Korean consumers increasingly adopted the use of humidifiers to keep the optimal level of humidity within their homes during the dry winter season. Introduced in 1996, HS products were used to eliminate germs and bacteria within humidifiers.
The HS product was first invented and sold by a Korean company called Yukong in 1994. Yukong transferred its HS business to SK Chemicals, which continued to manufacture the HS product and the main chemical ingredients for the HS products sold by other manufacturers.
The Korean company Oxy Co. Ltd released its own HS product in 1996. On March 31, 2001, Reckitt Benckiser acquired Oxy.
Over 20 companies, including Oxy RB, SK Chemicals, Lotte Mart, Homeplus, Aekyung, Emart, GS and LG were involved in either supplying raw materials for, manufacturing, marketing or selling HS products in Korea.
When RB acquired that company, there were no red flags which suggested the product was anything other than 100% safe. It was compliant with applicable laws at the time, and had all required approvals for placing it on the market.
In 2011, the Korean Centre for Disease Control (KCDC) suggested a link between HS products and reported lung injuries. A chemical used within HS called PHMG-P was suspected of causing lung damage.
Oxy RB immediately and voluntarily withdrew all Oxy HS products from the market. This was nearly three months prior to a Korean government-ordered recall of all HS products in November 2011. Oxy RB acted quickly and put the interests of consumers first.
Oxy RB began working on the HS issue after withdrawing the Oxy HS product from the market. Since 2012, we pursued a strategy of settling individual cases which allowed us to make good progress. We also announced the creation of a Humanitarian Fund in 2013 to assist those who believed they had been impacted by HS products. At the time, we believed that the courts and their mediation were the best forum for providing remedy, but we now recognize that this process was too slow.
In May 2016, Oxy RB formally accepted responsibility for the role Oxy HS has played in the HS issue, and apologized for the very regrettable circumstances and the time it took Oxy RB to understand the full picture.
On July 31, 2016, Oxy RB announced its Compensation Plan for the Oxy HS product users categorized by the Korean government in its first two rounds of categorization as suffering, or having suffered, lung damage which was “almost certainly” (Category 1) or “highly possibly” (Category 2) a result of their use of Oxy RB’s HS product. On July 10, 2017, it announced a further Compensation Plan for Category 1 and 2 Oxy HS product users categorized by the Korean government in its third round of categorization on or before 27 March 2017.
Since May 2016, Oxy RB has accepted responsibility for the role Oxy HS played in the HS issue. The Representative Director of Oxy RB has met with most of the Oxy HS product users categorized by the Korean government in Rounds 1 and 2 or in Round 3 (as announced on or before 27 March 2017) as suffering, or having suffered, lung damage which was “almost certainly” (Category 1) or “highly possibly” (Category 2) a result of their use of Oxy RB’s HS product and their families to apologize in person and gathered their valuable views for consideration prior to announcing the compensation plan.
The Global CEO of RB also met with representatives of the Category 1 and 2 Oxy HS victims from Rounds 1 and 2 and a special committee from the National Assembly of Korea in the UK to offer his deepest apology which was acknowledged by the victims and special committee who represented the public of Korea.
Since November 2012, a Korean government investigation committee has reviewed all reported cases of death or lung injury from exposure to HS products and categorized them on the basis of evidence linking their lung condition with HS product use. A total of 183 Category 1 and 2 Oxy HS victims (eight of whom received settlements from another manufacturer) were identified in the government’s first two rounds of categorization (out of a total of 530 applicants). Category 1 and 2 victims are those categorized by the Korean government as suffering, or having suffered, lung damage which was “almost certainly” (Category 1) or “highly possibly” (Category 2) a result of their use of HS products. As of 27 March 2017, 452 (60% of the total 752 applicants) Round 3 cases have been reviewed. Of them, 57 (13%) have been recognized as Category 1 or 2 HS victims, and 52 indicated that they used the Oxy HS product, either on its own or in conjunction with another HS product. A fourth round of applicants is yet to be categorized.
Through its Compensation Plan announced on July 31, 2016, Oxy RB has provided Oxy HS Category 1 and 2 victims from Rounds 1 and 2 with a remedy that reiterates its apology in the form that best respects the sensitivities of individual victims and their families, provides fair compensation without delay, imposes the minimum burden on claimants and provides access to independent advice and review. Oxy RB was the first company involved in the HS issue to publish a compensation plan in a transparent way. 99% of Category 1 and 2 Oxy RB victims from Rounds 1 and 2 have registered for the compensation process as of 31 January, 2017, and 89% have been paid. A further Compensation Plan was launched on July 10, 2017 for Category 1 and 2 victims from Round 3 whose categorisation was announced on or before 27 March 2017.
Oxy RB’s Compensation Plans are based on various consultations with Category 1 and 2 Oxy HS victims from Rounds 1, 2 and 3 and reflect the views of those victims and their families.
They are based on the principles of respect, transparency, fairness and speed. They include a lump sum payment in respect of mental distress (including child potential and family consolation, to reflect the impact on families and the gravity of the situation), past expenses, lost income, certain legal expenses and interest. An additional amount is offered where there is more than one victim in a family. For victims living with the ongoing effects of the Oxy HS product, there is a proposed provision for future medical and care needs.
Oxy RB has also committed KRW 10 billion to a Humanitarian Fund to contribute to a broader resolution for those who are in imminent and desperate help due to the impact of HS. Oxy RB is seeking to agree with the South Korean government, other manufacturers and other stakeholders on an industry-wide approach to the compensation of Category 1 and 2 victims announced in Round 3 after 27 March 2017 and in Round 4. Oxy RB believes that the HS issue can only be solved on an industry-wide level in which it plays a full part.
Recognizing the seriousness of the HS issue, and the fact that the process for resolving it was likely to take time, in Spring 2014, Oxy RB established a KRW 5 billion humanitarian fund to provide assistance to those who have suffered as a result of the HS issue. In May 2016, Oxy RB committed a further KRW 5 billion to the humanitarian fund.
Oxy RB intends that the humanitarian fund be distributed to those affected by the HS issue irrespective of whether they used Oxy RB’s HS product, to help them with immediate expenses (such as medical costs, grievance counselling and funeral costs). Oxy RB believes that it is important for affected families to get immediate help even before all the claims are resolved.
Consumer safety remains Oxy RB’s number one priority and we have taken steps to review and improve our safety and consumer contact escalation processes in order to prevent something like this from happening again.
RB is taking a number of other actions including: