When Is Compliance a Failure of Leadership?

by FASPE Fellows Brian Hathaway and Courtney Kaplan

Do managers' ethical responsibilities extend beyond legal compliance? Amid a barrage of lawsuits that have pushed OxyContin manufacturer Purdue Pharma to the brink of bankruptcy, company heir David Sackler argues that his family is being unfairly demonized by activists and politicians looking for a scapegoat.

In this profile, Sackler articulates a narrow conception of ethical responsibilities for business leaders. He is described as noting that "the board was frequently briefed that the abuse and diversion program was in compliance." He says that as a board member, he "was voting on information I was given" rather than running day-to-day operations -- a key distinction for establishing individual legal responsibility of corporate directors. And responding to allegations that Purdue bears responsibility for the spread of fentanyl, a cheap and deadly substitute for OxyContin, he argues that "the whole thing falls apart" when viewed through a particular legal framework.

The full extent of Purdue's legal responsibility is still unknown. The Sacklers recently transferred billions of dollars out of the company, perhaps in preparation for a bankruptcy filing that would complicate efforts to seek legal recourse. But with 130 Americans dying every day from an opioid overdose, a deeper question remains: how much of this human cost could have been avoided if business leaders recognized and embraced a broader conception of ethical responsibility?

Read the original article from Vanity Fair.