News Archive: 2009 (January - May)

• May 31 - Mystery Surrounds Hungarian Gas Deal. Global Witness reported that the takeover of Hungary's largest independent gas suppliers, Emfesz, by persons who are currently unknown further highlights how the European Union must tackle the question of secrecy in the gas trade if it wants to guarantee energy security.
  
  

  
  
  
• May 29 - Ilinois State Corruption Charges Mount. The wave of indictments of top politicians for corruption in the U.S. state of Illinois is gathering momentum with new announcements from the prosecutors due soon, according to a AP report. Not only has former Governor Rob Blagojevich been charged, as well as some of the leaders of the state assembly, but the release of telephone tapes between the Governor's brother and new Senator Roland Burris highlighting discussion of paying cash to the Governor in exchange for being considered for the U.S. Senate seat, has created a firestorm, as the Chicago Tribune reports, and may lead to a U.S. Senate ethics inquiry.
  
  
• May 27 - India Warns Defense Contractors. Press Trust of India reported that, sending a strong message against corruption in defence deals, Defence Minister A K Antonysaid the government will not hesitate to cancel contracts "if there is malpractice" in procurements" Giving a stern warning to Indian private industries who intend to enter into contracts with foreign suppliers and OEMs (original equipment manufacturers), the Defence Minister said; "They should not try to bribe our people... If they try, they will face the consequences, as also the officers and manufacturers who are in touch with them".
  
  
• May 26 - Japan Moves to Raise Corporate Governance. Japan’s trade ministry will ask securities exchanges to bolster corporate governance rules and won’t recommend that corporate laws be altered to expand oversight, a trade ministry official said today. Bloomberg reported that a 20-member panel led by Japan’s Ministry of Economy, Trade and Industry also won’t require listed firms to hire outside directors, though it will recommend that companies have at least one independent auditor or director. The panel will issue its recommendations formally when it publishes a report on corporate governance in June. The panel’s deliberations are part of an ongoing effort by Japanese regulators to spur improvements in governance standards in order to attract capital after the global credit crisis damaged corporate earnings.
  
  
• May 26 - Major Corporations Face High-Profile Human Rights Trials. The Financial Times reported that a New York court will start hearing a lawsuit today alleging Shell was complicit in Mr Saro-Wiwa’s death (he was executed in Nigeria in 1996) and a campaign of terror by Nigerian security forces. The claim – which the company says is false and is defending – is one of a series of similar cases launched against big businesses from round the world in industries ranging from carmaking to mining. FT writer Michael Peel said the potential of these lawsuits to generate huge damages and disastrous publicity now hovers, according to one lawyer whose firm defends big companies, “very close to the consciousness of corporate America acting overseas.”
  
  
• May 26 - U.S. Justice Department Increases Corporate Corruption Investigations. The Wall Street Journal reported that at least 120 companies are under investigation for violations of the Foreign Corrupt Practices Act, according to Mark Mendelsohn, a deputy chief in the Justice Department division overseeing the prosecutions, up from 100 at the end of last year. Among the companies currently under review are Shell and Sun Microsystems, according to the companies' disclosures.
• May 26 - BP-Russian Governance Struggle. The power struggle over management leadership of TNK-BP, the huge oil joint venture in Russia, is heating up with BP nominating Pavel Skitovich as its candidate for CEO, Reuters reported. Skitovich was chief executive of Polyus Gold, Russia's largest gold miner, for five months in 2007 and works for Interros, the investment company of Russian billionaire Vladimir Potanin. But, the Russian government is believed to be set to propose a rival candidate, Maxim Barsky, a board member at oil firm West Siberian Resources. UPDATE:May 27 - No sooner had BP made itrs announcement, than it was effectively overruled by its Russian partners with the decision that Alpha Group billionaire Mikhail Fridman, the TNK-BP chairman who is close to the Kremlin leadership, will serve as interim CEO as well. Moscow News reported he will hold this post until the end of the year when a new CEO will be appointed, possuibly one or other of new senior company appointees Pavel Skitovich and Maxim Barsky, managing director of the West Siberia Resources oil company.
  
  
• May 25 - Iraqi Trade Minister Forced to Resign. Prime Minister Nouri al-Maliki accepted his embattled trade minister's resignation Monday, the day before a scheduled no-confidence vote in parliament. McClatchy Newspapers reported, "It's over," said Maliki media adviser Yaseen Majeed. "They don't have to have the no-confidence vote anymore." The trade minister, Falah al-Sudany, is the first ministry head since the founding of the modern Iraqi state in the 1920s who has been forced to answer corruption charges in public.
• May 19 - Iraq Corruption Hits Basic Food Rationing. Iraq’s state-run food rationing system is crumbling and corruption in high places could be partly to blame. A new survey by the Baghdad Ministry of Planning and Development Cooperation of 120,000 families which had qualified for state food handouts in 15 of Iraq’s 18 provinces, found that 18 percent of families had not received the nine-item food ration for 13 months; 31.5 percent for 7-12 months; 14.5 percent for 4-6 months; 22 percent for 2-3 months and 14.5 percent for one month. The survey also revealed concerns about the quality of food items: 16 percent of the surveyed families said the ration items in April were bad, 45 percent said they acceptable, while 29 percent said they were good. See full story at IRIN News and another on corruption in Iraq at the BBC.
  
  
• May 19 - Lord Black's Conviction to be Reviewed by U.S. Supreme Court. The Washington Post reported that the Supreme Court has agreed to review the conviction of media magnate Conrad Black, who is serving a 6 1/2 -year sentence for mail fraud and obstruction of justice. Black was convicted in 2007 of stealing more than $6 million from Hollinger, now known as Sun-Times Media Group, in an illegal executive compensation scheme. The decision to review the Black case will involve the court in an evolving controversy about how mail and wire fraud laws have been expanded by a provision covering deprivation of the "right to honest services." The provision has made it easier for prosecutors to convict public officials, but the lower courts are divided about how it relates to private employers.
  
