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| Corporate Social Responsibility
* * * Greenpeace Accuses Danzer Group of Tax Evasion in the Logging IndustryGreenpeace claims Danzer subsidiaries in the Congo have deprived the country of an estimated 7.8 million euros.Greenpeace International, the leading environmental advocacy organization, makes a damaging case against Swiss logging company Danzer’s tax evasion schemes to divert profits it makes from its forestry activities in the Democratic Republic of Congo (DRC) to offshore accounts, depriving the local people of an estimated 7.8 million euros in tax revenue. Many organizations, including Greenpeace, have criticized illegal logging practices in the forestry industry, but less attention has been given to corporate tax evasion which Greenpeace claims is the norm among those logging companies working in the DRC. Danzer Group is a multinational company with subsidiaries all over the world. Greenpeace alleges that two of its African subsidiaries sell wood to its trading partner Interholco below the market value. The difference is then put into offshore accounts to avoid paying taxes on profit levied by the DRC government. According to internal company documents obtained by Greenpeace, the African subsidiaries are also avoiding a DRC tax put on the use of expatriate labor as a way of encouraging use of local employees. Instead of hiring native Congolese, Greenpeace says the companies use expatriate employees and pay them with money from the offshore accounts, thereby foregoing the DRC tax. The role of the auditor PricewaterhouseCoopers (PwC) is responsible for the company’s audits, and according to Greenpeace, did not include accounts from the two African subsidiaries in its report to the Board of Directors. The audit stated the firm could not reconcile the accounts and questioned the use of offshore accounts. PwC said “These transactions might not fully comply with local law. Due to the fact that the existence and the transactions of [Cotraco, SIFCI, 72 Siforco and IFO] Branch accounts are not fully known locally (Africa), we are not in a position to finally assess a possible risk of Danzer Group.” Danzer’s response Greenpeace has levelled heavy criticisms against Danzer Group in the past. Danzer has since launched a strong public relations offensive to improve its image and regain trust. It has partnered with the World Wildlife Fund to participate in its initiative, the Global Forest and Trade Network, of which one of the African subsidiaries is a part. IKEA has also renewed its contract with Danzer, after a brief hiatus. Danzer’s contract with IKEA is worth five million euros, Greenpeace says. Danzer also lambastes this Greenpeace report on its website, claiming “For years Greenpeace has been attempting to tarnish the reputation of Danzer Group by floating rumors, making defamatory statements and spreading half-truths. But constantly repeating false, concocted allegations does not make them true.” The company claims that they work completely within the law, that their offshore accounts “fulfill a developmental and technical function and provide credit worthiness when dealing with other European suppliers,” and that they invest large sums of money in social programs within the DRC. Logging companies receive incentives to expand business The Danzer companies are avoiding huge tax payments, Greenpeace says, depriving income from a country in extreme poverty. As a result of Danzer’s tax evasion schemes, the African subsidiaries often post losses in the DRC but profits in Switzerland (made from the offshore accounts). According to Greenpeace, Danzer and its subsidiaries are one of only four logging companies operating in the DRC and Danzer controls 40% of the wood exports. Logging companies are being provided incentives to expand their logging activities, instead of curbing their corrupt business practices, by international donors. At this point, logging companies operating in the country have little motivation to change their habits, Greenpeace says. The report calls on the World Bank and the International Monetary Fund to take action against these companies who undermine the fundamental goals of international development. Greenpeace says that the World Bank has been conducting a legal review of the logging industry, but according to Greenpeace, it ignores the issue of tax evasion. Greenpeace recommendations: Given the current problem, Greenpeace makes the following recommendations to both international donors and the government of the DRC:
Posted 8/5/08* * * New Report Details Bribery Demands in ChinaFirst report from TRACE International gathering data from its online bribe reporting tool, BRIBElineOne year after its launch, TRACE International has released the first country-specific data from its online tool for reporting bribe demands, the Business Registry for International Bribery and Extortion, or BRIBEline. One hundred and forty-eight anonymous reports about bribery demands in China were filed between July 1, 2007, and June 30, 2008, according to the U.S.-based, non-profit association which offers anti-bribery counsel to multinational corporations. Of the bribes reported in China during this period, 85 percent were requested by an individual affiliated with the government, including 11 percent by the police, 11 percent by a member of the judiciary, 11 percent by a ruling party official, and 52 percent by other government officials.
