2020-06-23 01:47 (Tue)
Corporate Scandal
Corporate Scandal
  • J. H. Lee, B. Weldegebriel, J. Palma, D. Kuandyk
  • Approved 2019.11.27 17:13
  • Comments 0
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MBN: Open Coverage, Closed Records

Every company now fights for one thing. Not money, as many would expect, but attention. The currency of choice for any popular platform, whether it be TV, YouTube, Netflix, or social media, seems to be the attention span of the core consumer demographic. And one Korean company has shown that it will do anything to achieve such a goal. In October, the Supreme Prosecutors’ Office (SPO) issued an indictment for the Maeil Broadcasting Network (MBN) corporation and its head executive for employing an expedient in order to obtain the necessary capital required to start the channel and manipulating the accounting records through window dressing settlements.

Before the age of streaming and YouTube, Korea was dominated by three “terrestrial broadcasting channels” that any citizen with a TV could access, as long as they could receive the transmitted signals using antennas. Some prime time soaps hit as high as 70% viewer ratings, a long-gone daydream of TV producers who now struggle to hit double digits.

To challenge the three giants of the industry — KBS, MBC, and SBS — several companies jumped into the industry as General Service Program Providers, broadcasting channels that encompassed all types of programs that the “terrestrial” channels typically excelled at, except with one distinct difference — they were on cable. In the early 2010s, such channels started to shake up the fundamentals of the TV industry as we knew it.

MBN, among other well-known broadcasting companies such as JTBC and Channel A, originally started out as a channel for economics news in 1995 by the Maeil Broadcasting Network. It then expanded to 24-hour news coverage, which swiftly changed in December 2011 to an all-encompassing channel.

While MBN struggled to make ends meet once the change occurred — at one point hitting a humiliating 0.000% viewer rating — it eventually rose as the top cable General Service Program Provider, maintaining first place for 56 consecutive months. It seemed to thrive even in the competitive market.

However, it has been revealed that the company had been founded on a bed of dirty money. Namely, the SPO released an indictment of the company for illegally acquiring funds for its establishment in 2011 through window dressing. Window dressing settlements refer to the strategy used to improve the image of the company’s performance to shareholders by essentially inflating its profit through various illegal means. Simply put, it’s an accounting fraud. MBN took out a loan of 55 billion KRW from banks by “borrowing” the names of some of its employees and then buying company stock to meet the necessary 330 billion KRW capital to start the channel. It then covered up such a misdeed by falsifying its financial records. In light of these revelations, the Securities and Futures Commission sued MBN to the SPO on October 31. The SPO released a statement that several key officials, including company president Dae-whan Chang and his son, will face up to three years of supervision by an assigned inspector as well as a fine of 70 million KRW. Ultimately, Chang stepped down from his position. Though MBN had stayed silent on the matter, the indictment forced it to release an apology and a promise for structural reform.

It is not to say that such a reveal comes as a surprise. These general program providers have been under great scrutiny for their often extreme measures to maximize profit and ratings. One such practice had been scheduling children’s TV programs between 10 p.m. and 6 a.m., an obvious ploy to increase the scores in the “children’s program” category for the annual ranking of the channels by the Korea Communications Commission. The overt capitalistic and money-grubbing practices of such channels has become a topic of concern for the future of Korean media, which also led to the “sensationalizing” of content to boost instantaneous TV ratings.

As companies vie for even a minute of your time, it is important to ask whether the public has a responsibility in choosing to not reward such behavior. The tactics will get dirtier and shiftier; it will take all our efforts to not be hoodwinked by these corporations.

Facebook: Bringing the World Closer to Chaos

Social media has always been hailed as an innovative force for communication and information sharing — connecting people thousands of miles away, forming communities of like-minded people, and raising awareness for important issues. From the Arab Spring to the recent Hong Kong demonstrations, social media’s role in shaping not only personal relationships, but also political and social awareness, is undeniably remarkable. However, with the pervasiveness of social media nowadays, its darker side is becoming increasingly apparent. Along with its merits come risks to mental health, data privacy, and misinformation, among others.

Perhaps the best example of social media being a double-edged sword is Facebook, which is largely considered the biggest social network worldwide, with 2.41 billion active users as of 2019. Facebook is a classic story of innovation and entrepreneurship, with the noble goal of “bringing the world closer together”. In fifteen years, Mark Zuckerberg has practically built a monopoly on social media — with an effective strategy of simply buying up strong competitors, as seen with its acquisition of Instagram and WhatsApp, or emulating successful ones, such as SnapChat.

