Get 40% Off
⚠ Earnings Alert! Which stocks are poised to surge?
See the stocks on our ProPicks radar. These strategies gained 19.7% year-to-date.
Unlock full list

Korea's Lotte Mart drops Reckitt Benckiser goods amid sterilizer scandal

Published 04/05/2016, 12:04
Updated 04/05/2016, 12:04
© Reuters. Safdar, Head of Reckitt Benckiser Korea and Japan, bows his head during a news conference to apologize over deadly lung injuries linked to the use of the humidifier sterilizers, some marketed by the firm, in Seoul

By Ju-min Park

SEOUL (Reuters) - A large South Korean retailer stopped ordering Reckitt Benckiser (L:RB) items on Wednesday and some e-commerce sites halted sales of goods made by the British giant after its humidifier sterilizers were linked to deadly lung injuries.

During an emotional news conference on Monday in Seoul, the head of the company's South Korean unit accepted responsibility, although some victims and their families and supporters said it came too late.

Ata Safdar, head of Reckitt Benckiser in South Korea and Japan, bowed several times in apology. As he spoke, a man stepped on to the stage shouting expletives and slapped him on the back of the neck.

South Korea said last year that 92 people were believed to have died from causes related to the humidifier products - not all of them made by Oxy Reckitt Benckiser, the former name of the group's South Korean arm.

South Korea says 530 people registered claims of lung ailments from using humidifier sterilizers made by various companies. The government banned the products, which it believes were only sold in South Korea, in 2011.

Humidifiers are widely used in offices and homes across north Asia where the winters are dry. The sterilizers, in liquid form, were added to the water.

"This is not an issue just for the Korean branch and the victims but for the head of the main office to get on his knees and apologise to the victims," Choi Ye-yong, who heads the Asian Citizens' Centre for Environment and Health, told reporters on Wednesday.

Lotte Mart, part of Lotte Shopping (KS:023530) and one of South Korea's biggest discount store chains, stopped ordering Reckitt Benckiser products from Wednesday, company spokesman Yoon Ji-yoon told Reuters.

Lotte Mart was among supermarket chains that sold since-banned humidifier sterilizers under their own brand, and last month made its own public apology.

South Korean e-commerce companies Coupang and Ticketmonster Inc said on Wednesday they would stop selling Reckitt Benckiser products. Its global brands include Dettol antiseptic wash and Durex condoms.

South Korean prosecutors, who have opened a criminal investigation into makers of the sterilizers, arrested a university professor on suspicion of fabricating data in a report for Oxy Reckitt Benckiser, a prosecution official involved in the case told Reuters.

The South Korean unit of Reckitt Benckiser did not have immediate comment when asked about the arrest, although Safdar said on Monday the company does not "condone wrongful behaviour" and that it was cooperating with prosecutors.

Choi and Kim Deok-jong, the father of a five-year-old boy who died in 2009 from lung disease linked by the South Korean government to the use of humidifier sterilizers, plan a protest at Thursday's Reckitt Benckiser shareholders' meeting in London, the activist group said.

Reckitt Benckiser spokeswoman Patty O'Hayer said in London the company respected everybody's right to demonstrate.

"We have stepped up and acknowledged our responsibility in this tragedy and are working hard to make amends and to address the issues of all those who have been impacted," she told Reuters by phone.

The company's South Korea unit generated 2014 sales of 257 billion won (154 million pound), according to online data citing NICE Information Service. Reckitt Benckiser Korea declined to provide local sales figures, although globally the group posted revenue of 8.87 billion pounds ($12.9 billion) in 2015.

"We have accepted full responsibility for the role that this product played in these health issues, including deaths, in Korea and while we acknowledge that we cannot repair the harm that has been done, we have stated our continuing intention to do whatever we can to provide full resolution to these cases," Reckitt Benckiser said on its website after Monday's apology.

© Reuters. Safdar, Head of Reckitt Benckiser Korea and Japan, bows his head during a news conference to apologize over deadly lung injuries linked to the use of the humidifier sterilizers, some marketed by the firm, in Seoul

According to Reckitt Benckiser, the humidifier sterilizer product was launched in South Korea in 1996 by Oxy, a company it bought in 2001 to form Oxy RB. The local company's name was changed in 2014 to Reckitt Benckiser Korea.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.