South Korea court convicts ex-Reckitt Benckiser unit chief in sterilizer case

SEOUL (Reuters) - A South Korean court on Friday convicted 14 people including a former head of the local unit of British consumer goods maker Reckitt Benckiser RB.L over the sale of humidifier sterilizers linked to deadly lung injuries, sentencing the former boss to seven years in prison.

A protestor poses with a sample bottle during a demonstration ahead of Reckitt Benckiser's annual general meeting, over claims that a sterilising hygiene product made by the company has led to deaths in South Korea, in London, Britain May 5, 2016. REUTERS/Toby Melville

The Seoul Central District Court found the former executive, Shin Hyun-woo, guilty of criminal negligence for failing to inspect the safety of the product and allowing its sale, and false labeling for marketing it as safe, according to a spokeswoman for Reckitt.

Two current employees of Reckitt Benckiser Korea, research and development head Cho Hanseog and R&D manager Michael Choi, were convicted of the same charges, as was former R&D head Kim Jingu. Cho and Kim were also sentenced to seven years while Choi received five years.

Reckitt Benckiser Korea, the company, was found guilty of false labeling and fined 150 million won ($126,000).

“We hope the verdicts in the criminal case will mark another important stage in resolving the humidifier sterilizer issue,” said Reckitt spokeswoman Patty O’Hayer. “Oxy RB remains deeply remorseful for the harm caused to all victims and their families.”

O’Hayer said Reckitt was taking actions to prioritise safety across the company, whose other products include Durex condoms, Scholl foot products and Nurofen tablets.

The South Korean government said in 2015 that 92 people were believed to have died from causes related to humidifier sterilizer products, not all of them made by the Reckitt Benckiser unit.

In May last year, the current head of Reckitt’s South Korean unit, as well as group chief executive Rakesh Kapoor, apologised and accepted responsibility. The Oxy brand, which Reckitt acquired in 2001, was the market leader for the liquid sterilizers, which were used to keep the water in humidifiers clean during Korea’s dry winters.

Of those sentenced on Friday - which also included employees from rival manufacturers and retailers LotteMart and Homeplus - several were charged with criminal fraud. All were found not guilty.

South Korean prosecutors opened a probe into the use of the products last year amid mounting pressure from the families of victims who said earlier offers of compensation by the company were insufficient given the seriousness of the damage.

South Korea said more than 5,200 people have come forward as of Dec. 31 with claims of lung ailments from using humidifier sterilizers, with the number increasing sharply after the prosecutors’ probe became public last year.

In May, the government said of the 530 claims received until then, 221 were assessed as being eligible for compensation. Of those, 177 had used the sterilizer sold by Reckitt, which had been on the market for more than a decade.

The remaining cases are currently being reviewed.

($1 = 1,190.6000 won)

Reporting by Jack Kim, Yun Hwan Chae and Jeong Eun Lee in Seoul and Martinne Geller in London; Editing by Simon Cameron-Moore and Mark Potter