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News Archive: January - April 2007

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  • Wolfowitz's Defense. Paul D. Wolfowitz declared vigorously today that it would be “unjustly and frankly hypocritical” for the World Bank’s board of directors to find him guilty of ethical lapses, reported the New York Times on April 30, 2007. But he also hinted that he would discuss whether to resign as bank president if the board clears him of misconduct.

  • Baker Hughes Pays Record Bribery Fine.  The company, one of the largest U.S. oil services firms, pleaded guilty to Foreign Corrupt Practices Act (FCPA) violations stemming from contracts in Kazakhstan. The New York Times reported on April 27, 2007 that it agreed to pay $44.1 million in penalties – the largest ever FCPA fine. (See full details at Corruption Investigations.)

  • Wall Street Firm Settles Landmark Sex Discrimination Case. Morgan Stanley, one of the world’s largest investment banks, has agreed to settle a sex discrimination suit involving 2,700 female employees with an immediate lump sum payment of $46 million and terms ensuring that women get equal opportunities to obtain lucrative brokerage accounts. Financial News reported on April 25, 2007 that the agreement is subject to U.S. federal court approval.

  • Political Pay Plan Slammed in Ireland.  The Belfast Telegraph reported on April 26, 2007 that a leading anti-corruption group (Transparency International- Ireland) has slammed the Government's plan to raise the limit at which politicians are obliged to publicly disclose gifts, loans and donations. At present, they have to disclose any gift or donation worth more than €650, but plans exist to boost this to €2,000.See Democracy & Government Accountability

  • Vulture Fund Gets Reduced Payment from Zambia. The U.K. High Court reduced a claim for $55m by a U.S. “vulture fund” operating through an offshore tax haven against Zambia. The Guardian reported on April 25, 2007 that the court agreed a payment of $15.5 million.  Donegal International had purchased some Zambian sovereign debt from Romania in 1999 for $3.2m. It then pursued Zambia for the face value of the debt.  Anti-poverty campaigners in the U.K. are calling on aid agencies to prevent future “vulture fund” actions.

  • Newmont Mining Acquitted in Indonesia. Newmont Mining, one of the world’s largest gold producers, has been acquitted of criminal charges in Indonesia relating to the alleged impact of its operations on the environment. This widely seen crucial test case, which could have sent the company’s CEO to prison, was greeted by The Wall Street Journal’s editorial writers on April 25, 2007 as “a victory for transparency and the rule of law." But the Mining Journal reported on the same day that Indonesian prosecutors will appeal the verdict to the Supreme Court.

  • Siemens Chief Forced to Resign. Siemens AG Chief Executive Officer Klaus Kleinfeld has been forced to resign just a week after the company’s Chairman, Heinrich von Pierer, quit.  Bloomberg News reported on August 25, 2007 that as Siemens continues to grapple with corruption investigations, the company’s Supervisory Board of Directors determined that there has to be fresh leadership. Siemens didn't name a successor to Kleinfeld, who has not been the direct subject of official government investigations.

  • Richard Scrushy Settles with US SEC. HealthSouth Corp. founder Richard M. Scrushy reached an $81 million deal with the US Securities and Exchange Commission (SEC) to settle claims against him related to the massive accounting fraud at the health-care rehabilitation company - claims he has neither admitted nor denied. Mr. Scrushy was charged by the Justice Department (DOJ) and the SEC in 2003 with accounting fraud and insider trading. During his criminal trial Mr. Scrushy was acquitted of all 36 criminal counts brought by the DOJ (The Wall Street Journal, 4/23/07).

  • China Announces Rules to Require Government Disclosures. China on Tuesday announced far-reaching new rules to take effect in May 2008 for disclosure of official information that would require local governments to reveal their accounts and inform farmers about the finances of often controversial land seizures. If applied, the new rules would change the way officials work in hundreds of thousands of villages and towns, where Communist Party committees make their decisions in secret. According to Xinhua the decree is a "landmark" decision that makes "the most specific and progressive" reforms to China's legacy of official secrecy (Washington Post, 4/24/07)

  • Global Financial Crime Congress Calls for Synergies Between Public, Private Sectors. Officials from Interpol and United Nations Office on Drugs and Crime (UNODC) at the Global Financial Crime Congress, which opened in Bangkok on Tuesday, stressed building up synergies between states, law enforcement agencies, the private sector and public towards more efficient combating financial crimes. At the four-day event co-organized by the Interpol and the UNODC, officials of the agencies and delegates from member countries are to discuss progress and new ideas on collaborative mechanisms to fight against money laundering, terrorism financing, corruption and high- tech crimes, among others (Xinhua, 4/19/07).

  • Wolfowitz Vows to Stay At World Bank Despite Ethics Questions. Embattled World Bank President Paul Wolfowitz, who has been pushing for an increased focus on anti-corruption in the Bank's programs, said on April 15, 2007 that he will remain in his post, despite recent calls for his resignation over his alleged involvement in a large pay increase for his girlfriend. A steering committee at the Bank said the issue was "of great concern to us all" and called on the bank's board to finish its investigation (AFP, 4/16/07).

  • Nigerian Opposition Demands Election Delay, Fears Rigging. Nigerian opposition parties joined forces Wednesday to call for a postponement of the presidential vote scheduled for this weekend just hours after the country's electoral commission said it would abide by a Supreme Court ruling that put Vice President Atiku Abubakar back on the ballot for the presidential election. He had been barred from running on allegations of corruption, charges he denies. The opposition called on Nigerians to ``protest in a nonviolent manner'' against election results that showed the governing party rolling up huge victories in state governor and legislator races and demanded a ``level playing field'' for all candidates, threatening to boycott Saturday's vote (Reuters Alertnet, 4/18/07)

  • UK SMEs Lack Guidance on Bribery. Bribery and corruption are just as likely to affect SMEs (Small and Medium Sized Enterprises) as large companies, yet only one fifth of SMEs feel able to distinguish between bribery and corruption or corporate hospitality and facilitation fees, reported the Association of Chartered Certified Accountants (ACCA). According to a recent ACCA survey of practitioners working in or with SMEs, 69 percent believe SMEs are likely to be confronted with bribery and corruption in the course of their business dealings, yet fewer than half thought that SMEs understand the law in this area (4/13/07). See Business & Corruption for more.

  • Corruption Trials Captivate Taiwan. An extraordinary series of corruption investigations is captivating public attention and strengthening the legal system in Taiwan, reported The Wall Street Journal on April 12, 2007. Proceedings began last week in the trial of Ma Ying-jeou, a leading opposition politician who is seen as a front runner in next year's presidential election and who is accused of misusing government funds when he was mayor of Taipei between 1998 and 2006. Other investigations, indictments, and convictions in the last year have ensnared high-profile corporate and political figures including the wife and son-in-law of Taiwan’s President and the chairmen or former chairmen of two of Taiwan’s most influential conglomerates.