Nearly three-quarters of individuals reporting a bribe said they had been asked for bribes more than once. Almost one-fifth of those who reported being asked for bribes multiple times reported that they had been asked more than 100 times. The most commonly requested form of bribe demand was cash or a cash equivalent.
According to Wrage, most international corporations are not well-prepared to respond to demands for non-monetary bribes. “What has been reported this first year is probably just the tip of the iceberg when it comes to representing the amount of bribery which occurs, Wrage said, but we are confident these reports can be used to help companies better understand the kindsof bribe demands they are likely to encounter and from whom.” The reports for the first year also showed that the majority of bribe-demands reported in China are for avoiding a harm or disadvantage, rather than gaining an advantage. More than half of the bribe demands reported were for services or actions to which the person or business was already entitled, including to ensure the timely delivery of services, for avoidance of a harmful action, or for payments due for services already rendered. Only 20 percent of the bribes were requested in exchange for gaining new business; 9 percent for favorable treatment by a judge, government employee or other government official; and 3 percent for exercising influence with or over another government official. Fourteen percent of those reporting characterized the bribe demand as falling in some other (unspecified) category.
“We rolled out BRIBEline as an anonymous, state-of-the-art tool to capture information about actual bribe demands, as they are experienced by people doing business all over the world,” said Wrage. “Our experience with this tool in the first year shows us this is a viable way to collect specific information that allows us to better understand the landscape of bribery and extortion in China and elsewhere.” Want to know more about BRIBEline? See EthicsWorld coverage. Posted 7/18/08
* * * Siemens UPDATE - Will Scandal Engulf Top Managers?SIEMENS, headquartered in Munich, is embroiled in a corporate corruption scandal that, as the German news magazine Der Spiegel states, “has emerged as the biggest in the history of German business.” The latest, and perhaps the most damaging twist, is that there are now an increasing number of German media reports (Der Spiegel, the Süddeutsche Zeitung, the Tagesspiegel) suggesting that top Siemens managers, including former chairman and CEO Heinrich von Pierer, knew far more about the company’s global bribe payments than has hitherto been suggested by German public prosecutors. The magazine reported: “Documents obtained by Spiegel suggest that the man formerly in charge of compliance at the company, Albrecht Schäfer, alerted Pierer and several of his colleagues about company slush funds as early as 2004. An internal memo dated May 3, 2004 by an employee reporting to Schäfer noted that a Milan court had ordered that the company be excluded from public contracts following an instance of bribe-paying in its electric power plant division. The ruling stated, ‘Especially the … existence of slush funds at Siemens shows that oversight practiced by Siemens was totally inefficient and that the company, at the very least, viewed the payment of bribes as a possible corporate strategy.’ The memo advised key executives, including Pierer, to ‘take note’ of the information.” So far, public disclosures suggest that the total amount of Siemens bribe-paying is an estimated €1.3 billion ($2.1 billion). Der Spiegel says Siemens is believed to have paid bribes around the world often amounting to between five and 10 percent of a deal's value, and in some cases as much as 30 percent. For many years the bribes were allegedly paid through special bank accounts in the Austrian mountain cities of Innsbruck and Salzburg. But, that was in the days when Germany did not have a law that explicitly banned its firms from making foreign bribes. Indeed, firms could offset such payments against their taxes. The coming into force of the OECD Anti-Corruption Convention in 1998, with specific German legislation in 1999, made it a criminal offense for German firms to bribe foreign government officials. Siemens, however, responded to the new law by creating a host of dummy corporations from the British Virgin Islands to Dubai and Singapore to hide bribe payments, and it made many of the bribe recipients “commission agents” as bribes were being made routinely in possibly as many as 60 countries. Der Spiegel recently reported that, “The scandal is especially explosive for Siemens because it has triggered an investigation by the stringent American stock market watchdog, the Securities and Exchanges Commission, which is threatening to impose massive fines on the Munich-based company. Siemens has been listed on the New York Stock Exchange since 2001. Talks began a few weeks ago between the SEC and Siemens to negotiate possible fines that could run as high as $2 billion related to the investigation into corruption and balance sheet falsification.” Posted 4/29/08* * * Unique