  
• May 15 - US Government Intervenes in Bank of America Board Governance. The Wall Street Journal reported that Federal officials have pressured Bank of America to revamp its board by bringing in directors with more banking experience, as regulators place the bank under increasingly heavy government scrutiny. The move represents unusual influence by the federal government over the workings of a financial institution in which it doesn't own a stake.The moves underscore the balancing act faced by the federal government as it tries to steer the banking sector through its crisis while also involved in a broader pattern of engagement in the operations of individual U.S. banks (see our NEWS page for April 30 on earlier board issues at this bank).
  
  
• May 12 - South Africa - Anti-Corruption Reassurance. AFP reported that new Finance Minister Pravin Gordhan warned that corruption won't be tolerated. he said, "I have no time for corruption and corrupt people," and added, "South Africa will do itself a great favor in the future if all of us ensure that we do not engage in any kind of corrupt or even mildly corrupt kind of activity."
  
  
• May 12 - Japanese Opposition Leader Ichiro Ozawa Resigns in Wake of Scandal. The Financial Times reported that the leader of the Democratic Party has quit after failing to quell criticism over the arrest of a senior aide in a fundraising scandal. Though Mr Ozawa strongly denies any wrongdoing, the alleged illegal donations from a scandal-hit construction company - long a bulwark of the ruling Liberal Party's money-raising machine - undermined the DPJ's claim to offer a new and cleaner kind of politics.
  
  
• May 12 - Top New York Lawyer Pleads Guilty. Marc Dreier, 59, a once highly prominent New York corporate lawyer, admitted to massive fraud in court. Prosecutors say he stole more than $400 million from investors. Bloomberg reported that he told the judge, "I engineered a scheme to issue and sell fictitious promissory notes purportedly issued by companies in the United States and Canada.”
  
  
• May 11 - Australian Company Withdraws from Burma. An internet news site, Asia Sentinal, reported that Downer EDI, a major Australian engineering company, has abruptly abandoned a Burma project by a subsidiary engaged on the construction of a lavish new airport.  The report stated that Downer's Singaporean consultancy arm, CPG Corporation, was contracted to design the revamped airport alongside Asia World, the Burmese conglomerate whose management is targeted by sanctions in Australia, the US and Europe. Downer claimed it had been unaware of its subsidiary’s Burmese work until contacted by Asia Sentinel- "As soon as this matter was brought to the attention of the chief executive, enquiries were made immediately and a decision followed to withdraw from the contract in an appropriate manner," said Downer spokesperson Maryanne Graham.
  
• From L: Presidents Teodoro Obiang of Equatorial Guinea, Congo's Denis Sassou Nguesso and Gabon's Omar Bongo Ondimba
  
  May 8 - French Prosecutor Now Challenges Investigative Judge in Test Case. The Paris prosecutor's office is now challenging a precedent-setting ruling made earlier this week by Paris's most senior investigating magistrate, Françoise Desset, who accepted a complaint brought by Transparency International France to investigate assets in France – from chateâux to Ferraris to multiple bank accounts – owned by the ruling families of Gabon, Equatorial Guinea and Congo-Brazzaville. AFP said the charge is that these assets were purchased with the proceeds of corruption. The investigation could cause diplomatic problems for the French government and thus the prosecutor's appeal, which is based on the assertion that TI France has not been wronged and so has no standing to bring the complaint.
  
  

• May 5 - Shell to clash with investors on pay. The Financial Times reported that shareholders in Royal Dutch Shell, Europe’s biggest oil company, have been advised by RiskMetrics, the international voting agency, to vote against a pay plan in protest over awards made to top executives. Investor groups assert that Shell failed to meet performance objectives, yet still set major pay rises for top managers. Total pay of Peter Voser, who will take over as chief executive in July, increased by 45 per cent to €4.14m.

  May 4 - Top indonesian Anti-Corruption official Accused of Murder. The BBC reported that Indonesian police have detained the country's top anti-corruption official as a suspect in the murder of a prominent business executive. Antasari Azhar was questioned on Monday as a witness, but police told reporters that based on strong evidence he would now be interrogated as a suspect. Nasrudin Zulkarnaen, a former director of a state-owned business, was killed in a drive-by shooting in March. Analysts say the scandal is a huge blow to the Corruption Eradication Agency.
  
  
• May 2 - Gunfight Breaks Out as Iraqi Soldiers Try to Arrest Trade Officials. The Washington Post reported from Baghdad that an effort by members of Parliament to prosecute what they say is a nest of corruption in the Trade Ministry led to a gun battle between ministry officials and Iraqi soldiers and the sudden disappearance of the trade minister and several senior ministry officials. Anticorruption officials accompanied by Iraqi soldiers went to the ministry’s headquarters to carry out arrest warrants on corruption charges against nine officials. “The Trade Ministry has become one of the most significant arteries for corruption and squandering of public funds in Iraq,” Sabah al-Saedi, head of Parliament’s integrity committee, told reporters.
  
• May 1 - Knocking the Shine Off Golden Coffins. As shareholders become ever more vocal about huge compensation to corporate titans, the board of Houston oil-drilling company Nabors Industries has agreed to dent (modestly) the benefits of one of the best compensated U.S. industrialists. The Wall Street Journal reported that “death benefit” for the dominating company Chairman and CEO Eugene M. Isenberg, 79, has been cut to $100 million in cash from $264 million (his estate gets the cash if he dies in the next four years). While this “golden coffin” pact may be modified it is still one of the largest in the nation. Nabors said the CEO earned a 2008 bonus of $70.8 million; he will also get a $100 million cash payment if he becomes disabled or is fired without cause; and the new contract "reflects significant executive concessions."
  
  
• May 1 - Swiss-U.S. Bank Secrecy Case Heats Up. AP reported that the Swiss government is asking a Miami court to reject a U.S. government petition that would force UBS, the major Swiss bank, to hand over the names of 52,000 Americans who are believed to have UBS accounts and allegedly, according to U.S, authorities, may be withholding almost $15 billion in assets from U.S. taxes. The Swiss said handing over the names would breach a U.S.-Swiss tax treaty, impinge on Switzerland's sovereignty and could lead to UBS violating Swiss law.
  