  • Pace of US CEO Pay Gains Increases. The median base pay for chief executives of the 350 biggest U.S. corporations grew 4.1% in 2006, compared with 3.6% in 2005, and outpaced those of their white collar associates, which grew 3.7%, according to a study by Mercer Human Resources Consulting for The Wall Street Journal (4/9/07). See Executive Compensation for more.

  • Sachs Says Forbes List Could Do More on Poverty than G8. Wealthy philanthropists have the potential to do more than the Group of Eight leading nations to lift Africa out of poverty, according to Jeff Sachs, special adviser to the United Nations secretary-general. According to the Financial Times Mr. Sachs told the newspaper, "There are 950 billionaires whose wealth is estimated at $3.5 trillion . An annual 5 per cent 'foundation' payout would be $175bn per year - that would do it. Then we don't need the G8 but 950 people on the Forbes list" (4/9/07).

  • Money Laundering Probe Threatens Major Deal for ABN Amro. A probe by the U.S. Justice Department into past money transfers at Dutch Bank ABN Amro Holding is threatening a potential $80 Billion deal to sell the bank to Britain’s Barclays PLC, reported The Wall Street Journal on April 9, 2007. In 2005, U.S. states' regulators fined ABN $80 million for violating U.S. money-laundering laws and sanctions against Iran and Libya. According to the article, Barclays is seeking greater reassurance that the matter can be resolved in the next two weeks before moving ahead with the deal.

  • Mbeki Says Corruption 'Distorts Human Values.' Corruption distorts human values and freedom, and negatively affects the delivery of services to those most in need, South African President Thabo Mbeki said on April 2, 2007 in Johnannesburg at the opening of the Fifth Global Forum on Fighting Corruption and Protecting Integrity. Urging conference delegates from over 100 countries to locate anti-corruption instruments within a development and anti-poverty framework, Mbeki said, “Corruption in all its forms and manifestations constitutes a process that negates the democracy and development the ordinary people need to transcend the boundaries of their world of poverty, underdevelopment and disempowerment." (Independent Online)

  • Korean Business Associations Launch Transparency Initiative. The Task Force on Corporate Transparency of the Korean Pact on Anti-Corruption and Transparency (K-PACT), an anti-corruption civil society group, announced that five Korean business organizations - the Federation of Korean Industries, the Korea Chamber of Commerce and Industry, the Korean International Trade Association, the Korea Federation of Small and Medium Businesses, and the Korean Employers Association - have announced initiatives to provide ethics training, resources on ethical management, and increased communication with suppliers about their ethical practices (Korea Times, BSR 3/28/07).

  • Corruption Threatens World's Forests. According to an article in the Washington Post, corrupt and illegal dealing is resulting in some of the largest natural forests left on the planet – including the highlands of Papua New Guinea, Indonesia and Africa and in the forests of the Amazon – being dismantled at an alarming pace to feed a global wood-processing industry centered in coastal China. Although environmental groups have created certifications and standards aimed at conserving forests, at the current pace of cutting, natural forests in Indonesia and Burma - major bulwarks against global warming -  will be exhausted within a decade. Illegal logging on public lands annually costs developing country governments $10 billion in lost assets and revenues, a figure more than six times the aid these nations receive to help protect forests. (4/1/07).


  • Report on Saudi CSR Published. On March 29, 2007, Tamkeen Development and Management Consultin, a Saudi Arabian Consulting Firm, released a report it claims is the first study on corporate Saudi Arabia and CSR. According to the report, while Saudi CSR is still largely trapped in the charity mindset, Saudi companies do not experience the same supply-chain pressures as in other emerging economies. However, the report finds a lack of attention to health and the environment in CSR and a lack of civil society, government and media pressure around these issues.

  • Rwandan Gas Project Stalled Over Accounting Questions. A gas project that is hoped to significantly contribute to poverty reduction in Rwanda is at risk after the government announced its intention to cancel its contract with Dane Associates, a US energy company. Albert Butare, Rwanda’s energy minister said Dane Associates has failed to disclose adequate details of the $3m in “pre-project costs” the company sought to cancel against its 70 per cent equity share in the project, in which the government holds the other 30 per cent (AllAfrica.com, 3/27/07).
  • G8 Calls for Increased Scrutiny of Aid. On March 27, 2007 the Group of Eight leading industrial states (G8), expressed concern at a Berlin meeting that the volumes of development aid coming from powerful emerging economies such as China and India should meet higher governance and transparency standards. Officials at yesterday's talks said delegates from China and India were keen to talk to the G8 on aid issues but stressed their right to set their own priorities (Financial Times, 3/28/07).

  • Siemens Board Member Arrested. A member of Siemens' board of directors, Johannes Feldmayer, has been detained over alleged irregular payments to a trade union. German industrial giant Siemens is already mired in a major corruption scandal over alleged bribe payments to obtain orders around the world. The scandal mirrors earlier charges at German car company Volkswagen, where former human resources head, Peter Hartz, was charged in January with granting favours to members of the workers council, which is illegal under German law (BusinessWeek, 3/29/07).

  • Insider Trading Case Against Citigroup Tests Australian Law. Australia's securities regulator, the Australian Securities and Investment Commission, today begins an unprecedented insider trading and breach of fiduciary duty case against Citigroup's local unit that could have wide-ranging implications for how investment banks around the world manage potential conflicts between merger-advisory work and trading on their own accounts. The case, which involves Citigroup traders' 2005 buying shares in port-cargo handler Patrick Ltd. while the investment bank was advising bidder Toll Holdings Ltd., a freight handler, on a hostile takeover of Patrick, will test a vague wording in Australian law that says financial-services businesses must "have in place adequate arrangements" to manage the conflicts (The Wall Street Journal, 3/26/07.

  • BP Blast Probe Faults Tensions at Top, Lack of Experience. On March 27, 2007 the Financial Times reported that an internal BP investigation into the Texas City refinery explosion that killed 15 people and injured 500 others, found that John Manzoni, the chief executive of refining, lacked refining experience and failed to obtain information needed to understand better his most complex and important refining asset and the risk of a big accident. According to the FT, the report also cites tensions between Mr. Manzoni and the vice president for refining and marketing, upon whom he chose to rely for information. The findings underscore the importance of sound management and experience in ensuring safety even at companies who make a point of promoting ethics and socially responsible values.

  • Wife of Ousted Thai Leader Faces Corruption Charges. The wife of ex-Thai Prime Minister Thaksin Shinawatra, Pojaman Shinawatra, was charged Monday with evading millions of dollars in taxes, opening the first corruption case involving the ousted leader's inner circle since a September coup. The case marks the first prosecution of those close to Thaksin, who was ousted by a September military coup and accused of widespread corruption. (AP, 3/25/07).

  • Founder of Algeria's Largest Bank Sentenced to Life for Fraud. The biggest fraud trial in Algeria's history ended yesterday when Abdelmoumen Rafik Khalifa, owner of Khalifa Bank, the country's first and largest private bank, was sentenced to life in jail for his involvement in the bank’s collapse in 2003. Khalifa was convicted in absentia (he is currently living in London) of repeated theft, fraud, corruption, and forging official documents. The bank collapsed after three executives — but not Khalifa himself — were arrested in February 2003 at Algiers airport while trying to leave the country with suitcases stuffed with US $2.24 million in cash (AP, 3/22/07).