Website Launched to Collect Bribery Reports Anonymously TRACE creates 14 language website to serve as “The Business Registry for International Bribery and Extortion.” Alexandra Wrage, President and founder of TRACE, stresses that BRIBELine fills a vital gap in the landscape of tools designed by international organizations to identify critical areas of corruption in government and in business around the world. TRACE, a U.S. not-for-profit organization, has pioneered education and training in anti-corruption for business intermediaries across the world and provides key information to business on corruption issues. Introducing the new website at Washington DC’s National Press Club on January 11, 2007, TRACE demonstrated how people can just enter the new website, select a language and then walk through a straightforward series of 10 multiple-choice questions about where they saw or experienced bribery and extortion. They are not asked if they paid bribes. They can name the countries and cities where events took place, as well as pinpoint the particular type of villainous institutions that demanded bribes. Michelle Gavin, a member of the Board of Directors of the TRACE Institute and an International Affairs Fellow at the Council on Foreign relations, said that the information received through BRIBELine will be organized in ways that could be of great value to corporations. “If you known the terrain, then it is easier to map out a strategy to avoid the bribe demands,” she said. Ms. Gavin said that the data that will be collected is not designed to create a corruption ranking of countries. Rather, the data will contribute to providing the public, through annual reports, with greater insights into the corruption situation in different countries. The date will also be useful in highlighting new trends, she added. TRACE emphasized that the data collected will not be used in any form as a law enforcement tool. Total anonymity is assured to all who provide data to the new system. To be sure, agreed Alexandra Wrage, this could result in some malicious people putting false information into BRIBELine, but she noted that this would be an unsatisfying system for such people to use and that this is a risk TRACE has been willing to accept to assure anonymity to people. A critical goal now is to spread the word of BRIBELine’s existence and to encourage people around the world to use the system – its success will depend to a great extent on a high volume of participants in many countries that can provide a sufficient critical mass of information to enable useful evaluation. “We know from experience that nobody wants to be named in a report as being associated with corruption,” said Suzanne Rich Folsom, Director of the World Bank’s Department of Institutional Integrity. “BRIBELine will put pressure on countries to take remedial action by introducing a reputational cost to those who seek bribes.” TRACE is a membership organization that pools resources to provide practical cost-effective anti-bribery compliance solutions for multinational companies and their commercial intermediaries. TRACE provides several core services and products, including: due diligence reports on commercial intermediaries; model compliance policies; an online Resource Center with foreign local law summaries, including guidelines on gifts and hospitality; in-person and online anti-bribery training; and research on corporate best practices. Posted 7/13/07 * * * UK SMEs In The Dark About Bribery and Corruption 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. This is according to a new survey report, Bribery and Corruption: The Impact on UK SMEs, by the Association of Chartered Certified Accountants, a global association of accountancy professionals. According to the study, which surveyed 558 ACCA members either working in SMEs as accountants or general managers or providing professional services to SMEs, over two-thirds (69%) of respondents agree that 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, revealing a fundamental uncertainty about what bribery and corruption amounts to in practice. Findings from the survey include:
According to John Davies, ACCA’s Head of Business Law, "SMEs may even be more vulnerable to such practices [bribery and corruption] because of their isolated market position or lack of in-house financial awareness.” For more on the survey visit ACCA’s website. Posted 4/13/07 * * * Companies Face Surge in US Anti-Overseas Bribery Enforcement Report Finds Agencies Cracking Down on Illegal Overseas Payments A new report by the US law firm Shearman & Sterling finds that companies doing business in the US are facing stricter enforcement of laws against bribery abroad, as the number of investigations and fines has risen. According to the report, 15 new investigations were reported in 2006 compared to eight in 2005, a significant jump from the one investigation a year the Securities and Exchange Commission (SEC) and Department of Justice (DOJ) were averaging between 1995 to 2000. According the report, in the last five years, several trends have emerged in the SEC and DOJ's (the main government agencies with jursdiction over these types of investigations) enforcement of the 1977 Foreign Corrupt Practices Act (FCPA), which made overseas bribe-paying illegal:
