Latest News & Views

BROWSE THE ARCHIVES SINCE 2005

Comenting on the ranking of Russia in the TI Corruption Perceptions Index, November 2010 - "How can a country claiming to be a world leader be in such a position?" asked Yelena Panfilova, director of the Moscow office of Transparency International. "It's a situation of national shame." ...from The Washington Post, October 27, 2010.

50 best business ethics blogs and news sources - new listing from Online MBA Guide

• Learn about Social Auditor Standards Wiki
  
  Transparency International Publishes an Online simple explanation of all that jargon - download ‘The Anti-Corruption Plain Language Guide‘.

TRACE COMPENDIUM - a compilation of summaries of international anti-bribery enforcement actions.

TRACE Global Anti-Corruption Survey 2011 - US strides ahead3, others fall back - global enforcement - See International Surveys

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NIGERIA's MASSIVE SCANDAL PROMPTS BOLD DOMESTIC REACTION
The Financial Times reported on April 26, 2012, that Nigeria’s outspoken central bank governor has called for a criminal investigation into a multi-billion dollar fuel subsidy fraud. Lamido Sanusi said those responsible should not only pay back stolen funds but go to jail.

Africa’s leading oil producer lost $6.8bn as a result of the mismanagement of its controversial fuel subsidy programme from 2009 to 2011, according to a report presented to parliament on Tuesday. Xian Rice of The Financial Times in lagos reported on April 25 that Ngeria lost $6.8bn because of corruption and mismanagement of its controversial fuel subsidy programme from 2009 to 2011, according to a report presented to parliament on Tuesday. Though high-level graft has been rampant for decades in Nigeria, the scale and details of alleged malpractices revealed in recent days have created uproar. Lawmakers shouted over one another when the report was discussed on Tuesday and some stormed out of the session, which was carried live on television.

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INDIAN CORRUPTION - A TORCH HAS BEEN LIT

“You have lit a torch against corruption,” said Anna Hazare, 74, on his release from prison in New Delhi on August 19, 2011. He told well-wishers “Don’t extinguish it until India is free from corruption...If I live or not, keep the torch alight.” Denounced by top Indian Government officials, the campaigner has a vast following and is forcing core issues of governance and justice in a country where corruption is widely perceived to be rife.

• Raj Sapru, Director, Advisory Services, at Business for Social Responsibility (BSR), brings together two critical concepts of value to all corproate leaders concerned with quality and with sustainability. Below is a short excerpt from his excellent new essay.
  

• Kindred Spirits

  There are signs of the quality and CSR disciplines converging, in particular with the release of the ISO 26000 Guidance on Social Responsibility. The international standard encourages companies to make a voluntary commitment to social responsibility and provides common guidance on concepts, definitions, and methods for evaluating those efforts. ISO 26000 will attract the attention of those invested in other ISO frameworks such as ISO 9000.
  
  Like CSR, quality is based on a core set of values, such as “do no harm,” “create zero waste,” “make external costs visible,” and “drive out fear” between management and employees... Like CSR, quality also has a strong focus on people—not just in terms of customer satisfaction, but related to the quality of working life and employee satisfaction.
  
  The two disciplines also share several important concepts:

  • Making hidden costs visible: From a quality perspective, hidden costs related to wasted materials, wasted energy, distracted employees, dissatisfied customers, and poorly performing products can amount to 10 to 40 percent of total costs. Similarly, CSR might use lifecycle approaches to highlight costs buried deep in the value chain, like supplier and consumer energy use for the manufacture and operation of products. This idea is already taking hold, with 86 percent of CEOs viewing “accurate valuation by investors of sustainability as important to reaching a tipping point in sustainability,” according to a UN Global Compact report.
    
    
  • Corporate governance: In quality, senior management holds complete responsibility for quality problems, and quality is made in the boardroom. The majority of quality problems are the fault of poor management rather than poor workmanship. Likewise, CSR success is directly related to CEO commitment.
    
    
  • Empowerment: “Quality at the source” refers to an approach in which workers are given the authority to stop a production line if there is a quality problem or offer a customer an on-the-spot refund if the service is not satisfactory. Empowerment is also a primary pillar in promoting supply chain sustainability. The promotion of an informed, participatory workplace helps ensure fair working conditions.
    