  
• April 30 - Former S. Korean President at Center of Bribery Probe. Former president Roh Moo-hyun, who came to power in 2003 and left office last year, is being questioned over allegations that he took millions of dollars in bribes from a wealthy businessman. The BBC reported that he went on national TV to state, "I feel ashamed before my fellow citizens. I am sorry for disappointing you." At one point a bag containing the equivalent of US $1m in cash is said to have been delivered to the presidential office.
  
  
• April 30 - Shareholders Rebel at Bank of America. Shareholders voted to strip Kenneth Lewis of his chairmanship of the board of directors of Bank of America. the Wall Street Journal reported that after an annual meeting vote (50.3% voted against the board's endorsement of Lewis), the board announced that Lewis will stay as president and chief executive officer of the firm. The vote will be seen widely not only as evidence that shareholders can force changes, but also as support for activists keen to see all major U.S. firms split the CEO and board chair roles. Recently, the US government forced a split at General Motors (see our earlier stories at NEWS).
  
  
• April 27 - Bank of America Crisis Deepens - The former head of Merrill Lynch, John Thain, who was forced out of Bank of America within days of the giant U.S. consumer bank acquiring Merrill, is now assereting that Bank of America is publicly making misleading statements about its knowledge of Merrill's developments prior to what was one of the largest ever mergers in American banking. The Wall Street Journal interviewed Mr. Thain today and also in an editorial said government pressure on the bankers (see below) is shocking (see editorial).
  
  
• April 23 - Governance Clash - Are there times when the public interest for secrecy trumps shareholder requirements for disclosure?
  The Wall Street Journal exclusively obtained transcripts of the New York State Attorney General's cross examination of Bank of America CEO Kenneth Lewis about his bank's acquisition of investment bank Merrill Lynch despite learning of staggering losses at Merrill in December. Lewis is reported as saying under oath that then US Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke did not want his to tell his shareholders the facts of Merrill's problems or the of the bail-out discussions that Lewis was having with the U.S. Government.
  
  Standard governance practice is for the CEO to inform shareholders when there is a major material development and the discovery of huge and unexpected losses at Merril was certainly material, but Lewis did not inform his shareholders. The article suggests that the Government officials feared that the news would damage already shattering public confidence in the economic system and add to the crisis. While the news may lead to storms of shareholder protests and analysis by governance experts, Lewis is quoted as saying that the government wanted everything in place to do the deal "so that you didn't set off alarms in a tragic economy."
  
• From the transcript:
  Questions to Lewis:" Were you instructed not to tell your shareholders what the transaction was going to be?"
  Lewis: "I was instructed that 'we do not want a public disclosure.'"
  Question: "Who said that to you?"
  Lewis: "Paulson..."
  
  

• April 22 - Bigger Sentence for Former Macau Minister. AFP reported that Macau's Court of Final Appeal jailed disgraced former minister Ao Man-long for 28-and-a-half years, extending his sentence in the gaming haven's biggest-ever corruption probe. Ao, 52, former Transportation Minister, had already been sentenced to 27 years in prison in January last year on 57 graft charges including bribe-taking and money laundering.
  
  
• April 20 - Warnings Given on Governance of $700 billion US Bank Bail-Out Fund. U.S. Inspector General Neil Barofksy, mandated to monitor the “Troubled Asset Relief Program” cites potential flaws and calls for U.S. Treasury safeguards in a special report to the Congress. The governance of the vast fund has been controversial from the start. Now, the IG  states, according to AP, that an Obama Administration private-public partnership plan designed to rid financial institutions of their "toxic assets" is tilted in favor of private investors and creates "potential unfairness to the taxpayer."
  
  
• April 17 - New Challenges for Splitting Key Post at Bank of America. Against a background of enormous financial losses, U.S. shareholders are now clamoring for governance reforms on lines common in many other countries - splitting corporate leadership with distinct Chairman of the Board and Chief Executvie Officer posts. Currently, Kenneth Lewis holds both positions at Bank of America, but The Wall Street Journal reports a gathering campaign - perhaps a precedent-setter for big U.S. business - to vote for a split at the annual shareholders meeting on April 29.
  
  
• April 16 - Ethics Tests for Business School Students! Writing on a Harvard University website today, Aine Donovan, the Executive Director of the Ethics Institute at Dartmouth College, says If business schools are to consistently produce outstanding ethical leaders, they should not only focus on teaching ethics in the right way and living up to the right honor code,They also need to do a much better job of filtering the people they invite into their exclusive cadres..."Unfortunately, too many business schools themselves make bad people decisions when it comes to choosing their own enrollees, with the result that a few MBAs at the top have produced great damage."
  
  
• April 13/17 - Summt of the Americas Starts April 18 - Looking Back at Corruption. On the eve of the summit in Trinidad & Tobago, The Miami Herald rcalls the first such summit at the end of 1994 in Miami -" With a dash of their pens, the majority of the region's 34 leaders signed what was billed as the world's first international agreement to stop corruption. They vowed to combat widespread political thievery with every resource at their disposal -- and they put it in writing. Fifteen years later, almost a dozen who signed the anti-corruption pact in Miami or in subsequent years are in prison, under indictment, or spent years dodging criminal charges of corruption or violation of human rights. From Panama to Peru and Paraguay, the Western Hemisphere presidents have battled accusations of embezzlement, money laundering and even murder.While seeing leaders who signed precedent-setting declarations against corruption fall to criminal charges themselves is rich with irony, experts agree: the 1994 summit in Miami made it happen."
  
  
• April 14 - Illinois Governor says he is not guilty - see original charges on April 2 below.
  