Posted 3/30/07 * * * Business Attitudes To Corruption Survey: How Companies Are Experiencing and Dealing with Corruption Abroad International Business Attitudes to Corruption - Survey 2006 Corruption remains a major obstacle to international business according to a new survey commissioned by the risk consultancy Control Risks and the law firm Simmons & Simmons. Despite new laws criminalizing foreign bribery, there have been few prosecutions outside the US and honest companies are still losing out to dishonest competitors on a large scale. Host countries lose out because high levels of corruption discourage reputable businesses from investing. And, although many companies are tightening their anti-corruption procedures, overall standards of compliance remain highly uneven – both across countries and across sectors. Control Risks and Simmons & Simmons jointly commissioned the survey, which involved telephone interviews with 350 international companies based in seven jurisdictions: the UK, the US, Germany, France, the Netherlands, Brazil and Hong Kong. This is the fourth in a series of Control Risks surveys on international business attitudes to corruption. Successful action against international bribery requires combined action by both governments and businesses. Laws making it possible to prosecute companies and individuals for paying bribes abroad are now in place in all 30 OECD member states. Leading international companies have responded by introducing anti-bribery codes and training programmes to help executives avoid corruption. However, more than half of the companies surveyed were not aware of their own country’s legislation covering bribes paid abroad. The new bribery laws clearly need to be promoted more effectively if they are to make a lasting impact. The report from the survey is divided into six sections – 1. Introduction (reproduced above) 2. High Costs to Business 3.Impact of Anti-Corruption Legislation 4. Emerging Best Management Practice, 5. Uneven International Competition, and 6. Prospects For The Future. Below are key excerpts from the first three, reproduced with permission. To view the full report, including detailed graphs click here. 1. High Costs to Business Business Lost to Corrupt Competitors A sectoral analysis shows that companies in the construction and the oil, gas and mining sectors have been most likely to lose business to corrupt competitors. Two main factors are at play: in both sectors the high value of projects – often running into the hundreds of millions or billions of dollars – increases the temptations of bribery; and both involve negotiations with government officials who have extensive discretionary power and may be susceptible to bribery. Size of company did not appear to be a major factor: 43% of companies with fewer than 250 employees had lost business to bribery in the last year compared with 44% of companies with between 751 and 1,000 employees, and 46% of companies with more than 1,000 employees. Limited Recourse Several respondents said that they would make informal enquiries to find out what happened, and some would seek the help of their embassy. A minority said that they would take action as a matter of principle: 8% said that they would seek an explanation from the tendering authority, 4.5% would lodge an appeal and 6.5% would go to law-enforcement authorities. The Dutch (18%) were more likely to go to the authorities, and the French (10%) were more likely to lodge an appeal. A German respondent commented that there was little point in reporting bribery in high-risk environments where the authorities themselves are corrupt. A Hong Kong respondent spoke for many when he commented that bribery by competitors was just ‘part of business’. A US businessman suggested that it was ‘best to just accept it [business lost because of bribery] and move on’. Bribery allegations are often based on rumour rather than hard evidence: the perception is that there is little chance of redress. A Deterrent to International Investment Both the 2006 and 2002 surveys showed a clear hierarchy in the nationalities of companies likely to be deterred. In both years, approximately half of the British companies interviewed had been put off otherwise attractive investments because of concerns about corruption, followed by Germany, the US and the Netherlands. French companies are significantly less likely to be put off by corruption risks. Hong Kong and Brazilian companies are the least likely to be deterred, perhaps in part because they have a narrower range of choices in their geographical regions. A similar hierarchy applies in the responses of the different sectors. Oil, gas and mining and construction are in the top three because – as noted above – the risks are highest in those sectors. Finance’s high ranking may derive in part from strict anti-money-laundering regulations. The sector breakdown was similar in 2002, with the same three industries ranking high in both years. It is easier – and less costly – to avoid