    
  • From reactive to proactive: In quality, prevention and continuous improvement are more effective than inspection. And in sustainability, supply chain monitoring approaches used alone fail to address root causes for social and environmental challenges.
    
    
  • Internal alignment: According to the total quality approach, each department views other departments as internal customers, causing barriers to fall. This kind of cross-functional approach is useful in identifying and managing CSR issues. Both quality and sustainability, therefore, encourage internal collaboration both vertically (from the CEO level to the factory floor) and horizontally (across departmental silos).

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GLOBAL WITNESS

• Libya’s oil must now be used to drive development and foster peace

  Unfrozen Libyan assets must be managed in an open and transparent way

  With Colonel Gaddafi’s 42 year dictatorship apparently drawing to a close, the Libyan National Transitional Council (NTC) and supporting countries must put measures in place to guard against a Libyan “oil grab” and ensure the Libyan people benefit fully from the exploitation of Libya’s natural resources, said Global Witness today.

  Libya’s oil sector has been abused for decades by the small elite surrounding Gaddafi, with oil revenues enabling Gaddafi to keep a grip on power for 42 years.  A transparently managed oil sector could prove the catalyst for much-needed development and stability in the country. But any perception that the rebels or NATO countries have their own designs on Libya’s oil could stir further division and conflict.

  “Libya currently stands at a crossroads in several senses – one of the best ways to ensure it takes the path of peace and prosperity is to bring transparency to its oil sector,” said Brendan O’Donnell, Senior Oil Campaigner at Global Witness. “By drawing a line under Gaddafi-era corruption and the mismanagement of public wealth, the NTC could champion resource justice in the transitional constitution and set a great precedent for Libya’s future.”

  Several actions must be taken to guarantee that oil and public funds benefit the Libyan people: 
  ·         No new oil concessions should be brokered until an elected government is in place. Any deals at this time could raise concerns within Libya that international support for the NTC is driven by a desire for access to oil rather than for the benefit of the Libyan people. The NTC is likely to have to honour Qaddafi-era contracts in order to get oil revenues flowing.  But no new deals for the exploration or exploitation of oil fields should be considered until an elected government can review existing rules and laws to ensure robust transparency and accountability, The Libya contact group should use its influence to ensure that companies in their markets do not attempt to broker deals at this time.  
  
  ·         Concrete transparency provisions should be written into the transitional constitution to ensure the just exploitation of Libya's natural resources.These should require the public disclosure of how Libya manages its oil sector and disclosure of all revenues associated with it.  
  

• ·         Public finances including unfrozen assets, funds raised against frozen assets, resource trading and aid should be made open to public scrutiny.The terms of existing oil contracts should also be disclosed and details of agreements made by the NTC with governments and companies involving sovereign funds or the exchange of cash, crude oil or 'IOUs' secured against frozen assets should be made public and open to scrutiny by Libyan civil society and NGOs. This is particularly important as the UN, EU and others start to unfreeze and return billions of dollars of Libyan assets held overseas. 
  

• ·         All funds should be released through a transparent mechanism such as a strengthened Temporary Finance Mechanism which was set-up by the NTC and the Libya Contact Group to manage aid flows.

  ·         Governments should assist the NTC to track down and recover the funds that Gaddafi and his cronies looted from the state, and punish those banks that accepted this money. 

   “Our experience shows that once bad financial practice is established in a fragile state, it takes decades to undo. Libya is a small country with a lot of oil – its people should prosper from their wealth, but this may not happen unless the transition phase is managed openly,” continued O’Donnell. “Both the NTC and the Libya Contact Group have a responsibility to take all necessary steps to ensure that the people of Libya benefit fully from their country’s wealth.”

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  Transparency International publishes a major report on corruption and climate change.

  "The urgent need to respond to climate change needs to be enhanced by transparency and accountability. Oversight must be built into all climate-related initiatives from the start," said Huguette Labelle, chair of Transparency International. "Good governance now will help ensure the success of the impact of climate change policy and funding."