  • 53% Decline in Fortune 500 CEOs Serving on Outside Boards. Since 1990, there has been a 53% decline in the board seats filled by Fortune 500 CEOs who serve on outside corporate boards and only slightly more than half of today's Fortune 500 CEOs serve on outside boards, according to a study by JamesDruryPartners, a US-based executive search and board recruitment firm. According to the study, the Fortune 500 CEO’s who continue to serve on outside boards have reduced their commitments from an average of 2.2 boards to 1.4 boards, representing a decline of 36% (3/21/07).

  • Total Oil CEO Questioned Over Corruption. The new CEO of French oil giant Total SA, France’s largest listed company, was questioned Wednesday in an investigation into  whether Total paid bribes to win a contract to develop the South Pars gas field in the Persian Gulf in 1997, reported the Associated Press (3/21/07). Christophe De Margerie was charged last year in another French corruption case, related to the U.N. oil-for-food program in Iraq. Formerly head of Total's exploration and production division, de Margerie was named CEO last month.

  • US Investigation Faults Lack of Attention, Cost Cuts for BP Workplace Explosions. On March 20, 2007 a US federal agency that has been conducting a two year investigation into a 2005 fatal set of explosions at a BP refinery in Texas blamed "safety deficiencies at all levels of the BP corporation" for the explosions and called for the appointment of an extra board member with expertise in saftey. According to the US Chemical Safety and Hazard Investigation Board, BP failed to repond appropriately to multiple audits revealing safety problems, failed to adequately investigate prior accidents, overlooked federal regulations, and cut costs that effected safety, focusing instead on production.

  • World Bank Board and President Resolve Differences Over Corruption Strategy. On March 20, 2007 the World Bank announced that its President, Paul Wolfowitz, and its board of directors have settled their differences over his controversial anti-corruption strategy, agreeing to a heavily revised version after the original strategy was criticised by ministers at its annual meeting in Singapore last September. The new strategy preserves Mr Wolfowitz's emphasis on anti-corruption and governance but now includes a pledge to stay engaged in countries with severe corruption and to work primarily with national governments on governance issues.  Moreover, while the bank will still seek to involve society at large in its governance efforts, the emphasis will be on doing so through existing national forums (Financial Times, 3/21/07).

  • OECD Working Group on Bribery Examines UK's BAE Decision. On March 14, 2007 the OECD Working Group on Bribery reaffirmed its concerns about the United Kingdom’s discontinuance of the BAE Al Yamamah bribery investigation and outlined continued shortcomings in UK Anti-Bribery legislation (see Anti-Corruption Conventions for Previous Coverage for earlier coverage). It urged the UK to remedy these shortcomings as quickly as possible, for example by enacting foreign bribery legislation as quickly as possible, and decided to conduct a further examination of the UK’s efforts to fight bribery.

  • Home Loans More Expensive for Minorities in US. US mortgage lenders sell a disproportionate share of high-cost home loans to minorities in big cities across the US, according to a study by the Woodcock Institute and four other groups, reported the Financial Times (3/15/07). According to the article, blacks were 3.8 times more likely to receive a higher-cost home loan than were white ­borrowers, while Latinos were 3.6 times more likely. Banks that responded said they use automated tools to evaluate loans which do not consider race, gender or ethnicity in determining the risk profile of a customer.

  • Hewlett-Packard: Proxy Campaign Suffers Setback at HP. Efforts to increase shareholder control over US company boards were dealt a setback after Hewlett-Packard (HP) shareholders rejected a proposal that would have allowed stockholders to nominate directors directly through the company’s proxy documents. The rejection of the stockholder proposal marks a setback for some of the biggest US pension plans, including the California Public Employees Retirement System, which had supported the measure at HP and other influential companies. (Financial Times, 3/15/07).

  • Dunn State Charges Dropped. A California judge dismissed all state charges against Patricia Dunn, the former HP chairman who was last year forced to resign under a cloud of controversy after a boardroom spying scandal that rocked the world’s biggest IT group. (Financial Times, 3/15/07).

  • UPDATE: Scandal Costs Nikko Cordial New Deals. Nikko Cordial, Japan's third largest broker and a partner of Citigroup, has lost a number of potentially profitable deals to underwrite equity issues this year as a result of an accounting fraud scandal. (MarketWatch, 3/15/07).

  • Nikko Cordial to Sue Ex-Staff Over Accounts Fraud. Japan's third largest broker, Nikko Cordial, a partner of Citigroup, announced it would seek $26m in damages from its former president, former chief financial officer, and former private equity unit chairman, for their involvement in an accounting fraud that resulted in a record fine for the broker and could lead to its de-listing from the Tokyo Stock Exchange. For previous coverage of the scandal click here (Financial Times, 2/28/07).

  • UPDATE: Conrad Black Trial Begins Today in Chicago (Chicago Tribune, 3/14/07)

    Holding Company Pleads Guilty in Hollinger Fraud.
    Ravelston Inc., a Canadian holding company used by former media baron Conrad Black to control the Hollinger International newspaper publishing empire pleaded guilty to defrauding Hollinger. Black and three other former Hollinger executives are charged with plundering $80 million from Hollinger, mainly by selling off hundreds of community newspapers across the United States and Canada (AP, 3/6/07)

  • Siemens Managers Admit to Bribes. Two former Siemens managers admitted in court to paying bribes worth $7.9 million to a pair of officials at an Italian utility in a bid to win contracts from 1999 to 2002. Several Siemens employees have been arrested in the case, and the company has since identified 420 million euros in questionable transactions (AP, 3/13/07).

  • Berlusconi and Mills Begin Corruption Trial. Former Italian Prime Minister Silvio Berlusconi, who left office in 2006 and U.K. lawyer David Mills, the estranged husband of U.K. Culture Secretary Tessa Jowell, go on trial in Milan today charged with conspiring to obstruct justice. Prosecutors have accused Berlusconi of paying $600,000 to Mills to testify in his favor during two separate criminal cases (Bloomberg, 3/13/07).

  • OECD Launches Website on Gender Equality. On March 8, 2007 the Organization for Economic Cooperation and Development, a group of 30 democratic, free-market countries, launched a new website devoted to its work on improving gender policy and parity in OECD countries.

  • Insider Trading Still Widespread in London. Suspicious trading occurred ahead of nearly a quarter of all merger and acquisition deals on the London stock market in 2005, according to a study released on March 7, 2007 by the UK Financial Services Authority. According to the Financial Times, the report adds to global regulatory concerns that illegal insider trading is widespread as the New York Stock Exchange referred twice as many suspicious trades to US regulators for possible investigation in 2006 as it did in 2004.