making an investment than to pull out of an existing relationship either with an individual commercial partner or with an entire country. Nevertheless, a significant proportion of companies had done both. Such withdrawals are rarely announced publicly, presumably for fear of jeopardising future relationships if the situation improves. Again, there is a similar hierarchy of the most sensitive companies, both by country and by sector. The Dutch are the most likely to pull out of an existing commercial relationship or investment, possibly because they are particularly sensitive to reputational concerns. Companies from the oil, gas and mining and the finance sectors were the most likely to have pulled out of existing relationships. Costs of Bribes Emerging Economies Lose Out
Since 1997 all OECD member states have joined the US in introducing laws making it possible to prosecute their own companies and nationals for paying bribes abroad. These laws have been introduced as a deterrent to corrupt activity, but the level of awareness of the laws is low. The survey also pointed to a high degree of scepticism about their effectiveness. Most respondents believed that it was still common practice to try to circumvent anti-corruption legislation via intermediaries, for example by turning a blind eye when commercial agents pay bribes on behalf of their clients. The good news is that many companies have responded by tightening their anti-corruption policies. 3. Emerging Best Management Practice When asked what was the maximum amount that might be considered acceptable as a facilitation payment, the average fee quoted was $168. However, 7% of companies said $1,000 would be acceptable – a large amount of money in a developing country. Smaller companies were significantly less likely to have either anti-bribery codes or bans on facilitation payments: 83% of companies with more than 1,000 employees have anti-bribery codes and 75% ban facilitation payments. In contrast, only 65% of companies with fewer than 250 employees have anti-bribery codes and only 40% ban facilitation payments. Anti-Corruption Training Programmes Among the different commercial sectors, the pattern is very similar in 2006 compared with 2002. Finance leads, in part because of stricter regulation of the sector. Companies with programmes to train executives in ways of avoiding corruption. By sector. As in other areas, there is a significant discrepancy between larger and smaller companies: 45% of companies with more than 1,000 employees have training programmes, compared with only 20% of companies with fewer than 250 employees. Annual Compliance Statements Hotlines These agents are very useful if they are successful for you. We have some close relationships where we have known them for many years so we don’t check their ‘integrity record’ but we know they are honest. If they choose to pay a bribe, it comes out of their commission and the legal aspects are their responsibility. His interpretation of US law is widely shared but incorrect: under the FCPA, companies are deemed to have ‘knowledge’ of corruption if it is ‘substantially likely to occur’ in the circumstances. There have been a number of prosecutions of companies whose agents have paid bribes on their behalf even where the employer denied having direct knowledge of the payments. A representative of the defence industry made the same point even more strongly, and even more problematically: The arms and defence sector has hundreds of these people. It is not stating it too grandly to say that the industry works almost entirely through ‘middle men’, some of whom can be high-ranking government officials. We work on a basis of trust and success. The formal process of checking their record or telling them how to run their operation and not pay a bribe where it is customary to do so is laughable. Again, this comment points to the disparity between what has been common practice in certain areas and legal principle. There were wide variations in the extent to which companies seek to control their agents’ conduct by contract. In the US (74%) and the UK (70%), it is common for companies to enter into agreements explicitly forbidding agents to pay bribes to secure business on their behalf. In other jurisdictions, such as Brazil (15%) and Hong Kong (27%), this practice is much rarer. As in other areas, transparency is one of the main weapons against corruption. Companies from most sectors said that the identity of their agents was known ‘in the market place’. The exception was the defence industry, where 26% of companies said that they employed agents whose identity was confidential. Integrity Procedures for Joint-Venture Partners and Suppliers We asked respondents to rate the compliance of a selection of leading trading nations both inside and outside the OECD on a four-point scale: The results followed a similar pattern to earlier Control Risks surveys in 1999 and 2002. Canada is perceived to have the highest standards of compliance, and most of the leading industrialised states are clustered in the bottom left of the chart. One non-OECD state – Singapore – is perceived to be on the same level as