  "Bangladesh is at the frontline in the battle to combat climate change. How Bangladesh manages climate governance and ensures transparency and accountability in the use of climate change funds can provide lessons for governments and civil society around the world. The recommendations in the report come at a critical time," says Iftekhar Zaman, executive director of Transparency International Bangladesh.

  Under global climate agreements, substantial new funding from governments and multilateral agencies will be made available to finance mitigation of climate change, such as renewable energy projects like wind farms or solar power plants, and adaptation to it, such as constructions of sea walls, irrigations systems and disaster-ready housing.

  None of the 20 countries expected to be most affected by climate change – where much of this money will be spent - scores higher than 3.6 on the TI's Corruption Perceptions Index, in which 0 indicates perception of extremely corrupt and 10 is very clean. Governments must ensure transparent oversight of how climate change funds are spent, which can be enhanced by civil society monitoring.

  The report combines analysis from more than 50 leading climate change experts from 20 countries tackling a wide range of issues including:

  • the politics of climate change and accountability of funding institutions
  • the role of the private sector
  • the integrity of carbon markets
  • the response to climate change impacts in developing countries (climate-proofing infrastructure, preparing for climate migration and improving disaster management)
  • Forestry governance

  
  The report warns of the risk of a green resource curse. New technologies needed to replace fossil fuels, such as solar panels, require different natural resources. It is important that the mining industry that exploits these resources is transparent and publicly discloses payments to governments so that citizens can ensure the proceeds are used for their benefits.

  Similarly, governments that sell land for bio-fuel cultivation, estimated to be 10 per cent of transport fuels in many of the world's leading economies by 2030, must allow for public participation and oversight so that local communities' land rights are respected.
  

• UK Government Delays Implementing Anti-Bribery Law - TI-UK Reacts "Disastrous news.."

• The U.K. government on January 31 said it had delayed implementing a new anti-bribery law that was due to come into force in April following protests from businesses worried about which companies would be covered by it and what actions could be interpreted as bribery.  A Justice Ministry statement noted the government will release new details on the legislation in "due course... "We are working on the guidance to make it practical and comprehensive for business.".
  
  Chandrashekhar Krishnan, Executive Director of Transparency International UK, said: ‘This is disastrous news. Last July, the Government committed to publishing its Guidance to companies early in the new year so the Bribery Act would come into force in April 2011. The Government has failed to fulfil that commitment. Even worse, it is not prepared to confirm a revised time frame.

  "‘This raises serious doubts about the credibility of the Government’s commitment to the Bribery Act, which was passed in the last Parliament on the basis of an all-party consensus. The Act is a robust piece of legislation that will help to level the playing field for the vast majority of UK companies that want to conduct their business in an ethical manner. This delay creates unnecessary uncertainty for these companies and exposes the Government to international criticism that it is not serious about combating corruption’.
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• January 31 - New Delhi - Thousands of people on Sunday marched through several Indian cities to protest government corruption and demand an effective anti-graft law, the Hindustan Times reported.

• January 31 – The Daily Telegraph reported - Kabul Bank losses spark fears of huge Afghan corruption and financial crisis. Losses at Afghanistan's largest bank due to a spree of bad loans to government cronies could be three times higher than originally feared and finally total £580 million.
  
  

• New Swiss Anti-Money Laundering Law Takes Effect Ffebruary 1. Swiss Info reported on January 19 that five days after he fled his country, Switzerland froze accounts and assets connected to deposed Tunisian President Zine al-Abidine Ben Ali. The seven-member cabinet also agreed to freeze any assets belonging to Laurent Gbagbo of Ivory Coast, who is clinging to power despite having lost a presidential election to Alassane Ouattara in November.

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• Key Global Fund aiding HIV/Aids, TB and malaria victims in Africa accused of alleged corruption.
  
  The BBC reported on January 27, 2011, that the German Government has halted payments to the United Nations supported Global Fund. The BBC reports that, “media reports speculate that billions of dollars may have been siphoned off” from the Fund.
  