In the past few years, however, Facebook has been embroiled in a series of data privacy controversies. The Cambridge Analytica scandal of 2018 brought about shocking revelations on the huge effect Facebook has on society, only this time, with a sense of panic and concern instead of marvel and gratitude. In a story broken by The New York Times and The Guardian, it was revealed that the political consulting firm Cambridge Analytica improperly accessed the data of 50 million Facebook users and utilized it to manipulate the 2016 US presidential election and the Brexit vote. In initial reports, Facebook denied the possibility of fake news and propaganda on its platform. It was only in 2017 that the company confirmed possible election interference. In 2018, Zuckerberg was called to a series of congress hearings investigating Facebook’s role in the scandal — but these concluded with merely a five billion USD penalty. The company faced calls for breakup in early 2019, most notably from presidential candidate Elizabeth Warren and from Facebook co-founder Chris Hughes. The US Federal Trade Commission has opened an antitrust probe into Facebook to determine “whether Facebook has stifled competition and put users at risk”.

Facebook CEO and founder Mark Zuckerberg testifies in Congress
Facebook CEO and founder Mark Zuckerberg testifies in Congress

Facebook also has a hand in the global spread of fake news. Its algorithm favors and rewards content that generates the most engagement, regardless of whether this content is true. In the Philippines, internet trolls and sensationalized fake news stories spread like wildfire over a country where 97% of the population uses Facebook. The Duterte administration’s use of Facebook to spread misinformation places the country in a dangerous situation, where false propaganda trumps legitimate news. In Myanmar, Facebook is weaponized to spread hate speech and attacks against the Rohingya ethnic minority. All around the world, governments are using propaganda to tear down political opponents and to discredit critical opinions.

There is a wide consensus that Facebook holds too much power. Some even go as far as to say it is a threat to democracy. Indeed, when users caught wind of an immense data privacy breach, most vowed to quit Facebook — to no avail. There is simply no similarly wide-reaching alternative.

In truth, Facebook only seeks what companies have always sought: to make profits. With a business model of offering free services to collect data and selling that information, it is unsurprising that there is a host of ethical dilemmas plaguing the company. The ideal solution would be for Facebook to consider the real-world impacts of its business practices and to actually solve these issues, rather than presenting empty promises to do better. However, it is difficult for the company to police factual legitimacy on the platform, as literally billions of posts are made every single day. It is impractical and unfeasible to go through each one manually, and even harder to determine which ones are fake. Facebook also refuses to ban political ads, possibly because it is difficult to determine what constitutes political motivation and also to prevent backlash from politicians who spend millions of dollars on Facebook ad campaigns.

Ultimately, the responsibility of limiting social media’s negative effects on society lies with governments, businesses, and even consumers. There is no straightforward approach to solving the complex problems that this digital age brings, but it is important to hold companies such as Facebook accountable for their actions. The conversation about regulation should continue, no matter how tedious and seemingly impossible it may be.

Boeing: Built Something Worse

The two deadly crashes of the Boeing 737 MAX shocked the aviation industry and called into question the actions of the world’s largest aircraft manufacturer. As new pieces of evidence and informants emerge, the narrative is shifting from an accident story to a full-blown scandal.

The tale begins in 2011, when Boeing learned that American Airlines was ordering 200 brand new planes from Airbus, Boeing’s fiercest competitor. At the time, Boeing had plans to design a new airplane model, but with the knowledge that Airbus was gunning for market dominance, it found itself in a position where it had to choose between going through with the costly, time-consuming project or taking a shortcut and redesigning one of its old products. The 737 is the most successful passenger aircraft of all time. Since its creation in 1967, it has been sold in thousands and redesigned a number of times. A deal was negotiated with American Airlines — half of the order would go to Boeing if they renewed their most lucrative airplane. Having captured the deal, Boeing decided to take one more chance on the 737.

Updating the old 737, in a race to keep up with Airbus, was a task easier said than done. Big new engines needed to be installed higher up and nearer to the front of the plane. This change caused a serious problem in flight that forced the plane’s nose up — risking a stall and not getting enough lift. Boeing knew of this problem but since it was too close to certification, instead of changing the design, Boeing opted to add a software called the Maneuvering Characteristics Augmentation System (MCAS). This addition to the flight control software was designed to sense the plane’s vertical orientation and automatically adjust its angle of flight.

A former Boeing engineer turned FBI informant has shed a light on why minimizing changes was preferred. The engineers were put under a lot of pressure to limit the introduction of new features, because the company wanted to pitch to buyers that the plane was very similar to the old model and that pilots didn’t need to go through expensive retraining. The informant also revealed that the decision to make MCAS dependent on a single sensor was an additional attempt to avoid the need for retraining.

Since the company believed that the plane handled similar to the old model, the only prerequisite to pilot it was to complete a 56 minute iPad course. There was absolutely no mention of the MCAS and its anti-stalling mechanism — a feature Boeing considered too technical and unnecessary to include in the course, as described later. Boeing’s choice to not tell pilots about the existence of this system would soon be catastrophic.

On October 29, 2018, Lion Air Flight 610 crashed into the Java Sea 13 minutes after takeoff. Days after the crash, Boeing revealed the existence of the MCAS system, but gave reassurances that it was safe. They released a safety document to refer to in case of emergencies. However, five months later, that reassurance was tragically proven wrong. On March 10, Ethiopian Airlines Flight 302 crashed 6 minutes after takeoff, killing all 157 people aboard — even though the pilots followed all emergency protocols. Within a few days, airlines across the globe grounded the 737 MAX.