Japan: ‘generally high standards of compliance with occasional lapses’. However, most of the non-OECD states included fall into the third category: ‘companies would prefer to comply, but will pay bribes if competitors are doing so’. Brazil, the state with the poorest rankings, is not an OECD member but has signed the OECD anti-bribery convention. The view that it has done little to implement the convention is supported by the earlier finding – noted above – that 70% of Brazilian respondents had no knowledge of their country’s laws on foreign bribery. The UN Convention Against Corruption (UNCAC), which was signed in 2003 and came into force in late 2005, is an important international initiative to develop common standards among both industrialised and developing countries. However, as yet it has no enforcement or peer-review mechanism and, at best, it may take many years before it has a significant impact on the conduct of international business. Posted 11/22/06 * * *
The Transparency International
Source: IMF, international finance statistics, 2005 figures. It is impossible to rank individual companies in terms of their propensity to pay bribes abroad, but surveys can be pursued that ask questions in terms of the home countries of exporting companies. This has been done in the new Bribe Payers' Index. A score of 10 would suggest a country whose international companies are seen to be totally free of bribe paying, while a low score suggests a substantial propensity to bribe. The BPI, conducted on behalf of Transparency International by the World Economic Forum, which has been responsible for the overall coordination of the survey and the data control process, but which relies upon a network of the Forum’s partner institutes to conduct the survey locally, involved polling of more than 11,000 business executives in 125 countries. Approximately 70 percent provided meaningful responses and the ranking in the BPI that is based on the views expressed of over 8,000 of these executives. Transparency International first sought to capture the propensity of corporations to pay bribes abroad through a targeted survey by Gallup International in 15 leading emerging market economies. A refined version of this Bribe Payers’ Index was published in 2002. While the methodology of that survey is completely different to the new one (it was based on very detailed questions to a very select target group in each of 15 countries, while the new survey is based on two questions to business people in 125 countries), the results as indicated in the above table are similar. They offer scant cause for satisfaction in the leading industrial countries with no country score at 8 or above. Posted 10/4/06 * * * The Billion-Dollar Body Parts Industry: Medical Research Alongside Greed and Corruption
As the cultured host of PBS' long-running "Masterpiece Theater," Alistair Cooke was an emblem of American taste and refinement. Since his death in 2004, Cooke has also become emblematic of a macabre and little-known market: America's distinctly shady traffic in human remains. Unbeknownst to his family, Cooke's bones were cut out before he was cremated and sold for $7,000 to two companies that prepare human tissue for transplant. Cooke's fate was ghoulish in the extreme -- but what is even more disturbing is that it was not at all unusual. Body parts are big business in the United States. Tissue, organs, tendons, bones, joints, limbs, hands, feet, torsos and heads culled from the dead are the cornerstones of the lucrative and important business of advancing scientific knowledge and improving medical technique. Body parts are a billion-dollar industry; they underwrite both cutting-edge research and everyday medical procedures. Major corporations such as Johnson & Johnson, Bristol-Myers Squibb, and Medtronic rely on human remains to guide them in developing medical equipment. Researchers rely on them to hone surgical techniques and even to create cosmetics. Doctors use them to replace heart valves, to treat burn victims, to replace bone, even to plump up lips and eliminate wrinkles. Few people think to ask where the material that sustains this enormous industry comes from. But journalist Annie Cheney is a timely exception. In Body Brokers: Inside America's Underground Trade in Human Remains (Broadway), Cheney chronicles her quest to find out how human remains are procured, processed, marketed and used. What she discovers is a complicated tale of booming business and lack of oversight; of limited supply and endless demand; of unscrupulous brokers and the earnest donors, scientists and doctors they exploit; of unspeakable violations of the dead enabling marvelous scientific advancements. The government regulates the procurement of organs and transplantable tissue, but it does not regulate human remains used for research and education. According to the 1968 Uniform Anatomical Gift Act, Cheney notes, it is illegal to buy and sell the dead. But according to this same law, it's legal to recuperate costs involved in securing, transporting, storing and processing cadavers. "Costs," Cheney notes, is an enormously expansive, exploitable term. It