  
• April 9 - Labor Rights Activists Protest in the Philippines. According to the "Clean Clothes Campaign" authorities in the Philippines are abusing their legal system as a means to repress workers' rights. A new court case against 33 labour-rights activists and factory workers is politically motivated and aimed at suppressing labour rights in the country. The workers, most of whom are women, are officials and members of three labour unions active in garment industries in the province of Cavite, just South of the capital Manila. They organised a strike in their factories in September 2006 to protest against the factories' refusal to negotiate for a collective bargaining agreement with the unions. Two days after their initiation, the peaceful strikes were violently dispersed by local police forces and agents of a private security company, who attacked the strikers with clubs and other crude weapons, injuring dozens of the workers.
  
  
• April 7 - Fujimori Found Guilty. Bloomberg reported from Lima that Peru’s former President Alberto Fujimori has been sentenced to 25 years in prison being found guilty of human rights abuses after a 15- month trial. Fujimori, 70, was convicted on four charges that involve ordering two massacres of 25 people and the kidnappings of a journalist and a businessman while president from 1990 to 2000. He fled the country in 2000 as charges mounted of grand corruption, but was extradited from Chile to stand trial.
  
  
• April 7 - Madoff Friend Merkin Sued By New York State. J.Ezra Merkin, until recently the chairman of the once vast General Motors Acceptance Corporation, and manager of several private investment funds from which he pocketed $470 million in commissions as he placed vast assets from mostly Jewish charities into the hands of Ponzi scheme maverick Bernard Madoff, has been sued by New York State Attorney General Andrew Cuomo for, according to The New York Times, “deceit, recklessness and breaches of fiduciary duty that have resulted in the loss of approximately $2.4 billion.”
  
  
• April 6 - Zuma's Path to S. African President Now Looks Clear. After years of allegations, the BBC reported prosecutors in South Africa have announced they are dropping corruption charges against African National Congress (ANC) leader Jacob Zuma. Chief prosecutor Mokotedi Mpshe said phone-tap evidence suggested political interference in the investigation. Zuma is expected to become president after general elections on 22 April.
  
  
• April 4 – Former Top UK Banker Refuses to Cut Pension. After massive losses, the Royal Bank of Scotland ousted CEO Sir Fred Goodwin last October, but ever since a battle royal has been waged by politicians to convince Sir Fred, 50, to take a cut in his lifetime annual UK £703,000 pension – now RBS shareholders have overwhelmingly passed a motion calling for Sir Fred to the decent thing, as they said. And new RBS Chairman Sir Philip Hampton told the bank's annual meeting that he has called on Sir Fred to take a reduction. But, on the week-end British papers ran stories declaring Sir Fred refuses to budge and will keep the cash, reported Reuters. RBS is now 70% owned by the UK Government.
  
• April 3 - Leading Austrian Banker Freed on Euro 100 million bail.  Austrian prosecutors are alleging that Julius Meinl, one of the country’s most prominent bankers, has been at the center of an enormous multi-billion euro international set of corporate scams. Bloomberg reported that after being held in custody he has now been released after posting 100 million euros ($134 million) bail. Meinl’s bank claims it is not impacted by the charges, but this is the second bank in Vienna to recently be caught in a scandal, with a rival having lost more than $2 billion of client cash on investing with Bernard Madoff in the United States.
  
  
• April 2 - Former Illinois Governor Indicted The New York Times reported from Chicago, "Rod R. Blagojevich, this state’s ousted governor, was charged on Thursday with 16 felony counts, among them racketeering conspiracy, wire fraud and extortion conspiracy in a wide-ranging scheme to deprive residents of “honest government,” prosecutors said, including trying to leverage his authority to pick someone to fill President Obama’s former Senate seat." Mr. Blagojevich, who was believed to be vacationing with his family near Walt Disney World in Florida when the indictment was announced, issued a statement through his publicist. “I am innocent. I now will fight in the courts to clear my name.” he said. (NOT GUILTY - on April 14 in his first court appearance the former Governor pleaded not bguilty - CBS reported)
  
  April 2 - Bad Day for KPMG.
  - Two former KPMG partners received stiff sentences for aiding a major tax evasion scheme. The Wall Street Journal said they were given prison sentences of 97 months 121 months plus multi-million dollar fines.
  - Auditors sued for $1 billion by liquidators of former huge sub-prime mortgage lender New Century. The Financial Times reported the liquidators claim KPMG was responsible for New Century's collapse.
  
  (NEW CENTURY FINANCIAL: the demise of New Century, once one of the largest sub-prime mortgage lenders in the United States, revealed extraordiny problems in corporate governance. Michael J. Missal, a partner at K&L Gates LLP, Washington DC, was the court appointed examiner in the New Century Financial Corporation bankruptcy. He released a voluminous official report that reads like a detective novel in spring 2008 and he and a colleague at the law firm, Lisa M. Richman, examined the governance issues in an article last October for Mortgage Banking magazine.)
  
• April 1 - Bangladesh Government Launches Anti-Graft Effort – the Siemens Connection. The Christian Science Monitor said that Bangladesh's newly elected government has taken its first high-profile swipe at the problem of endemic corruption. It reported that Arafat "Koko" Rahman, the son of former Prime Minister Khaleda Zia and a prominent businessman, was formally charged with laundering nearly $2 million in kickbacks, including $180,000 from Siemens Corporation, the German electronics giant. Mr. Rahman and his brother Tarique, although allegedly at the center of many corrupt deals in Bangladesh, were considered untouchable between 2001 and 2006, when their mother held office. The charges against Arafat Rahman are the first involving foreign bribery and could result in a jail sentence of seven years if he is found guilty.
  
  
• April 1 - Charges Dropped Against Stevens. Reuters reported that US Attorney General Eric Holder has decided not toi pursue the corruption case against former Senator Ted Stevens, 85, who was convicted last october, lost his reelection bid in Alaska a few weeks later, and was appealing his case. Lawyers for Stevens, once the all-powerful chairman of the Senate's Appropriations Committee, always claimed that the government prosecutors hid informatioin from them in the trial. Ho,lder's decision is seen in part as sending a signal to prosecutors to nbetter prepare future cases.
  