  German Development Minister Dirk Niebel said, "I take the allegations of corruption and breach of trust carried by media against the Global Fund very seriously, and I expect that the fund will promptly clear them up." He added, "I have halted all further payments to the fund until it is fully cleared up."
  
  Jon Liden, a spokesman for the Global Fund, confirmed to the BBC that the misuse of some $34m of funds had been uncovered in nine countries by the Fund's own inspector general, following investigations in 33 of the 145 countries the Fund is active in. He said the most grievous instances of fraud had been found in Mali, Mauritania, Djibouti and Zambia - but said in three of those cases it was the Fund's own regular audits which picked up the irregularities, and that they had been made public over previous months by the Fund itself. He acknowledged that there "are probably more instances of misuse to be uncovered", but said media reports suggesting the sums concerned could amount to billions were likely to be wildly inaccurate. He said corruption was a "necessary risk" the Fund had to take when disbursing funds in countries racked by poverty and war, and claimed the Fund had saved more than seven million lives.
  
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  Was Bad Corporate Governance Responsible for the Financial Crisis?
  
  Yes, in large measure, according to a report by the Democratic Party majority of the 10-member US Congressional “Financial Crisis Inquiry Commission”. Blame is also assigned to financial regulators and credit rating agencies.
  
  According to a report by Reuters, “The financial crisis could have been avoided and was the result of poor decision making both in Washington and at top financial firms that fostered a culture of excessive risk taking.” The Democrats in their report said, "We conclude this financial crisis was avoidable," the report said.
  
  In terms of major financial institutions, the Democrats assert that they found "stunning instances of governance breakdowns and irresponsibility." Reuters said that among those singled out are American International Group, mortgage giant Fannie Mae and Merrill Lynch.
  
  What is surprising about this report is that, despite the tough language on who to blame, it appears to offer little that is new. The three firms highlighted above all have different chief executives and ownership structures from the pre-crisis days of 2007.
  
  At the same time, many major financial services firms have undertaken internal reviews of their risk management approaches, including Board supervision.
  "Less than a 3 percent drop in asset values could wipe out a firm," according to the report. The report criticized credit rating agencies such as Moody's Corp, McGraw-Hill Cos' Standard & Poor's and Fimalac SA's Fitch Ratings for giving "their seal of approval" to securities that proved to be far more risky than advertised because they were backed by mortgages provided to borrowers who were unable to make payments on their loans.
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  True transparency is about more than spilling the beans

  By Katherine V. Smith, Executive Director, Boston College Center
  
  Today’s media often characterize our networked information age as the age of transparency. Transparency can be a euphemism for lack of control over information and the public narrative about our business or ourselves. More ideally, it can be a mindful business strategy for approaching decisions and actions with the intention of communicating proactively and honestly about what is being done and why.
  
  This requires us to address directly issues that may present conflicting interests and values. That’s not easy, especially in an environment made ever more complex by increased scrutiny of ever greater numbers of people – people who may either stay at the surface of an issue or suddenly and in vast numbers dive deep into one of its dimensions.
  As I read a recent story about how financial institutions are bracing for a potential new wave of information leaks, two thoughts occurred to me:

• Being leaky is not the same as being transparent.
• As a society we are in the midst of an information technology revolution that is moving so fast  we have not yet caught up to understand its potential impacts.

  
  It seems that (in parallel with the progress of the 21st century) we are in our “tweens” and headed toward a kind of social adolescence. As is often the case with those only approaching maturity, we don’t always see how we are affected by the forces of development and therefore clumsy at times in how we deal with it.
  
  Being leaky implies there are holes in an otherwise seamless container or closed system that holds its contents intact and safe from exposure, only to be dispensed in increments as decided by the owner of the vessel.  When breaches occur, they cause the contents (the proverbial beans) to be spilled at our feet while creating opportunities for others to look into the container.  If we think about information as the content, it is clear that the power of information technology has compromised any company’s or individual’s ultimate control of its story or message.  Narratives will be weaved in increasingly communal ways, with multiple, sometimes conflicting versions that are retold and revised on an ongoing basis.
  