can and does mean whatever suppliers and brokers want it to mean. In practice, the loophole in the Uniform Anatomical Gift Act means that bones, tissue, organs, joints, limbs, heads, and even entire torsos are hot commodities in a marketplace where the demands of researchers, product developers, and doctors far exceed the supply. Heads currently sell for upwards of $900, legs for close to $1,000, hands and feet and arms for several hundred dollars apiece. Fully dismembered and eviscerated, a human corpse can generate close to $10,000 on the open market. For the "body brokers" who supply materials to corporations, research centers, tissue banks and other clients, the profit motive is strong, the oversight is nonexistent and corruption is rampant. Mutilation and Embezzlement These two types of malfeasance blur together in what Cheney convincingly shows is a systemic problem of astonishing proportions. Michael Mastromarino, former CEO of New Jersey-based Biomedical Tissue Services Ltd., is a case in point. When Cheney interviewed him, he was both a major supplier of tissue to Regeneration Technologies, a Florida-based tissue processor that did a $75 million business in 2003, and a shady dealer in illicitly procured body parts. Right under the nose of the FDA, which had inspected his company and knew what his business was, Mastromarino was procuring tissue illegally, failing to process it appropriately and then selling it off for enormous profit. Indeed, as a police investigation revealed just last winter, Mastromarino was the very man who paid thousands for the bones of Alistair Cooke. The Uniform Anatomical Gift Act of 1987 bans the sale of transplant tissue, and the FDA forbids the transplanting of cancerous tissue (Cooke's bones were riddled with cancer that had spread from his lungs). But this did not stop Mastromarino, who listed Cooke's cause of death as a heart attack in order to circumvent the one restriction while simply ignoring the other. Cooke's bone tissue was bought by Regeneration Technologies and the New Jersey-based Tutogen Medical Inc., where it was processed for transplant. American medicine has always struggled to procure enough bodies for research and education. Since the late 18th century, when dissection became an essential component of medical training, the demand for cadavers has far exceeded the supply. Back then, the solution was grave robbing -- entrepreneurs could make a tidy profit digging up freshly interred corpses and delivering them, under cover of night, to medical men willing to pay handsomely for them. Today, we aren't robbing graves, but we are violating corpses; we are failing to carry out donors' wishes, and we are putting patients at risk -- all because we have been disturbingly complacent about what actually happens to people's bodies after they die, and disturbingly ignorant about how greed leads pivotally positioned people to exploit the dead and endanger the living. A million Americans every year undergo procedures that use tissue or bone harvested from the dead. Describing how contaminated tissue transplants can injure, infect, and even kill, Cheney documents how the corrupt world of body brokering threatens the health of everyone who receives such transplants. Body Brokers is a good read -- but it's also a wake-up call that every American ought to heed. The real success of Cheney's book will be measured not in sales -- though those have been brisk -- but in policy change that focuses on the people who deal in human remains, the companies that process tissue and parts for sale, the hospitals that do business with these companies, and the doctors and dentists who treat patients with products made from the flesh and bone of the dead.
* * *Global Corporate Survey Raises Key Ethics Issues Ethical Investment Research Services (EIRIS) in the U.K. warns of bribery concerns in two key sectors: oil & gas, and aerospace & defense. In a September 28, 2005 reportEIRIS stated in a new report that these two sectors are judged to be most exposed to risk from bribery and corruption. According to a survey of company practices at 2,400 companies, EIRIS found that just under 24% appear to have declared policies on whistle-blowing, bribery, political donations and compliance monitoring. Of the 23 countries analysed, Hong Kong and Singapore were found to have the fewest companies with high standards of corporate codes of ethics. Dutch companies scored highest on the quality of their over-all corporate codes of ethics - over 86% of companies have meaningful ethical codes, and almost 73% of companies based in the Netherlands have polices judged by EIRIS as ‘advanced’. Oil and Defense Companies Lack Systems to Counter Bribery and Corruption “More and more companies are operating in environments where
political and economic systems are weak and the potential for
corruption is great,” said report author and EIRIS research analyst
Danielle Mallen. “Investors are increasingly interested in how
companies respond to the challenges raised by operating in such
places. EIRIS is pleased to provide a further dimension to the
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