When a lawsuit puts a business deal on hold, Cargill takes responsibility for its mistakes and accepts the consequences.
In 1998, Cargill sold its international seed operation to Monsanto, and announced further plans to sell its North American seed business. Before the sale could be finalized, Pioneer Hi-Bred filed a lawsuit against Cargill, claiming Cargill had stolen its intellectual property in the form of germplasm, or seed tissue. The accusations called into question Cargill’s integrity, and put its reputation for conducting honest, ethical business at risk.
After Pioneer Hi-Bred filed the lawsuit, Cargill began an intensive internal investigation, which revealed that a Cargill employee, who had previously worked at Pioneer Hi-Bred, had in fact wrongfully introduced material from his former employer into Cargill’s corn breeding program. Outside counsel recommended that Cargill admit no wrongdoing and push for a settlement. But holding fast to the company’s long-held commitment to integrity and ethics, Cargill executives refused.
Robert Lumpkins, Cargill’s chief financial officer, and Frederic Corrigan, the company’s executive vice president, approached Pioneer Hi-Bred directly in an attempt to share findings from the investigation and make things right. “The Pioneer executives were speechless,” recalled Jeffrey Skelton, a Cargill lawyer assigned to the case. “Openly admitting Cargill had made mistakes was not something our outside lawyers could fathom.”
Cargill agreed to destroy the illegal material in its corn breeding program, to compensate Pioneer Hi-Bred US $100 million for past damages, and to pay licensing fees for future use of the materials. Cargill also notified Monsanto, the company that had purchased its international operations, that some material may have entered its products. After putting the sale of its North American operations on hold during the lawsuit, Cargill sold the business to another buyer in 2000.
Reflecting on the ordeal, CEO Ernie Micek penned an open letter to the company, urging each employee to follow Cargill’s Guiding Principles—seven key ideas that form the foundation of the company’s code of conduct. “When this chapter is closed, it will show that Cargill was forthright in facing up to a problem and taking appropriate action,” he wrote. “[It is] a company of which we can all be proud.”
Skelton, who remains with Cargill today, still remembers the moment he learned that a hard-fought legal solution is not always the right answer. “Ultimately, our ethics allowed the dispute to be resolved in a positive manner,” he recalls. “Witnessing an example like this taught me the true values of Cargill.”