  • Malaysia PM Dismisses 85% of Graft Cases. Malaysia’s prime minister, Abdullah Ahmad Badawi, who won a landslide election victory in 2004 with a pledge to tackle corruption launching a three-year anti-corruption drive, yesterday dismissed 85% of pending graft allegations. Badawi also resisted calls for two of his top anti-corruption lieutenants, the head of Malaysia's Anti-Corruption Agency and the deputy minister in charge of police, to step down after they themselves were accused of graft (Reuters, 3/6/07)

  • Olmert Faces New Corruption Allegations. The Attorney General of Israel announced that he will begin an investigation into Prime Minister Ehud Olmert after an Israeli television channel exposed a document allegedly showing that Olmert granted favours to dozens of members of his former Likud party when he served as trade and industry minister two years ago. Last month, Israel's state prosecutor commissioned an investigation into charges that Olmert performed a breach of trust during the privatization of a leading Israeli bank when he served as finance minister in late 2005 (Jerusalem Post, 3/2/07).

  • UK Government Releases Final Report on Inequality - Working Mothers Face Serious Job Discrimation. On February 28, 2007, The Equalities Review, a project launched by the UK government in 2005 to examine causes of persistent discrimination and inequality in the UK, released its final report. Citing a study in which 70% of recruitment firms had been asked by clients to avoid hiring pregnant women or those of childbearing age, the report suggests that young mothers face more discrimination in the workplace than those with disabilties or ethnic minorities. The report outlines ten steps to make Britain more equal.

  • Nigerian Senate Examines Executive Corruption. Nigeria's Senate began its examination of a panel report that indicted Vice President Atiku Abubakar of corruption and criticized President Olusegun Obasanjo. According to AFP, the report said that Abubakar "abused his office by aiding and abetting the diversion" of 145 million dollars of public funds from the Petroleum Technology Development Fund (PTDF) which Abubakar oversaw and which were earmarked for training purposes. The panel did not indict Obasanjo but found that he had acted "in disregard of the law" in allocating money from the fund. On February 7, Nigeria's anti-graft agency released a list of politicians it considered to corrupt to run for office, including Abubakar (See News) (3/1/07).

  • Freddie Mac Bans Sub-Prime Loans, Civil Rights Groups Applaud Move. Freddie Mac, a US government-sponsored home loan corporation, announced that it will cease buying sub-prime mortgages that have a high likelihood of excessive payment shock and possible foreclosure and will limit the use of low-documentation underwriting to ensure borrowers have the income necessary to buy their homes. The move has been applauded by the civil-rights coalition, The Leadership Conference on Civil Rights (LCCR), as an sign of ethical leadership and a “win-win situation for low income borrowers.” According to an LCCR statement, “It takes backbone to make a move like this and Freddie Mac should be commended for its leadership on the issue. By cutting off financial backing for dicey, low interest 'teaser' loans that balloon astronomically, Freddie Mac will prevent families, a disproportionate number of whom are minorities, from losing their homes" (2/27/07).

  • US SEC To Study Foreign Governance Rules. The US Securities and Exchange Commission, has commissioned a study of how Europe and other areas handle shareholder voting rights as the regulator faces pressure to relax rules allowing shareholders access to company proxy documents (Financial Times, 2/23/07).  

  • Proxy Campaign Suffers Setback at HP. Efforts to increase shareholder control over US company boards were dealt a setback after Hewlett-Packard (HP) shareholders rejected a proposal that would have allowed stockholders to nominate directors directly through the company’s proxy documents. The rejection of the stockholder proposal marks a setback for some of the biggest US pension plans, including the California Public Employees Retirement System, which had supported the measure at HP and other influential companies. (Financial Times, 3/15/07).

  • Dunn State Charges Dropped. A California judge dismissed all state charges against Patricia Dunn, the former HP chairman who was last year forced to resign under a cloud of controversy after a boardroom spying scandal that rocked the world’s biggest IT group. (Financial Times, 3/15/07).

  • UPDATE: Scandal Costs Nikko Cordial New Deals. Nikko Cordial, Japan's third largest broker and a partner of Citigroup, has lost a number of potentially profitable deals to underwrite equity issues this year as a result of an accounting fraud scandal. (MarketWatch, 3/15/07).

  • Nikko Cordial to Sue Ex-Staff Over Accounts Fraud. Japan's third largest broker, Nikko Cordial, a partner of Citigroup, announced it would seek $26m in damages from its former president, former chief financial officer, and former private equity unit chairman, for their involvement in an accounting fraud that resulted in a record fine for the broker and could lead to its de-listing from the Tokyo Stock Exchange. For previous coverage of the scandal click here (Financial Times, 2/28/07).

  • UPDATE: Conrad Black Trial Begins Today in Chicago (Chicago Tribune, 3/14/07)

    Holding Company Pleads Guilty in Hollinger Fraud.
    Ravelston Inc., a Canadian holding company used by former media baron Conrad Black to control the Hollinger International newspaper publishing empire pleaded guilty to defrauding Hollinger. Black and three other former Hollinger executives are charged with plundering $80 million from Hollinger, mainly by selling off hundreds of community newspapers across the United States and Canada (AP, 3/6/07)

  • Siemens Managers Admit to Bribes. Two former Siemens managers admitted in court to paying bribes worth $7.9 million to a pair of officials at an Italian utility in a bid to win contracts from 1999 to 2002. Several Siemens employees have been arrested in the case, and the company has since identified 420 million euros in questionable transactions (AP, 3/13/07).

  • Berlusconi and Mills Begin Corruption Trial. Former Italian Prime Minister Silvio Berlusconi, who left office in 2006 and U.K. lawyer David Mills, the estranged husband of U.K. Culture Secretary Tessa Jowell, go on trial in Milan today charged with conspiring to obstruct justice. Prosecutors have accused Berlusconi of paying $600,000 to Mills to testify in his favor during two separate criminal cases (Bloomberg, 3/13/07).

  • OECD Launches Website on Gender Equality. On March 8, 2007 the Organization for Economic Cooperation and Development, a group of 30 democratic, free-market countries, launched a new website devoted to its work on improving gender policy and parity in OECD countries.

  • Insider Trading Still Widespread in London. Suspicious trading occurred ahead of nearly a quarter of all merger and acquisition deals on the London stock market in 2005, according to a study released on March 7, 2007 by the UK Financial Services Authority. According to the Financial Times, the report adds to global regulatory concerns that illegal insider trading is widespread as the New York Stock Exchange referred twice as many suspicious trades to US regulators for possible investigation in 2006 as it did in 2004.

  • Malaysia PM Dismisses 85% of Graft Cases. Malaysia’s prime minister, Abdullah Ahmad Badawi, who won a landslide election victory in 2004 with a pledge to tackle corruption launching a three-year anti-corruption drive, yesterday dismissed 85% of pending graft allegations. Badawi also resisted calls for two of his top anti-corruption lieutenants, the head of Malaysia's Anti-Corruption Agency and the deputy minister in charge of police, to step down after they themselves were accused of graft (Reuters, 3/6/07)

  • Olmert Faces New Corruption Allegations. The Attorney General of Israel announced that he will begin an investigation into Prime Minister Ehud Olmert after an Israeli television channel exposed a document allegedly showing that Olmert granted favours to dozens of members of his former Likud party when he served as trade and industry minister two years ago. Last month, Israel's state prosecutor commissioned an investigation into charges that Olmert performed a breach of trust during the privatization of a leading Israeli bank when he served as finance minister in late 2005 (Jerusalem Post, 3/2/07).