  Einstein noted that information is not knowledge. A state of historical amnesia exists today because the amount of information we experience leaves us intellectually immobilized by the fatigue that results from trying to process the volume and velocity. Faced with this paralysis we give ourselves permission to look away from the torrent of bytes that flow past and stay at the surface.  The challenge of our new era of transparency is to be able to know what to pay attention to, what to discard, what requires action, what requires protection.
  
  It won’t be easy. In a year when, Facebook’s users number 500 million (up from 5 million in 2007), its valuation has topped $50 billion (up from its approximate valuation of $30 billion just six months ago), and founder Mark Zuckerberg is the Man of the Year; Wikileaks’ Julian Assange continues to garner major headlines and you cannot live a professional day without encountering a tweet, a post, a link, or a leak, we are undoubtedly in a new era.  Social networks, knowledge communities such as wikis, and ever-faster-cheaper-better – and more mobile – technology contribute to the volume of data and information available and the velocity at which they travel.  There are many benefits to our ability to connect with each other more easily and there are also challenges and risks for business to manage.

  In this decade, which can be considered this century’s “adolescence” we need to emerge a stronger and more engaged society. Business has a tremendous opportunity to facilitate this engagement. Being transparent implies that our system is open, or at least accessible, and that we are receiving as well as offering knowledge and learning about our actions and our products.  Owners, stakeholders and customers may add to this understanding or learn from it.  This state of being requires us to start our decision making processes in fundamentally different ways that could bring positive and radical transformation to the quality of all of our lives.
  
  How is our community fundamentally different if it is based on interests and affinity rather than on geography?  What is gained?  What is lost?  How might our decision-making and behavior change if we accept up front that they are fair game for broad public consumption?  Will our business decisions change? How would we measure and report success? Over what time frames?
  
  These are all puzzling questions. Share your thoughts here about where we might find the answers and what are the greatest opportunities and challenges they pose for business.

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• LEADING FORMER CONGRESSMAN FOUND GUILTY AND SENTENCED TO PRISON - Tom DeLay -- once one of America's most powerful politicians - the former top Republican Party leader and majority leader of the House of Representatives, was sentenced to three years in prison for money laundering and conspiracy stemming from his role in a scheme to channel corporate contributions to Texas state races in 2002. He was released pending an appeal and he claims he did no wrong. But, the jury guilty verdict and the sentence will create a wave of investigations and debate in Texas on just how political campaigns are really funded.
  
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• Verdict Against Khodorkovsky in Russia Raises Profound Rule of Law issues - White House Issues Unprecedented Rebuke
  
  ABC NEWS The guilty verdict in the second trial of Russia's best known prisoner sparked protests outside a Moscow court overnight and drew immediate international condemnation. The US secretary of state said Mikhail Khodorkovsky's conviction raises serious questions about the rule of law in Russia. The German foreign minister called it a "step backward" for Russia. And the British foreign office said the law should be applied in a "non-discriminatory and proportional way". Mikhail Khodorkovsky was once Russia's richest oil tycoon who fell out with the Russian prime minister, Vladimir Putin, when he backed opposition politicians. He has been in jail for tax evasion since 2003 and has now been found guilty of embezzlement.
  
• Statement by the White House Press Secretary, 12/27/2010.
  
  We are deeply concerned that a Russian judge today has indicated that for a second time Mikhail Khodorkovsky and Platon Lebedev will be convicted. We are troubled by the allegations of serious due process violations, and what appears to be an abusive use of the legal system for improper ends. The apparent selective application of the law to these individuals undermines Russia’s reputation as a country committed to deepening the rule of law. The Russian government cannot nurture a modern economy without also developing an independent judiciary that serves as an instrument for furthering economic growth, ensuring equal treatment under the law, and advancing justice in a predictable and fair way.
  
  The Obama administration stands in solidarity with the many people in the Russian government, in the legal system, and in civil society who are committed to strengthening the rule of law and deepening the commitment to universal values enshrined in the Russian constitution. Russia’s failure to keep this commitment to universal values, including the rule of law, impedes its own modernization and ability to deepen its ties with the United States.
  