  

  Trace Releases DVD on Toxic Transactions - The hour long movie features interviews with anti-bribery experts around the world. Trace says - The video features high-profile anti-bribery case studies and interviews with executives at companies such as Siemens, GE and Tyco, as well as the Department of Justice, Securities and Exchange Commission, World Bank, OECD, and UK Serious Fraud Office.
• March 28 - Burma's "Golden Gas" Fuels Oppression. A new video from Burma reveals the links between ongoing oppression and profits from the oil and gas industries. Revenue Watch grantee the Shwe Gas Movement presents the little-told story of how residents living atop the largest gas deposit in Southeast Asia lack their own electricity and face massive relocation without compensation to make way for a $52 billion gas development.
  
  
• March 26 - Former Taiwan President on Trial. The corruption trial of Taiwan’s former president, Chen Shui-bian, opened in a heavily guarded Taipei courtroom on Thursday, hours after Mr. Chen blasted the proceedings as a “tool for political suppression and persecution” by his successor. the New York Times reported that prosecutors charged that he stole or took bribes totaling more than a billion Taiwanese dollars ($30 million), sometimes in return for political favors involving land deals. His wife, Wu Shu-chen, his son and his daughter-in-law pleaded guilty last month to money laundering,and Mrs. Wu also pleaded guilty to forgery.
  
  
• March 26 - Afghan Corruption Not So Bad! Reuters reported that President Hamid Karzai said foreigners exaggerate the extent of corruption in Afghanistan for political reasons. he said he owns no property and no significant bank accounts and his income is 24,350 afghanis ($487) each month. He said, "Foreigners have defamed Afghanistan so badly in terms of corruption. But it's not as serious as they think."
  
  
• March 19 - Ethics Resource Center Announces Winner of Annual "PACE" Award for Excellence in Corporate Ethics. Jean-Paul Agon, Chief Executive Officer of L'Oréal, the global cosmetics firm, wins this prestigeous leadership award. Full details at ERC.
  
  
• March 17 - Obama Stresses AIG Bonuses Raise Ethics Issues. As the political uproar gathers momentum in the United States over the payment by insurance giant AIG of vast bonuses to execiutives in its finance division (the one that amassed such huge losses that the U.s. Government has now provided over $170 billion in a bail-out) so President Obama declared "... it’s hard to understand how derivative traders at A.I.G. warranted any bonuses, much less $165 million in extra pay. How do they justify this outrage to the taxpayers who are keeping the company afloat?... I’ve asked (Treasury) Secretary Geithner to pursue every legal avenue to block these bonuses and make the American taxpayers whole...This isn’t just a matter of dollars and cents. It’s about our fundamental values."
  
  President Obama added: "All across the country, there are people who work hard and meet their responsibilities every day, without the benefit of government bailouts or multi-million dollar bonuses. And all they ask is that everyone, from Main Street to Wall Street to Washington, play by the same rules/ That is an ethic we must demand. See full statement.
  
  
• March 14 - Gucci, Hermes - Only the Best for Top Chinese Officials from Subordinates. The New York Times reported that at this time of the Peoples' Party Congress in Beijing the luxury stores are doing booming trade. The delegates seek to curry favor with their superiors, the nation’s top leaders, by showering them with expensive gifts: Gucci handbags, Hermès scarves, Montblanc pens and $30,000 diamond-studded Swiss watches. The gifts are essentially bribes or kickbacks, and they are prohibited under Chinese law. But in China, legal experts say, bribery laws are selectively enforced, and party members in good standing are rarely investigated.
  
  
• March 14 - Madoff Appeals! - Confessed swindler Bernard L. Madoff asked a federal appeals court on Friday to overturn a judge's decision to send him to jail pending sentencing, reported the Wall Street Journal. Yesterday he was sent to a Manhattan prison cell after saying "sorry" in court. Prosecutors say that Madoff accounts indicated management of over $64 billion of client funds, but so far barely $1 billion has been found. The huge figure may be pure fiction, but where the Madoff money went is the $64 billion question and Madoff is not cooperating with the investigation. Madoff also filed court papers p[lacing his family wealth at around $825 million.
  
  
• March 14 - Surprising Who Needs A Moscow Loan! The New York Times reported many Russians are outraged on reading that the country’s richest woman, Yelena Baturina, has applied for about $1.4 billion in government loan guarantees for her construction company, Inteko. Forbes magazine estimated her fortune in 2008 at $4.2 billion. Her company is involved in huige construction developments in Moscow. Her husband is Yuri M. Luzhkov, the powerful Mayor of Moscow.
  
  
• Huguett Labelle - Chair of Transparency International - Explains to The Economist magazine what Transparency is - her letter:-

  SIR – Certain assertions in your article on transparency in financial markets deserve to be reconsidered (Economics focus, February 21st). You describe transparency as amorphous, criticise it as costly and say it takes second place to trust in the money markets. It is hardly surprising that shortcomings may arise from inaccurate, immaterial and incomparable publicly available information, but transparency as a principle cannot be blamed.

  A hefty prospectus veiled in legal jargon should not be considered a transparent tool of disclosure; it is a means of obfuscation. The sheer complexity of repackaging subprime loans to achieve AAA credit-ratings is indicative of efforts to deceive through disguise. Trust in financial markets vanished when the lack of transparency became apparent; it is only through transparency that investor confidence and public trust can be won back. As for “symmetry”, some investors will always be able to use information better than others, but this information should be available to all. Transparency leads to a level playing field.

  The failure of the markets has resulted in massive bail-outs. By comparison, the costs of disclosure in well-regulated markets are borne by all those who promote a risk, or transfer it to others. From preventing excessive short-term risk-taking to exposing potential conflicts of interest, transparency is key to ensuring that confidence is restored.

  Huguette Labelle
  Chair Transparency International, Berlin.
  

• March 10 - Threats to Corporate Governance Progress in Russia Kazakhstan and Ukraine. Reuters reported that Fitch, the credit rating agency, said the economic crisis could set back progress in corporate governance that has been made in these three countries, which in turn could effect their credit ratings. "Weak corporate governance may constrain the rating of a company regardless of how strong its financial profile is, and recent improvements tend to have been driven primarily by international listing and funding requirements," Fitch said in a statement.
  