  • UK Government Releases Final Report on Inequality - Working Mothers Face Serious Job Discrimation. On February 28, 2007, The Equalities Review, a project launched by the UK government in 2005 to examine causes of persistent discrimination and inequality in the UK, released its final report. Citing a study in which 70% of recruitment firms had been asked by clients to avoid hiring pregnant women or those of childbearing age, the report suggests that young mothers face more discrimination in the workplace than those with disabilties or ethnic minorities. The report outlines ten steps to make Britain more equal.

  • Nigerian Senate Examines Executive Corruption. Nigeria's Senate began its examination of a panel report that indicted Vice President Atiku Abubakar of corruption and criticized President Olusegun Obasanjo. According to AFP, the report said that Abubakar "abused his office by aiding and abetting the diversion" of 145 million dollars of public funds from the Petroleum Technology Development Fund (PTDF) which Abubakar oversaw and which were earmarked for training purposes. The panel did not indict Obasanjo but found that he had acted "in disregard of the law" in allocating money from the fund. On February 7, Nigeria's anti-graft agency released a list of politicians it considered to corrupt to run for office, including Abubakar (See News) (3/1/07).

  • Freddie Mac Bans Sub-Prime Loans, Civil Rights Groups Applaud Move. Freddie Mac, a US government-sponsored home loan corporation, announced that it will cease buying sub-prime mortgages that have a high likelihood of excessive payment shock and possible foreclosure and will limit the use of low-documentation underwriting to ensure borrowers have the income necessary to buy their homes. The move has been applauded by the civil-rights coalition, The Leadership Conference on Civil Rights (LCCR), as an sign of ethical leadership and a “win-win situation for low income borrowers.” According to an LCCR statement, “It takes backbone to make a move like this and Freddie Mac should be commended for its leadership on the issue. By cutting off financial backing for dicey, low interest 'teaser' loans that balloon astronomically, Freddie Mac will prevent families, a disproportionate number of whom are minorities, from losing their homes" (2/27/07).

  • US SEC To Study Foreign Governance Rules. The US Securities and Exchange Commission, has commissioned a study of how Europe and other areas handle shareholder voting rights as the regulator faces pressure to relax rules allowing shareholders access to company proxy documents (Financial Times, 2/23/07).  

  • Fannie Mae to Shut Down Foundation. Fannie Mae, the US-sponsored mortgage company, announced that it would shut down its foundation – which last year gave $61 million dollars - but promised to take over its work and maintain the same level of giving. The foundation has been a longtime lightning rod for criticism that the company was using tax-exempt contributions to advance corporate interests by funding Fannie Mae-marked advertisements to educate home buyers, causes closely associated with Fannie Mae executives, and the work of potential political allies in the housing world. The closing is part of an upheaval at Fannie Mae that began with allegations of accounting manipulations and led to the removal of much of the companies top management (See Managing Workplace Ethics) (Washington Post, 2/26/07).

  • Latin American Anti-Corruption Fund Draws Massive Applications from Civil Society. FONTRA, a new anti-corruption fund, has attracted 118 grant applications from civil society organizations across the Southern Cone countries of Argentina, Bolivia, Brazil, Chile, Paraguay and Uruguay, according to the Partnership for Transparency Fund (PTF) on February 21, 2007. FONTRA, established by the PTF and Communication and Development (ICD) in Uruguay, with financing from the Inter-American Development Bank’s Multilateral Investment Fund, will make grants of upto $25,000 for specific anti-corruption projects. 

  • British Firms Skeptical About Workplace Diversity. A survey by the UK-based Policy Research Institute on Ageing and Ethnicity has found that the value of multicultural workplaces is disputed by most small to medium enterprises (SMEs) in the UK. According to the survey, which is based on interviews with over 300 British SMEs and is, according to the Financial Times, the largest to chart business views on this issue, more respondents disagreed than agreed that ethnic diversity contributed to performance. While 45% reported having policies for making older workers feel more included and 42% had them for female employees - only 25% had similar policies for ethnic minority staff (2/20/07).

  • North American Companies' Compliance Spending on the Rise. A study released today by AMR Research, a Boston research and advisory firm, found that annual compliance spending for all North American companies is expected to grow 8.5% this year to $29.9 billion from $27.3 billion in 2006. According to the study, corporations' costs of complying with the 2002 Sarbanes-Oxley financial and accounting disclosure law – which still constitutes the largest percentage (20%) of companies’ compliance expenditures - are leveling off, but costs of meeting environmental guidelines are on the rise (Wall Street Journal, 2/22/07).

  • Anti-Corruption Campaigner Arrested in Angola. Global Witness, the London-based anti-corruption and human rights group, reported that one of its anti-corruption campaigners, Sarah Wykes, was arrested and detained in Angola Sunday on charges of ‘espionage,' and is demanding her release. Ms. Wykes was in Angola to discuss oil-related “transparency issues” with civil society organizations. Because, oil accounts for 95% of Angola's export revenue while most of the country lives in poverty, groups such as Global Witness are pushing the government - which has not yet commented on the case - to increase oil account transparency (BBC, 2/19/07).

  • Starbucks and Ethiopian Government Reach Agreement on Coffee Trademarks. On February 18, 2007 U.S. coffee company, Starbucks announced that it has reached an agreement with the Ethiopian government in which it will no longer oppose Ethiopia’s efforts to trademark its specialty coffee and create a network of licensed distributors, which would secure farmers a higher price for their crop and which Starbucks had previously attempted to block (see News, for previous coverage). Starbucks also announced that it will double its purchases from East Africa and increase its technical assistance to farmers.

  • CRO Magazine Publishes U.S. '100 Best Corporate Citizens 2007'. On February 15, 2007 Corporate Responsibility Officer Magazine (CRO) released the eighth annual list of '100 Best Corporate Citizens' which rates U.S. companies on environmental, employee, social, investor, and customer issues. The list is drawn from approximately 1,100 publicly held U.S. companies in the Russell 1000, S&P 500 and Domini 400 indices. See Surveys & Trends.
  • Internal BP Review of Blast Call for Executive Firings. An internal review by oil group BP into management accountability for a fatal 2005 Texas refinery blast that killed 15, calls for four executives to be fired, reported the Financial Times. While the study, "found no evidence that anyone acted in bad faith or violated BP's Code of Conduct", the report said, "... each of the individuals identified... failed to perform their management accountability in significant ways" and recommended that BP end their employment (2/14/07)

  • Ceres Publishes Climate Change 'Blacklist.' On February 13, 2007, Ceres, a U.S. coalition of environmentally conscious investors and organizations, published a Climate Watch List of 10 companies who have fallen behind their peers in addressing climate change. These include: oil-giant Exxon Mobil, financial group Well Fargo, utility group TXU, oil company ConocoPhilips, retailer Bed, Bath, and Beyond and insurer ACE. The list coincides with shareholder filings at more than 35 companies calling for action on climate change.

