Roundup’s Final Countdown As Bayer Waits on Jury Decision
Reuters is reporting that Bayer has hired an external law firm to investigate French media evidence that Monsanto, the U.S. seed maker it took over last year, had compiled a file of influential personalities. Bayer’s move comes after French prosecutors opened an inquiry last week after newspaper Le Monde filed a complaint alleging that Monsanto had created a file of 200 names in the hope of influencing their positions on pesticides.
Le Monde reported on the file writing, “Two hundred names. Political leaders and officials, journalists, leaders of professional organizations and public organizations, and even scientists. Line after line, their identities and opinions on glyphosate, pesticides or GMOs are ginned in two carefully-tabulated tables.”
Bayer is on the ropes and its future and integrity as a global leader in crop sciences is currently in question. The French investigation is yet another black eye at a precarious time for Bayer. The world is currently waiting for a jury decision on the third high-profile product liability cancer case surrounding Bayer’s glyphosate-based herbicide product Roundup. Having already sustained two highly publicized and costly losses where it was decided that Roundup contributed to cancer and that the company failed to warn consumers of risks, a third legal loss may effectively derail the company’s future into uncharted waters.
The Financial Times recently painted a sobering picture of Bayer’s potential troubles writing, “Any settlement worth about €5bn…could be absorbed by the German group without jeopardising its credit rating. Should the cost spiral to €20bn, however, Bayer’s leverage could rise to a level where a cut to the group’s “Baa1” credit rating was necessary, and even a “Baa2” rating could look stretched. Such a scenario could leave the company’s rating just two notches above junk status.”
Bayer’s stock price has collapsed by about 40% since the Monsanto deal closed in June 2018. The company is now only worth roughly what it paid for the U.S. chemical maker Monsanto. Bayer shareholders are also actively showing their distaste and concern with the company’s leadership. CNN recently reported “Over 55% of voting shareholders did not endorse the actions of management” during their annual meeting in a rebuke described as “unprecedented” in Germany. The question from investors was whether Bayer management did their homework on Monsanto with some calling the deal “value destroying.” It was also reported that some shareholders believed it was time to consider dramatic structural changes within the company due to Roundup’s legal anchor threatening to further tank company valuation.
Looking back at the headlines over just the last few weeks has seen a quickening of a very volatile situation play out. Despite the litany of poor news for Bayer, two troubling headlines stood out signaling the potential depth of Monsanto’s agency capture. First, the Environmental Protection Agency (EPA) maintained in a new decision that glyphosate, the active ingredient in Roundup, does not cause cancer or other health problems if it is used according to instruction labels. Sidestepping scores of scientific evidence, internal emails, admissions from Monsanto’s own scientists, and two landmark legal decisions, US agriculture secretary Sonny Perdue chose to comment using an industry talking in EPA’s press releases stating, “If we are going to feed 10bn people by 2050, we are going to need all the tools at our disposal, which includes the use [of] glyphosate.”
Last week internal Monsanto records filed in court showed that an advisor in the White House allegedly stated that it had Monsanto’s back. U.S. Right To Know’s Monsanto Roundup Trial Tracker reported that in a July 2018 email to Monsanto global strategy official Todd Rands, the corporate intelligence and advisory firm Hakluyt reported to Monsanto the following: “A domestic policy adviser at the White House said, for instance: ‘We have Monsanto’s back on pesticides regulation. We are prepared to go toe-to-toe on any disputes they may have with, for example, the EU. Monsanto need not fear any additional regulation from this administration.”
Key themes revealed from court documents [termed ‘The Monsanto Papers’] as part of discovery from the jury trials thus far show efforts to derail and discredit scientists, the ghostwriting of safety studies, and admissions of incomplete safety testing of Roundup. A new round of Monsanto Papers releases shows former Monsanto CEO Hugh Grant praising several employees for a successful publication of a ghostwritten safety evaluation and risk assessment review of glyphosate.
The public now awaits the jury decision of Pilliod V. Monsanto. Alva and Alberta Pilliod are a married couple from California blaming their individual cancers on the longtime use of Roundup. The Pillion’s Attorney Brent Wisner was responsible for helping Dewayne “Lee” Johnson, the first plaintiff to take Monsanto to trial, win his case against last year. In the recent closing arguments of the Pilliod V. Monsanto case, Wisner reportedly told jurors they should consider ordering at least $892 million in punitive damages as that represented one year of profits for Monsanto. He said a better figure might be $1 billion in order to send a message to Bayer and Monsanto.
With an estimated 13,000 more plaintiffs waiting in the wings, Bayer’s brand and financial future is now being actively questioned by global media and even its own shareholders. Another major jury award for the Pilliod’s will all but ensure that Bayer will rapidly loose favor in the larger media narrative seeing an acceleration of public recoil. If Bayer escapes this trial without taking a legal loss and further financial damages, it appears the respite will be short-lived as their troubles are now coming from a multitude of different sources and directions simultaneously.