  
• March 9 - Losing the Anti-Corruption Battle in Kenya. Transparency International-Kenya today released its domestic corruption perceptions survey with the conclusion that "The Grand Coalition Government in Kenya seems to be losing the war against corruption. In the wake of widespread starvation and rising costs of living, TI-Kenya's National Corruption Perceptions Survey shows that many Kenyans believe the government has the power, the ability but not the will to tackle corruption. Parliament stands especially indicted in the failure to uphold the common good." Coinciding with news of major graft within the maize and oil sectors, TI-Kenya's new survey found:-

  • Most Kenyans surveyed would like to see more and conclusive prosecutions of individuals implicated in mega scandals
• The majority have lost confidence in the collective will of the current parliament to effectively address corruption
• The re-emergence of post-election violence is viewed as highly likely should the current administration fail to effectively institute anti-corruption reforms.
  
  
• March 9 - Goldman, Sachs Now Challenges Indian Authorities Over Corporate Governance. The Indian Government has rejected criticism from the New York bankers over its decision not to consult minority shareholders on $20 billion of subsidies for refiners taken from the Oil & Natural Gas Corporation. While Goldman, Sachs has voiced serious concerns about the major cash withdrawals, Bloomberg reported - “The government is the majority shareholder in ONGC and in every company, the majority shareholder decides,” R.S. Pandey, the senior-most bureaucrat in the nation’s Oil Ministry, said by telephone from New Delhi today. “It is not illegal.”
  
  
• March 4 - China Strengthens Anti-Corruption Efforts. The Chinese government will strengthen its efforts to promote clean government and combat corruption, Premier Wen Jiabao said in a speech at the Second Session of the 11th National People's Congress (NPC), Xinhua reported. China will focus on standardizing institutions and limiting the exercise of power, and prevent and punish corruption. Wen said, "We will resolutely investigate and prosecute corruption cases and punish corruptionists in accordance with the law."   A total of 4,960 Chinese officials above the county level were punished for corruption in a year ending November 2008, according to the Central Commission for Discipline Inspection of the Communist Party of China.
  
  
• March 3 – Zambia, Ex-President's Wife Jailed. Regina Chiluba, wife of the former president, has been ailed for three and a half years for receiving $300,000 from her husband in suspected stolen treasury funds and also property which included houses purchased from treasury funds. Reuters reported that former president Frederick Chiluba faces charges of theft of public funds amounting to $488,000, but denies any wrongdoing. In a separate case, former Zambia air force commander Sande Kayumba, his business ally Amon Sibande and an ex-senior officer in charge of logistics Andrew Nyirongo, were each sentenced on Tuesday to seven years hard labour for corruption.
  
  
• March 2 - Olmert Likely to Face Prosecution.  Israeli Prime Minister Ehud Olmert may be indicted over suspicion of receiving illicit funds from New York millionaire Morris Talansky, Attorney General Menachem Mazuz told Olmert's legal team on Sunday. Haaretz newspaper said the indictment is pending an additional hearing. In a letter to Olmert's attorneys, Mazuz stated that he believes the Prime Minister had methodically abused his public office and his status to acquire personal favors from Talansky over a period of time in exchange for assisting Talansky in his business ventures.
  
• Feb 26 - How Should Boards Handle CEO Sickness? Apple Inc.’s Board of Directors decided at the company’s annual meeting that it will not disclose further information on the health of CEO Steve Jobs, 54, who is on six months leave, due to return in June. The Wall Street Journal reported that although Jobs didn't attend the meeting—his first absence in years—he was a main topic of discussion. "We believe we have met all disclosure obligations," director Arthur Levinson said. Investors have been concerned about the company’s leadership. In early January, Jobs said he lost weight throughout 2008 and doctors concluded the cause is a hormone imbalance that “has been “robbing” me of the proteins my body needs to be healthy… The remedy for this nutritional problem is relatively simple and straightforward, and I’ve already begun treatment. …Now I’ve said more than I wanted to say, and all that I am going to say, about this.”
  
• Feb 27 - At Failing Banks Do CEO’s Have Pension Rights? A public battle emerged in the UK as the Government sought to stop pension payments to ousted CEO Sir Fred Goodwin, 50, of Royal Bank of Scotland whose massive losses are effectively being acquired by the government. The Financial Times reported that Sir Fred, who gave up severance pay and options on leaving RBS last October, said publicly he will not give up or reduce his UK £693,000-a-year pension. See letter from Sir Fred and letter in response from UK business minister Lord Myners.
  
  
  
• Feb 26 - Liberian Blood Diamonds Convictions - Statement. Global Witness has welcomed the Special Court for Sierra Leone's conviction yesterday of three senior commanders of the Revolutionary United Front (RUF) for war crimes and crimes against humanity. "These verdicts are a chilling reminder of how the trade in diamonds and other natural resources has underwritten some of the worst war crimes of the past two decades," said Global Witness Campaigner Mike Davis.
  
  
  
• Feb 25 - Irish authorities raid Anglo Irish Bank HQ. AFP reported that police and investigators raided the Dublin headquarters of the recently nationalised Anglo Irish Bank and sifted through potential evidence at Anglo Irish, which is engulfed in controversy over corporate governance. The bank's former chairman and chief executive Sean FitzPatrick resigned after admitting he had failed to disclose $110-million dollar loan by moving it in and out of the bank for a period of eight years. The bank is also being investigated about a loans-for-shares scandal involving a so-called "golden circle" of 10 clients.
  