  • UPDATE: Nikko To Increase Compliance Staff. Nikko Cordial said it will add 50 people to its now 100 person (approx) compliance staff to help improve its internal control system after being accused of fraud. It will appoint a chief compliance officer, a chief risk management officer and a new chief financial officer. The same day, Nikko announced the departure of Deputy President Hiroaki Sugioka, the sixth executive to leave (Bloomberg, 2/13/07).

    Nikko Cordial Probe - Further Blow to Citigroup Image. On January 31, 2007, the Financial Times reported top managers of Citigroup's Japanese investment banking joint partner, Nikko Cordial - Japan’s third largest broker - had been involved in fraud. An earlier scandal forced Citigroup to close its private bank in Japan in 2004 and led to a humiliating public apology in Japan by Citi's CEO Charles Prince. The fraud was discovered by an outside investigation commissioned by Nikko

  • Johnson & Johnson Admits to Improper Payments. Johnson & Johnson, a U.S. drugs and consumer products maker, announced that some of its foreign units had made improper payments related to the sale of medical devices in two unspecified small-market countries, possibly violating the U.S. Foreign Corrupt Practices Act and spurring a top executive to retire. The company, known for its philosophy requiring managers to act ethically and justly, said it voluntarily disclosed the information to the Justice Department and the Securities and Exchange Commission and that it would cooperate with any investigation. (Reuters, 2/13/07)

  • Nigerian VP Named on Agency Graft List. Nigeria's anti-graft agency, the Economic and Financial Crimes Commission (EFCC), has released the names of 135 politicians it alleges are too corrupt to run in the country's elections in April, including the country’s Vice President, Atiku Abubakar who defected from the ruling party to run as an opposition presidential candidate and denies the allegations. Almost 30 candidates for regional governors are on the list. As the EFCC has no power to ban candidates from running for office, the list is advisory. (BBC, 2/7/07).

  • Wal-Mart Faces Historic Sex Bias Case. The biggest sexual discrimination case in U.S. history advanced against Wal-Mart Stores Inc., the world's largest retailer, when a top court ruled that more than a million women could join a suit charging bias in pay and promotions. The plaintiffs estimate they could win billions of dollars in lost pay and damages and that as many as two million women who have worked for Wal-Mart in its U.S. stores since 1998 could join a class-action lawsuit (Reuters, 2/7/07).

  • China Launches Review of Corruption in Drug Industry. China’s state media announced that the government has launched a review of corruption in its drug industry as it investigates, Zheng Xiaoyu, the former director of the State Food and Drug Administration who is accused of taking bribes to approve shoddy drugs blamed for at least ten deaths. While there has been no indication thus far on whether foreign drug companies are implicated, the widening scandal has led to the closure of at least one Chinese company linked to Mr. Zheng, who was fired in 2005 (AP, 2/9/07). For Transparency International’s Global Corruption Report on healthcare see International Surveys.

  • FTSE4Good Launches Climate Change Criteria. In response to rising climate change concerns facing companies and investors, FTSE Group (FTSE), an international index provider, announced that is has launched a new set of criteria to offset climate change for its FTSE4Good Index Series, which is used by investors to identify companies with positive records of CSR practice; and by listed companies as a framework for best practice (2/7/07). See Socially Responsible Investing.

  • Disney Accused of "Cutting and Running" In Response to Workers' Rights Violations. Members of the Hong Kong-based activist group Students and Scholars Against Corporate Misbehavior, or Sacom, staged a protest at the Disney company’s Hong Kong office yesterday, after Disney withdrew orders from a Shenzhen factory accused of exploiting workers, causing the factory to shut down and hundreds of workers to lose their jobs. In September Sacom cited ventilation and payment problems at the factory, where laid off-workers protested the shut-down last week. Sacom is accusing Disney of “cutting and running” in response to workers’ right violations and of shifting blame for labor conditions onto its licensees, whom it hires to outsource to factories. Disney stated that it had been working with the licensee and factory for months to improve conditions and that the withdrawal of orders was the licensee’s choice (Wall Street Journal, 2/7/07)

  • Partnership for Transparency Fund Launches New Website.  The Partnership for Transparency Fund (PTF) launched its new website on January 30, 2007 at a time when its global activities are expanding. The fund, which has made over $1.2 million in grants, provides micro grants (no more than $25,000 per project) to civil society organizations across the developing world that are engaged in curbing corruption. The website contains a full set of evaluations of completed projects, plus details on how to apply for grants.

  • Massive Corruption Crackdown in Bangladesh. Over 15 Bangladesh ministers from both leading political parties have been arrested over the past few days in a corruption crackdown by the interim government reported The Daily Times (2/6/07).  Since Jan. 11, when emergency rule was declared following months of political turmoil, and a number of basic civil rights were suspended, police and security forces have arrested at least 33,000 people as part of the army-backed interim government’s promise to rid politics of corruption. On Monday the government announced it would sign the UN Convention Against Corruption (Daily Star, 2/6/07).

  • World Bank Blacklists More Than 100 for Corruption. The World Bank’s Institutional Integrity Department announced in a report that it had blacklisted more than 100 firms and individuals for fraud and corruption in projects financed by the development agency over the past two years. It said it had investigated and closed 441 in projects in 2005 and 2006 for corrupt practices. This compares to the more than 300 barred for corruption between 1999 and 2004 (2/6/07).

  • Hyundai Chief Found Guilty of Embezzlement. A South Korean court found Hyundai Motor Co. Chairman Chung Mong Koo guilty of embezzlement and fraud, sentencing him to three years in prison. Prosecutors accused Mr. Chung of taking about $100 million from Hyundai and affiliate companies for political bribes and personal use. (Xinhua, 2/5/07)

  • Global Witness Becomes A Movie Star. The movie Blood Diamond, staring Leonardo DiCaprio, brings to the fore the extraordinary work of Global Witness, a UK NGO that has been a leader in ethical reforms in the natural resources sector: see a fascinating profile in The Guardian (UK), January 31, 2007.

  • Siemens Now Faces US Investigations. The German global company, already under major bribery investigations by authorities in its home country, in Italy and in other European countries, now faces investigations by both the U.S. Department of Justice and the Securities and Exchange Commission, reported The Financial Times on February 1, 2007.
  • CSR Directory Releases Category on Human Trafficking. The CSR Directory, an online resource guide of over 1,700 organizations in more than 90 countries working on corporate social responsibility published by CSR Wire announced that it has added a new category on 'Organizations with Human Trafficking Programs', in order to reflect the rising relevance of this issue on the CSR radar screen. To use the directory click here (1/30/07).