  President Obama has spoken frequently with President Medvedev about this case and others as part of their ongoing conversation about President Medvedev’s important campaign to strengthen the rule of law and modernize Russia’s political and economic system. We will continue to monitor closely the next stages in this case, including the fairness of the sentences and the review by higher courts during the appeals process.
  
  MOSCOW REACTS: Associated Press, 12/27/2010 - Russia's Foreign Ministry has angrily rejected Western criticism of jailed oil tycoon Mikhail Khodorkovsky's conviction in a second criminal case, saying it amounted to pressuring the court.
  

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SUSTAINABILITY Cancun's Depressing Climate Change Conference Strengthens the Case for Business to Show Ethical-Environmental Leadership. From the pen of Geoff Lye: "To borrow the title of John Elkington and Pamela Hartigan’s 2008 book The Power of Unreasonable People, perhaps the time has come to call on Unreasonable CEOs to step up to the challenge. Unlike democratic governments, CEOs can lead and inspire rapid and massive actions to reduce emissions. Just consider how quickly WalMart has moved from a slow follower to global business leader in squeezing carbon out of its supply chain; no government could move as quickly or as efficiently. And Unilever’s Paul Polman’s recent pledge to double their business while halving their environmental footprint is nothing less than a paradigm shift in their underlying business model. (see full article)

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• Auditing Firm Charged with Complicity in Major Financial Crisis Fraud. Reuters reported December 22, 2010 that New York Attorney General Andrew Cuomo has brought a suit seeking over $150 million against Ernst & Young for allegedly participating with its former client, Lehman Brothers, which went bankrupt in September 2008, in what Cuomo contended "was a massive accounting fraud."
  
  

• Sudanese President Omar-al-Bashir “has siphoned as much as $9bn out of his impoverished country, and much of it may be stashed in London banks,” according to Wikileaks as reported in The Guardian (UK), Dec.17, 2010.

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NIGERIA -- CHENEY CHARGED --- authorities have filed charges against former US Vice President Richard Cheney (AFP). They charge that when he was the Chairman and CEO of Halliburton in the 1990s, the company and its wholly owned subsidiary KBR conspired to pay $180 million in bribes to officials in Nigeria in order to secure around $2 billion of business contracts. The case is interesting because Haliburton agreed to settle similar charges with both the US Justice Department and the Securities and Exchange Commission in what was the largest corporate fine ever for a violation of the US Foreign Corrupt Practices Act. However, the US official charges against the firm never mentioned Cheney. The former KBR chief, Albert Stanley is serving a 7 year prison term in Texas. UPDATE: Bloomberg reported on December “The charges against Dick Cheney and all the others were dropped today,” Femi Babafemi said in a telephone interview in Abuja, the capital. Halliburton, where Cheney was chief executive officer until 2000, offered to pay $120 million in fines and repatriate an additional $130 million to Nigeria, he said. A person who answered a call to Halliburton’s Houston office said no one was available to comment.
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The release of Aung San Suu Kyi brings hope.

Released from house arrest on November 13 release - she has spent 15 of her past 21 years in jail. In an opinion article in The Financial Times, November 22, 2010, Nobel economist Amartya Sen wrote of Burma in part: "The situation has remained terrible for so long that there is now a kind of defeatism that makes frustrated well-wishers eager to be thrilled by little mercies. So while Aung San Suu Kyi’s release from unjust confinement is a great moment for celebration, it is also a time to think clearly about what the world can do to help her cause."

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PTF develops new website
www.PTFund.org

Anabel Cruz, Chair of the Partnership for Transparency Fund reports on PTF's busiest year.

"We have come far over the last 10 years and expect to expand our activities significantly over the next five years across the developing world," said Anabel Cruz, Chair of the Board of Directors of the Partnership for Transparency Fund (PTF) on the publication of PTF's 2009 Annual Report. Over the last decade PTF has made available over US $2.5 million in small grants in support of 148 anti-corruption projects undertaken by civil society organizations in 44 countries. PTF President, Pierre Landell-Mills, stressed that 2009 was PTF's busiest year. Not only were more than 30 new grants approved, almost double the 2008 total, but PTF negotiated a major new $3 million dollar grant from the Japanese Social Development Fund (JSDF) and undertook an important study of the global experience in supporting the demand for good governance. 2009 saw the launch of its South Asia program in partnership with the Public Affairs Center in Bangalore.