  
• Feb 21 – Key Book Giving Inside Story on Kenyan Corruption is Published. The Financial Times published a review by Patrick Smith, Editor of Africa Confidential of Michela Wrong's new book "It’s Our Turn to Eat: The Story of a Kenyan Whistleblower" (published in the UK by Fourth Estate and to be published in the U.S. this summer). The book provides the scoop on the fight waged by John Githongo, former anti-corruption czar, to expose and counter top level government corruption. Says Smith, " Wrong’s narrative is part political thriller, part African morality tale.... The Githongo affair did more than highlight Kenyan corruption, however. Wrong explains that it also emphasised the weakness of western and international financial institutions working in Kenya."
  
  
  
• Feb 21 - Weak Indian Corporate Governance.  A leading Indian credit rating agency, CRISIL, stated weak corporate governance was found in nearly half of the companies initial public offerings it graded. The Hindu newspaper reported on a range of analysts views following the major Satyam scandal which has placed issues of corporate governance at the center of major business and political debates.
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  Feb 20 - Spanish Judge Investigating Opposition is Hospitalized. Reuters reported tha Judge Baltasar Garzón, famed for prosecuting the late Chilean dictator Augusto Pinochet, was taken to hospital on Friday with chest pains. Garzón, 53,  is leading an investigation into bribery and misallocation of local government contracts in which members of the conservative Popular Party have been implicated. Opposition politicoians have accused the investigating magistrate of trying to smear its name and acting in league with the Socialist government.
  
  
• Feb 19- Investigative Reporters Win 2008 Transparency International Integrity Awards. TI Chair Huguette Labelle announced in London that this year’s winners are two outstanding and courageous journalists - David Leigh, Investigations Editor at the Guardian (UK), and Roman Shleynov, Investigations Editor at Novaya Gazeta (Russia). See the full story at TI. ...see News from NGOs
  
  
  
• Feb 18 - Offshore Haven Antigua Now in Fraud Spotlight. Reuters reported Antigua and Barbuda's minister of finance and economy said on Wednesday the twin-island Caribbean state was scrambling to shore up its banking system after potentially devastating U.S. fraud charges against Allen Stanford, its biggest private employer. he is missing - his company managed reportedly $8 billion.
  
  
  
• Feb 16 - Asian Development Bank Sanctions Companies. Xinhua news service reported that the ADB announced it sanctioned 41 firms and 38 individuals for corruption. The ADB said 74 percent of the cases investigated involved ADB-financed activities, while 18 percent involved ADB staff members. The remainder involved sanction violations and conflicts of interest. the ADB does not publish the names of those sanctioned, but they are prohibited from doing business with the ADB for up to seven years, while sanctions against individuals range from one year to an indefinite period.
  
  

  • Feb 15 - New York Times Editorial Raises Haliburton - Iraq Links. More Annals of Global Greed Inc. "Halliburton and its former KBR subsidiary have agreed to pay $579 million in fines to settle criminal and regulatory charges of having bribed foreign officials to win billions in construction contracts. There may be some taxpayer comfort in the fact that this scandal was rooted in Nigeria, not Iraq, where the Halliburton megacorporation (you know, the one Dick Cheney ran before he became vice president) reaped multibillions as the Bush administration’s most favored no-bid contractor. Still, there are a lot of unanswered questions about Halliburton’s practices in Iraq, with numerous complaints of overpricing and ineptitude. Its corporate conduct in the Nigerian scheme is hardly encouraging and should compel tighter scrutiny of its Iraq failures."
    
    

  • Feb 11 - KBR and Former Parent Haliburton Pay Huge $579 Million in Fines to Settle Nigeria Bribery Case (see news story from Market News noting KBR pays $20 million and Haliburton pays the rest, being responsible during the years when the bribes were paid, including several years when former US Vice President Richard Cheney was Chairman and CEO of Haliburtion) - details first revealed in quarterly financial statement without any comments of regret, guilt or concern..see Corporate Reputation and also see background on the investigation and guilty plea by former top executive at Corruption Investigations.
    
    

  • Feb 10 - Massive Extortion Demands Forced US Out of Kyrgyzstan. A detailed article in the International Herald Tribune itemizes years of extortion by the country's previous and current leaders, involving hundreds of millions of dollars, which the US felt bound to submit to in order to main a key strategic military base. Now, the bill has got too high, writes Alexander Cooley, an associate professor of political science at Barnard College, Columbia University.
    
    
  • Feb 10 - U.S. Commits to "Transparency and Accountability." In a major speech, US Treasury Secretary Timothy Geithner announced the launch of a new website at FinancialStability.gov. He said that critical to President Obama's efforts to revive the credit system are "new, higher standards for transparency and accountability." he added that, "The spectacle of huge amounts of taxpayer assistance being provided to the same institutions that help caused the crisis, with limited transparency and oversight, added to public distrust. The American people will be able to see where their tax dollars are going and the return on their government's investment, they will be able to see whether the conditions placed on banks and institutions are being met and enforced, they will be able to see whether boards of directors are being responsible with taxpayer dollars and how they're compensating their executives, and they will be able to see how these actions are impacting the overall flow of lending and the cost of borrowing."
    
    
  • Feb 6 - A.S. Murty Takes Helm of Satyam Computer Services. Engulfed in crisis, Satyam has turned to a 15 year veteran to be CEO, but The Economic Times of India reported that Mr. Murty is widely viewed as a stand-in before the company, snared in India's biggest corporate scandal, is eventually sold. It added that the CEO now has the unenviable task of restoring the confidence of Satyam's 600-plus clients and about 50,000 employees, but it is not clear if he will play a key role in any sale process, most likely to be orchestrated by the government.
    
    
  • Feb 5 - Kenya Blocks Investigation. The BBC reported that the UK Serious Fraud Squad ended its proble of the "Anglo Leasin Affair" - a vast allegedly $100 million scandal involving senior ministers - after the Kenyan Government failed to produce evidence to try suspects.
    
    
  • Feb 4 - Obama Slams Pay for Bankers, Sets Limits. President Obama calling bonus payouts at banks getting government rescue funds “shameful,” announced that the government will require financial companies getting aid in the future to cap compensation of top officials at $500,000 a year. According to Bloomberg, “To restore our financial system, we’ve got to restore trust,” Obama said at the White House as he set out new rules for companies that seek “exceptional” assistance from the Treasury. “And in order to restore trust, we’ve got to make certain that taxpayer funds are not subsidizing excessive compensation packages on Wall Street.” Treasury Secretary Timothy Geithner added that the economic crisis has been “made worse by a loss in faith” in the judgments of executives.
    