  • U.S. President Addresses Executive Compensation. The United StatesPresident attacked lavish salaries and bonuses for corporate executives in his “State of the Economy” speech on Wall Street yesterday, warning that corporate boards must ''step up to their responsibilities'' and tie compensation packages to performance. While acknowledging that the gap between the rich and poor is growing at a time of economic growth, Mr. Bush did not endorse any government role in reducing those packages but instead highlighted new federal rules which give investors increased access to information on the executives pay packages at public companies, rules whose impact is yet to be seen. Mr. Bush’s comments come at a time when Democrats in Congress are pushing for legislation to require shareholder approval of executive compensation plans and the capping small business executives' tax-deferred pay packages at $1 million a year (AP, 2/1/07).

  • UK Government Letter Cites Security As Reason For Ending Major Corruption Probe. On January 25, 2007, the office of the UK Attorney General wrote to the UK's Campaign Against Arms Trade (who forwarded the letter to Ethicsworld - attached here) denying that commercial considerations influenced the Blair Government’s much-criticized decision to quash a corruption investigation into contracts between British Aerospace Systems (BAE Systems) and Saudi Arabia. The letter said the decision was driven by serious anti-terrorism and national security concerns. Denying that the action violates the OECD Anti-Bribery Convention (more on this story at Anti-Corruption Conventions), the letter includes a detailed statement on new UK efforts to enforce the Convention. Governments frequently cite 'national security' in refusing to disclose defense contracts. The letter implies that the UK bowed to Saudi government pressures and saw the investigation as a threat to the two countries' intelligence relationship.

  • Global Compact Announces Record Quarter for Company Progress Reporting. The UN Global Compact reported that in the last quarter of 2006 an unprecedented 428 of its business participants issued a Communication on Progress (COP), describing how they are implementing the initiative’s ten principles. This is a dramatic increase from the 70 which did so during the last quarter of 2005. The surge in submissions brings the total of COPs in 2006 to a record high of 927– an increase of 41 percent over 2005 (1/30/07).

  • ADB Bans 37 Firms, Reports Slight Drop in Fraud Complaints. On January 30, 2007, the Manila-based Asian Development Bank (ADB) announced that it has banned 37 firms and 32 individuals from transacting with the organisation due to fraud, corruption or misconduct in 2006. The ADB reported that its fraud investigators received 171 complaints in 2006, a slight reduction from the 199 the previous year. The bank said the most common form of 'fraudulent practice investigated in 2006 was misrepresentation and falsification of documents'. 'Collusive practices account for 46 percent of the corrupt practices cases,' it said.

  • Boston College Center For Corporate Citizenship Launches New Magazine. The new magazine, 'The Corporate Citizen,' has been published by the Boston College Center for Corporate Citizenship to provide business leaders, policymakers, academics and others with the latest CSR ideas and practices. The publication reflects much of the content from The Center’s annual conference and the practices of many of its 350-member companies (1/5/07).

  • Shanghai Stolen Pension Money 'Recovered.' Shanghai’s mayor, Han Zheng, announced on Sunday that Shanghai has recovered all the money that was stolen from the city’s pension fund by officials, ending what has been China's most serious corruption scandal in ten years. The investigation into the abuse of up to one third of the pension's funds has led to last years detention of Shanghai’s top most official, a shake up in the hierarchy of the Communist party and President Hu Jintao’s increased assertion of control over regional interests before a key party congress this year (China Daily, 1/29/07).

  • Major U.S. Firms Agree to More Disclosure of Political Giving.The Center for Political Accountability reports that General Electric, Hewlett-Packard, American Electric Power and Home Depot have joined 15 other leading U.S. corporations to increase transparency (1/24/07). See Business & Politics for the full story.

  • Information From The UK's Campaign Against Arms Trade Leaked to BAE Systems. High Court to review leak issue on February 2, 2007.  BAE has returned the materials voluntarily but it has refused to state how it obtained the documents, stated the Campaign Against Arms Trade (CAAT) on January 25, 2007. The material concerns CAAT’s legal actions in UK courts that challenge Prime Minister Blair’s decision to quash an official investigation into alleged corruption in BAE’s contracts with Saudi Arabia. See statement by the OECD Secretary-General on Blair's decision at Anti-Corruption Conventions. This story also highlights a recent article on Corruption in Iraq

  • Is Corporate Social Responsibility More Than Just Public Relations? CSR Is a central issue at the World Economic Forum (Jan 24-29, 2007). In a major cover story, Business Week magazine, examines the issue: "Beyond the Green Corporation." Senior Editor Pete Engardio writes that now CSR is far more than just PR for top CEOs. He notes that a list of the 100 most sustainable corporations will be published at the Davos, Switzerland meeting of the World Economic Forum. The article stressed that simply put, sustainability now in the corporate vocabularly of CEOs means, "meeting humanity's needs without harming future generations." See Business Week

  • Ries To Lead ERC Fellows. On January 16, 2006, the Ethics Resource Center announced that M. Martha Ries, Vice President, Ethics and Business Conduct, Boeing Company, has been elected Chair of the prestigious and influential ERC Fellows Program.  This program, now in its tenth year, brings together chief ethics officers from numerous major U.S. corporations to exchange views and promote ethics research. Ms. Ries, based in Chicago, assumed leadership of Boeing's ethics programs in March 2004. She is responsible for companywide internal policies and procedures, regulatory tracking, operational activities and compliance related to the Ethics and Business Conduct.

  • Heritage Foundation Publishes 2007 Index of Economic Freedom. On January 23, 2007, the U.S.-based Heritage Foundation published its 2007 Index of Economic Freedom which measures and ranks 161 countries across 10 specific freedoms, from business freedom and property rights to freedom from corruption. The top 10 in order are: Hong Kong, Singapore, Australia, United States, New Zealand, United Kingdom, Ireland, Luxembourg, Switzerland, Canada. The new findings show that economic freedom worldwide has decreased slightly since last year but remains high. The Middle East’s freedom increased to its highest level since 1995. Europe, Asia, and the Americas are the three freest regions, and each has something special worth noting. Asia has both the world’s three freest economies and its least free economy (North Korea). Europe has over half of the top 20 countries, and the Americas are home to both the richest and some of the most dynamic countries in the world.

  • South African Governance Concerns To Be Raised Before African Union. Reuters reported on January 24, 2007 that a report to be presented in coming days to heads of state of the African Union highlights South African governance issues, especially crime, graft and xenophobia. The African Peer Review Mechanism (APRM) report called on the government to "deal systematically, deliberately and effectively with the lingering vestiges of racism" and to "come up with better-informed measures to combat the growing problem of xenophobia."

  • U. S. Senate Passes Ethics Reform. The U.S. Senate, responding to voter frustration with corruption and special interest influence in Washington, overwhelmingly approved far-reaching ethics and lobbying reform legislation under which senators will give up gifts and free travel from lobbyists, pay more for travel on corporate jets and make themselves more accountable for the pet projects they insert into bills. The Senate rejected the idea of setting up an independent office to investigate the ethical breaches of members (AP, 1/19/07).

