Have you ever asked yourself when you read a story that seems incredible and painful, why didn’t someone say something? That question keeps rolling around in my head as I connect the dots between the story of the downfall of Stewart Parnell – Peanut Corporation of American – and survey results from the National Business Ethics Survey (2013) related to whistle blowing and 
retaliation.
Warning Signs were everywhere!
Stewart Parnell and his father, Hugh, began their peanut business decades ago by selling peanuts to candy and ice cream makers. It was then that growers in rural Gorman, Tex., encouraged them to expand by buying a small roasting facility there. After a rocky start the Parnell’s found some sound footing selling peanuts that were included in such brands as Nutty-Buddy and Trail Mix.
According to an article in the Washington Post by Lyndsey Layton and Nick Miroff:
By 1994, the Gorman plant had ballooned to 65,000 square feet, with 95 employees and more than $30 million in yearly sales. Then the Parnells cashed out, selling the company. Hugh Parnell retired; Stewart Parnell and his two younger brothers remained as consultants.
But Stewart Parnell was restless. He bought back the Gorman plant in 2000, then went into business with another investor who had been struggling with a peanut plant in Blakely, Ga. Three years after Parnell took over, revenue at that plant had tripled. The company also began operating a facility in Suffolk, Va.
Ambition provided the fuel for expansion
The business was expanding but business was done on the cheap. Cheap labor and minimal facilities provided a foundation for profitable growth.
“The old man used to look for distressed situations: Someone over-inventoried or had peanuts from last year that they had to move,” said David Brooks, who was a buyer for a snack company that refused to purchase from Parnell because of concerns about sanitation and what he called the “culture” of the family business. “He would aggressively look for these, making phone calls, hunting people down. Stewart grew up in that and was the same way.”
On three occasions in the mid-1980s, Brooks inspected PCA’s Gorman plant to determine whether to buy its peanut products, he said. Each time, he gave the plant a failing grade.
“It was just filthy,” said Brooks, who has since retired from the food business. “Dust was all over the beams, the braces of the building. The roofs leaked, the windows would be open, and birds would fly through the building. . . . It was just a time bomb waiting to go off, and everybody in the peanut industry in Georgia, Virginia and Texas — they all knew.”
They all knew…that’s the point where questions have to be asked – namely why didn’t someone – some employee somewhere report the conditions as health hazards. Again the Washington Post report states:
Victoria Brown, 32, said she worked in PCA’s Blakely plant for three months before she was fired two years ago for coming to work late. She earned $6.25 an hour sorting peanuts and picking out rocks, sticks and other debris before washing them. The plant was stiflingly hot, she said, and the roof leaked. “Water would come in when it rained,” Brown said.
National Business Ethics Survey (2013) says…
A fair question might have been – why not blow the whistle on Peanut Corporation of America? Failing to stop Stewart Parnell cost nine deaths and 637 cases of salmonella illness in 44 states and Canada. “Blow the whistle and save lives.” That seems easy to say, but according to the most recent national business ethics survey conducted by the ethics compliance initiative more than one in five workers (21 percent) who reported misconduct said they suffered from retribution as a result.
Blow the whistle and suffer the consequences. Perhaps that’s what we are finding today and it seems that it’s only getting worse. While blowing the whistle on your employer has negative connotations, the greater good is most always served when the truth is revealed. Take the case of Enron – here’s the comment from a CNN report about the Enron case:
Enron’s most prominent whistle blower Sherron Watkins took the stand Wednesday and described a company that increasingly became mired in accounting fraud in 2001, prompting her to send an anonymous letter to Enron founder Kenneth Lay in August warning him that the company “had a hole in the ship and we’re going to sink.”
The challenge for the whistleblower is retaliation. According to the NBES report:
Retaliation has not always been so widespread: The rate was only 12 percent in 2007, the first time it was measured in NBES. Asked why they kept quiet about misconduct, more than one-third (34 percent) of those who declined to report said they feared payback from senior leadership. Thirty percent worried about retaliation from a supervisor, and 24 percent said their co-workers might react against them.
A Culture of Ethics meant Peanuts to Stewart Parnell
Low paying jobs, terrible facilities and an attitude of profits above all else, created the firm foundation for a collapse that was inevitable. Would I blow the whistle and risk losing my job or just do what I need to – to pay the bills? Faced with taking care of my family or doing the right minded thing for the benefit of others, most would choose to just do their job.
The challenge in being short sighted is that every choice has a consequence. In the case of Peanut Corporation of America the following were outcomes:
- All employees lost their jobs
- Peanut Corporation of American is no longer in business
- Stewart Parnell was sentenced to 28 years in federal prison; and
- Hundreds of people got sick and 9 died as a result of Parnell’s choices.
Every choice has a consequence. It’s sad to see the impact when ethics are disregarded.
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