Brazil and Iraq.

Conclusion

In conclusion, Johnson & Johnson presents itself as an adherent of the highest standards of business conduct with its loud CSR claims and ESG scores. However, the company has a track history of engaging in failing to warn of its product liability, international bribery, and fraudulent bankruptcy maneuvers. It is critical to understand the prevalence of these issues at such a large corporate entity to be able to see through the façade of virtue signaling in the CSR and ESG reports.

References

Cassin, H. (2020). Johnson & Johnson discloses new FCPA investigation. The FCPA Blog. 

Johnson & Johnson. (2020). 2020 health for humanity report [PDF document]. Web.

Johnson & Johnson. (2021). 2021 annual report [PDF document].

Johnson & Johnson. (2022). About Johnson & Johnson.

Mann, B. (2021). J&J is using a bankruptcy maneuver to block lawsuits over baby powder cancer claims. NPR.

Spector, M. (2021). Factbox: J&J’s legal strategy for Baby Powder, talc liability. Reuters.