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Clare Short to Chair EITI

The Board of Directors of the Extractive Industries Transparency Initiative (EITI) will nominate former UK Development Minister Clare Short to succeed Peter Eigen as the EITI Chair. The hand-over will take place at the EITI’s global membership meeting in March, 2011.

Peter Eigen is a founder of EITI, which brings together government, business and civil society to enhance transparency and accountability in the oil, gas and mining sectors across the world. He has served as the Chair since the establishment of the organization in 2006.

Clare Short had a long career as a Labour Party Member of Parliament, serving as the aid minister in the Tony Blair government ffrom 1997 to 2003. She did not seek reelection in 2010. She became a so-called “Independent Labour MP” in 2005. Her resignatuion in 2003 from the Blair Government created a maqjor public dispuite, as she assailed the PM for was after a public dispute with PM Blair over the UK’s policy to join the US in the invasion of Iraq, which she strongly disagreed with.

Ms. Short has often been outspoken and controversial. Not only did she protest the UK’s Iraq policies, but she has long been a forceful critic of the Israeli Government's stance on Gaza and the Palestinian Territories.

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More Trouble for BAE Systems as Bribery Deal Challenged in UK Court and as Accounting Cover-Up of Bribes Leads to Guilty Plea

November 25, 2010 - Bloomberg ---BAE Systems Admits Guilt in U.K. Accounting Case, Faces December Hearing - BAE Systems Plc, Europe’s biggest defense company, said it failed to keep proper accounting records of payments in a case that tests U.K. fraud prosecutors’ ability to negotiate plea deals.

November 23 - London - Corner House, which has been active in challenging the UK Government's handling of the BAE foreign bribery allegations for years, reported that Arms company BAE Systems today pleaded guilty at the City of Westminster magistrates court in London to minor charges of false accounting relating to its controversial sale of military radar equipment to Tanzania in 1999. The sale has been surrounded by allegations of corruption. BAE and the Serious Fraud Office (SFO), which was investigating the corruption allegations, announced in February 2010 that they had reached a “plea bargain” settlement under which BAE would plead guilty to the accounting misdemeanours. After BAE entered its guilty plea, District Judge Caroline Tubbs gave permission for the plea bargain settlement to be heard at the higher Southwark Crown Court on Monday 20 December. At this unprecedented hearing, the judge, Mr Justice Bean, will be asked to confirm the final settlement. The single criminal offence against BAE, presented by SFO lawyer Louis Mably, was brought under section 221 of the Companies Act 1985 concerning a corporation's "duty to keep accounting records".

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« BIENS MAL ACQUIS » CASE: FRENCH SUPREME COURT OVERRULES COURT OF APPEAL’S DECISION

A Major Victory for the Campaign to Expose Plundered Assets – TI-France together with SHERPA: Highest French Court Rules to Admit Complaint.  The decision stands as a considerable legal milestone. For the first time in France, the collective action of an anti-corruption association is deemed admissible before a criminal court.
The criminal chamber of the Supreme Court (Cour de Cassation) ruled in a corruption case calling for an investigation into how luxury assets (properties and cars, as well as bank accounts) were acquired in France by three foreign heads of state - Denis SASSOU NGUESSO (Congo-Brazzaville), Omar BONGO ONDIMBA (Gabon, now deceased), Téodoro OBIANG MBASOGO (Equatorial Guinea) - and their relatives.
The Supreme Court has overruled the decision handed down one year ago by the Paris Court of Appeal by ruling the complaint filed by TI France on December 2nd 2008 is admissible. The Supreme Court’s decision will allow the appointment of an investigating judge and the opening of a judicial inquiry. This judge will have to determine the conditions under which the assets in question were acquired, as well as how the numerous bank accounts identified by the police were accumulated. The inquiry should also shed light on the role played by various intermediaries who might have facilitated operations identified as suspect by the French police. First among those are the banking institutions which were identified by the investigations, and whose respect for their anti-laundering obligations one can only question. (Also please see Gabon winner of TI-Integrity Award 2010). November 9, 2010.