  • Technology Groups To Create Human Rights Code. Technology Groups To Create Human Rights Code. Microsoft, Google, Yahoo, and Vodaphone have reached an agreement with human rights groups and internet freedom activists to establish a set of principles covering how they deal with censorship and other restrictions. The move follows criticism of US tech companies dealings with China (See Business & Politics). The companies plan to consult a diverse group of NGOs, academics, and investors and to complete the guidelines in 2007 (See Press Release). (Financial Times, 1/19/07).

  • Diversity Still Lacking in American Management. According to a new survey by Hudson Highland, a recruitment and talent management firm, 76 percent of U.S. workers report to a Caucasian boss, just 33 percent to a female, and less than half report racial, ethnic or gender diversity on their company's executive team (1/17/06). Moreover, while 47 percent indicate a formal diversity initiative at their company, only 31 percent of all respondents believe these programs create salary and job advancement opportunities for women and minorities.

  • Oil-for-Food Chief Formally Charged with Bribery. Benon Sevan, former chief of the $64 billion UN humanitarian oil-for-food program for Iraq has been indicted. Mr Sevan, who was indicted in New York along with Fred Nadler, an American businessman and brother-in-law of former UN Secretary-General Boutros Boutros-Ghali, is charged with fraud and conspiracy for allegedly taking a $160,000 bribe to influence who could buy Iraqi oil under the scandal-tainted program (Wall Street Journal, 1/17/07).

  • VW Executive Begins Trail, Admits to Breach of Trust. Volkswagen AG's former personnel chief, Peter Hartz, admitted to breach of trust as his corruption trial opened in Frankfurt, making it possible that he will receive a fine and a suspended sentence. Hartz faces 44 charges of breach of trust for allegedly bribing labor officials at the company - including granting 1.9 million euros in "special bonuses" to Klaus Volkert, the former leader of VW's powerful employee council (Deutsche Welle, 1/17/06).

  • Blair Faces Pressure Over Corruption Probe Hault. UK prime minister Tony Blair came under intense international pressure from 130 campaign groups and charities from 30 countries to reverse his decision to scrap a corruption inquiry by the Serious Fraud Office into a major arms contract between the UK's BAE Systems and Saudi Arabia. Lobby groups including Amnesty International, Oxfam, Friends of the Earth and Transparency International warned the UK government that its decision to scrap the investigation, made after intense lobbying by BAE and anger among Saudi officials, is likely to do “irreparable damage” to Britain’s anti-bribery reputation and could be accused of “double standards” in its dealings with developing nations. (Financial Times, 1/15/07) To read the letter, which has been released just as a meeting of OECD officials on anti-bribery issues convenes in Paris, click here (.pdf).

  • European Party Head Faces Funds Inquiry. Joseph Daul, the new leader of the European People's party, the European parliament's biggest political group, is part of an inquiry in France into the diversion of €16m of agricultural money in the 1990s that has also ensnared three former agriculture ministers, reported the FT on January 12, 2006. Mr Daul was placed under investigation in 2004 for allegedly diverting money to finance the French farmers' union and to pay his own staff while he was head of the National Breeding Confederation, the French beef producers' union, between 1993 and 1998. According to the article, the eurosceptic UK Independence party unearthed the allegations on January 11.

  • Big Retailers Create Unified Code for Labour Standards. The world’s four largest supermarket chains – Wal-Mart, Tesco, Carrefour, and Metro – working with Migros, the largest Swiss retailer, have for the first time agreed on a draft code of workplace standards called the Global Social Compliance Programme aimed at eliminating problems such as child labour and unpaid wages in their vast global supply chains. The programme includes standards drawn form the companies existing codes of ethics and will also set out principles aimed at standardizing and monitoring initiatives to combat “audit fatigue” among suppliers (Financial Times, 1/11/07).

  • IFC Issues New Corruption and Fraud Sanction Procedures. On January 4, 2007, the International Finance Corporation, the private arm of the World Bank, announced that, as a part of a larger World Bank Group effort, it is applying a new procedure for combating fraud and corruption related to newly initiated investment financing, as well as technical assistance and advisory projects. Under the new procedure, any person found to have engaged in corrupt or fraudulent practices in connection with an IFC project may be subject to sanctions including the publication of the person’s name on a Web site and possible debarment.

  • CSRWire Reports on Top CSR News of 2006. In a January 4, 2007 article, CSRWire highlighted the most important CSR news stories of the year, beginning with awarding of the Nobel Peace Prize to Muhammad Yunus and the Grameen Bank, a development which it claims elevated the global notoriety of microfinance. According to the article, CSR dominated headlines in 2006 more so than ever before with issues like microfinance and 'green' energy becoming part of the collective consciousness.

  • Siemens Faces Iraq Bribery Probe. German prosecutors announced that they are investigating whether the technology and engineering conglomerate Siemens AG paid bribes to win contracts in Iraq while the country was ruled by Saddam Hussein. According to prosecutors, the investigation followed a 2005 United Nations report that named 63 German companies said to have paid bribes to Saddam's Iraq. The news follows that of other corruption probes focusing on the Munich-headquartered company and the detainment of six current or former employees in Munich in November (AP, 1/3/07).

  • Vietnam's Top Ten Corruption Cases 2006. The Government Inspectorate of Vietnam has selected its 10 biggest corruption scandals it uncovered in 2006, with the the million-dollar gambling case involving Bui Tien Dung, former General Director of Vietnam's Transport Ministry's Project Management Unit 18, topping the list. For the full list see report by Thahn Nien Daily, 1/4/07.

  • Congratulations Bentley. Bentley College in Massachusetts, US,a global pioneer in business ethics education, is celebrating the 30th anniversary of its Center for Business Ethics (CBE). It is led by Michael Hoffman, founder and executive director, who notes: "Many people think business ethics means the ethics of individuals, but it is much more than that. Good people can be brought down by bad organizations and good organizations can be brought down by bad people. It is vital for organizations to constantly remind employees that succeeding in financial goals is important, but not at the expense of values and ethical propriety."

  • Home Depot Chief Resigns Following Compensation Criticism. Robert L. Nardelli, the chief executive of Home Depot, who has come under heavy criticism for his pay package, has resigned. Mr. Nardelli, whose pay of more than $240 million over the past six years shareholders questioned earlier this year after flagging stock prices, will receive about $210 million in compensation from Home Depot, the US's second largest retailer (The New York Times, 1/3/07).

  • Pharmaceutical Chief Accuses Generic Drug-Makers of Exploitation. Jean-Francois Dehecq, Chairman of Sanofi-Aventis, one of the world's largest pharmaceutical companies, has attacked generic drug companies in the developing world for failing to focus on supplying medicine to their own countries. Dehecq accused groups of "exploiting people in the South" by paying wages of "three times nothing" to employees in developing countries and then exporting products to the North rather than selling their low-cost medicines locally (FT, 1/2/07).