    
  • Feb 4 - Zuma Trial Postponed to August - A South African judge postponed a hearing on ruling ANC leader Jacob Zuma's corruption case to August 25, several months after he is expected to become the next president. Reuters, noting that Zuma is the candidate of the African National Congress in an election expected in April, reported that the postponement could mean Zuma appears in the dock as a serving president, increasing political uncertainty at a time investors are already concerned over the direction of policy in Africa's biggest economy.
    
    
  • Feb 4 – SEC Slammed for Madoff Scandal.  Investor Harry Markopolos, who over many years tried and failed to warn the Securities and Exchange Commission that Bernard Madoff was cheating investors, today said before the U.S. Congress that the SEC is a “failed regulator," according to the Wall Street Journal. Madoff has allegedly cheated thousands of people across the world of up to $50 billion.
    
    
  • Top Chinese Official Sentences to Life in Prison. AFP reported from Shanghai that a former leading official in the city’s ultramodern Pudong business district has been sentenced to life in prison for corruption.  Kang Huijun, 52, has been found guilty of taking more than CNY5.9 million (about $862,000) in bribes and illegally acquiring CNY12.1 million through other means. Kang was director of the district's economic and trade bureau and general manager of state-owned property developer Shanghai Lujiazui, before becoming deputy district head in 2004.
    
    
  • Jan 31 - Bolivian Scandal. Reuters reported that Bolivian President Evo Morales sacked Santos Ramirez, the head of state energy firm YPFB, in an investigation into a corruption case that involved the murder of an energy company manager. Ramirez, a former head of the Senate, denies the charges. Police said a manager of a YPFB contractor was robbed killed and robbed of $450,000 that was to be handed to Ramirez.
    
    
  • Jan 30 - Blogo Is Gone. The New York Times reporting on the impeachment and ousting from office of Illinois Governor Blagojevich, noted, “The scary thing — this is just the beginning,” said State Representative Jack D. Franks, a Democrat who served on the impeachment investigation committee. “We have an endemic culture of corruption that has seized our state. It’s not a Democratic thing. It’s not a Republican thing. I think everybody elsewhere would be surprised if you heard the words we have heard on the tapes of Blagojevich. But in Illinois, you wouldn’t be surprised.”
    
    
  • Jan 21 - In his inaugural address on January 21, 2009 President Obama declared "To those who cling to power through corruption and deceit and the silencing of dissent, know that you are on thewrong side of history; but that we will extend a hand if you are willing to unclench your fist."
    
    
  • Jan 13 -Zuma Indicted As Corruption Charges Revived. The BBC reported that former South African President Thabo Mbeki has said he feels vindicated by the court ruling. He said lying for political gain was becoming entrenched in South Africa and it would corrupt society. The Supreme Court of Appeal said prosecutors could resurrect their corruption case against Mr Zuma, who denies the charges.  
    
    
  • Jan 12 - Illicit Banking for Iran Now May Involve Nuclear Issues. Lloyds in $350 million Settlement. The Financial Times reported that authorities suspect that money from Iran transferred through the American banking system might have been used to finance Iran’s nuclear and missile programmes. vast purchases of tungsten were financed. Several banks are under investigation. One, not seen as involved in the tungsten deals, is Loyds TSB of the UK which agreed a $350 million settlement with US authorities after admitting that it helped Iranian and Sudanese clients access the US banking system in violation of US sanctions. Lloyds falsified business records by altering wire transfer information to hide the identity of its client, prosecutors said.
    
    
  • Jan 9 – India's Enron. Corporate Governance Tested. The leaders of Satyam Computer Services have been arrested after admitting that they inflated the company balance sheet in an alleged US$1 billion fraud. Earlier, Press Trust of India reported that Rajeev Chandrasekhar, President of the Federation of Indian Chambers of Commerce and Industry said government, regulators and the bankers need to draw lessons from the scandal. He said, "What happened following Enron in the US is bound to happen here. There is going to be definitely a need for a deeper and harder look at the corporate governance."
    
    
  • See the story of record fines levied against Siemens AG at Ethicsworld report
    
    
  • Jan 5 - Major Global NGOs Protest Gabon on Arrests of Civil Society Leaders, Including EITI/Publish What You Pay Activist Marc Ona. The Gabonese authorities should immediately release five leading members of civil society, including two journalists, who were arrested on 31st December. There are no formal charges or official warrants against them, said leading NGOs today. “We call on the international community to insist that they be released.” said Radhika Sarin, the international coordinator of the Publish What You Pay coalition. The arrests follows a campaign of official harassment against Ona and other activists who have raised concerns about management of public money in Gabon and called for more transparency and accountability in the country’s oil and mining sectors.
    
    
  • Jan 2 - Corruption Rampant in Afghanistan. A top front page New York Times story by reporter Dexter Filkins leads by stating: "When it comes to governing this violent, fractious land, everything, it seems, has its price." And in a lengthy analysis it asserts: "Kept afloat by billions of dollars in American and other foreign aid, the government of Afghanistan is shot through with corruption and graft. From the lowliest traffic policeman to the family of President Hamad Karzai himself, the state built on the ruins of the Taliban government seven years ago now often seems to exist for little more than the enrichment of those who run it." Dec 31 - Bangladesh Elections Returns Leader Despite Past Corruption. Bangladesh's first election in seven years returned former Prime Minister Sheikh Hasina to power in a landslide, AP reported. Analysts said unless Hasina pushed ahead with the anti-corruption drive that she promised in the campaign, Bangladesh would lose the gains of the election and likely revert to the corruption, mismanagement and political power struggles that have paralyzed the previous attempts at democracy. See exclusive Ethicsworld analysis at Democracy and Government Accountability.

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