Boeing is now in serious damage control and is facing falling profits, a declining reputation, and a criminal investigation — but it is not the only entity in the spotlight. The Federal Aviation Administration (FAA), the body responsible for certifying new aircrafts, is being questioned on why they allowed the airplane to fly in the first place. Reports claim that due to budget cuts, the FAA has become a toothless tiger that heavily relies on Boeing’s own safety tests. Boeing’s CEO Dennis Muilenburg has recently testified in Congress, and the FAA is expected to give testimony next.

Boeing is claiming to have fixed the issues with the MCAS and is hoping that the 737 MAX will be back in the skies soon. However, the aviation industry and the flying public’s confidence in the plane is shaken, and perhaps Boeing’s true test of damage control will be reflected by the number of passengers who step onboard. No matter how many people decide to board the plane, 346 lives were lost and the scandal is far from over.

Coca-Cola: Taste the Killing

An environmental activist group called Break Free From Plastic has conducted a study on plastic waste and concluded that Coca-Cola is the world’s largest polluting brand. The waste audit has revealed that it is responsible for more plastic waste than the following three companies combined, with byproducts found in 37 countries. In March, the company admitted that it produces more than three million tons of plastic packaging in a year. Greenpeace had also criticized the company for its massive carbon footprint, stating that more than 60% of Coca-Cola’s packaging is single-use plastic bottles. Company representatives responded to the accusations, saying that Coca-Cola is “investing to accelerate key innovations that will help to reduce waste”.

Coca-Cola has been named the most polluting brand in the world
Coca-Cola has been named the most polluting brand in the world

Promises made by the company, however, significantly differ from its actions. While promoting the green image of the company, Coca-Cola has been accused of various activities undermining global attempts at ensuring environmental regulations. Members of Zero Waste Europe have claimed that Coca-Cola has intentionally started its own competing “Zero Waste” program to promote ideas unrelated to the intended purpose of their movement. The original Zero Waste movement advocates for the reduction of plastic, while Coca-Cola’s campaign strongly promoted the idea of recycling plastic. Alexandra Aubertin, a board member of Zero Waste Europe, said that the company’s goal was “to confuse people on the zero waste hierarchy”.

Besides the refusal to stop using single-use plastic bottles, Coca-Cola is notorious for privatizing and polluting local sources of water. The company consistently purchases land with vast amounts of groundwater, and their intensive utilization of groundwater chambers has aggravated water scarcity issues in several regions across the globe.

In the early 2000s, Coca-Cola opened new factories in the semi-arid region of Rajasthan, India. Less than a year after the factories started operating, local villagers complained about increasing water pollution levels. Farmers had also reported decreasing amounts of water available for crop irrigation. It was reported that the factories were consuming as much as 500,000 liters of water per day. Given the already critical agricultural situation in the region, Coca-Cola’s expansion into Rajasthan had only worsened the issue. Within five years of the factories’ operational activity, the water levels in the nearby village, Kaladera, had dropped by ten meters. The same concerns and issues were raised by villagers in the states of Kerala and Uttar Pradesh. The struggle of Plachimada villagers against Coca-Cola has been perhaps the most infamous case of the company’s expansion into India. Residents of Plachimada village in Kerala experienced problems with water access soon after Coca-Cola factories were opened near their homes. The factories had also been distributing sludge wastes to villagers for fertilizing purposes. A laboratory analysis of a sludge sample from the factory detected incredibly high amounts of lead and other elements dangerous to human health. In 2005, after a series of protests, the Indian government ordered the closure of the factories in the state of Kerala. The damage done to the local villagers has been estimated at 28 million USD. To this day, Coca-Cola has not paid any compensation.

Besides damaging the environment, Coca-Cola has also been accused of using paramilitary death squads in South America. From the 1990s to the early 2000s, Coca-Cola hired right-wing paramilitary fighters to suppress labor union protests in the company’s factories in Colombia. Within a period of ten years, eight labor union leaders were murdered by paramilitaries. A local Colombian trade union Sinaltrainal sued Coca-Cola for inciting anti-union violence against its own workers, but the court ruled in favor of the company, saying that there was not enough proof of connection between the company and the paramilitaries. Similar scandals took place in Turkey, where the company was accused of intimidating and torturing local trade union leaders and their family members. Coca-Cola has been practicing unethical business for a long time — the company was heavily investing in Apartheid South Africa until the 1980s, where it followed local segregationist laws by separating white and black workers in its facilities.

While Coca-Cola has been engaging in many unethical and even illegal activities, the company spends a significant amount of money to clean up its reputation. In 2018, it spent 5.8 billion USD on its marketing campaign. Coca-Cola attempts to position itself as a global and innovative company, but the scandals and criticisms around it suggest that it is far from following the image it advertises.

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