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The 2010 Annual Membership of Transparency International condemned "the coward and violent attacks against journalists and civic activists everywhere. Specifically, we are appalled at the latest brutal attack against Oleg Kashin, journalist of Kommersant Daily. Such attacks threaten press freedom and civic activism and cannot be tolerated. We call upon law enforcement authorities in Russia to conduct a thorough investigation of all such cases and to undertake all possible measures to prevent such attacks from happening in the future."

The Annual Meeting also resolved: "To establish an Amalia Kostanyan award recognizing excellence within the TI anti-corruption movement. Amalia Kostanyan was the chair of TI Armenia , a real hero and an active member of the UNCAC Coalition, who died suddenly last September while engaged in the work that characterized her selfless and fearless contribution to the fight against corruption. The Amalia Kostanyan Award will keep her memory alive and will honour other heroes, people of integrity and courage, within the Transparency International movement. The selection process would be similar to the one applied for selection of the TI Integrity Award winners." (November 9, 2010)
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UNITED NATIONS CONFRONTS HUMANITARIAN DISASTER
OXFAM AMERICA REPORTS

Ten years after world leaders committed to halve world hunger by 2015, little progress has been made to reduce the number of people who go to sleep hungry, and many hard-won achievements have been undone by the global economic, food and fuel crises, according to a new report from Oxfam America. 

“The fact that 925 million people are hungry is a scandal when the world has enough food and money to ensure that all have enough to eat. The food crisis has not gone away, it’s happening every day for these people,” said Gawain Kripke, Policy Director for Oxfam America. 

The launch of “Halving Hunger: Still Possible” coincides with an announcement by the UN Food and Agriculture Committee (FAO) that the number of hungry people worldwide has dropped by 98 million to 925 million in the past year. This is good news and a welcome reversal of the upward trend in hunger in recent years. However, it’s not nearly enough progress to meet goals set in 2005. In the ten years since the MDGs were agreed, the proportion of hungry people in the world has decreased by just half a percent - from 14 percent in 2000 to 13.5 per cent today.

However it warns that the decline is incidental, due largely to two years of good harvests which had, until recently, led to a fall in global food prices. The policies and increased investment which are needed to address the underlying causes of hunger remain unfulfilled.

Oxfam called on President Obama and other world leaders to create a rescue package to save the MDG goals - including cutting hunger - at an upcoming summit in New York.  This will require pursuing a twin-track approach; needs of vulnerable populations must be met in the short term, while poor countries are enabled to develop long term agricultural production through investments in small producers, especially women.

To achieve these goals by 2015, Oxfam estimates that an annual increase of $75 billion is needed to tackle hunger and malnutrition.

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From The Financial Times
Transparency on extractive industries will help beat corruption

Published: August 24 2010.  
From Mr Frank Vogl

Sir, Several recent articles have drawn attention to key developments in bringing to light corruption in African extractive industries. New US legislation may now lead to a quantum leap in replacing the opacity that clouds this sector with transparency.

Tucked into the new US financial reform law that President Barack Obama recently signed are provisions that require US companies in the oil, gas and mining businesses to file independently audited statements on their payments to foreign governments to the Securities and Exchange Commission.

Much of the credit for the latest breakthrough goes to the Publish What You Pay coalition of more than 600 civil society organisations and to one of its prime supporters, philanthropist George Soros, who weighed in to push for the recent US legislation.

Research by Global Witness in the UK, among others, has also contributed greatly to public understanding of just why the leaders of so many natural resource rich African countries are so wealthy and their citizens are among the world’s poorest peoples.

Further efforts will be made by civil society to force still greater transparency in the extractive industries’ sector. They are likely to push harder for constructive approaches by host governments and companies within the forum of the Extractive Industries Transparency Initiative, which brings all parties together.

What is now essential, however, is that the major minerals’ importing countries should now redouble their efforts to curb the rampant corruption pursued by the leaders of such exporting countries as Angola, the Democratic Republic of Congo, Equatorial Guinea and Zimbabwe, to name just a few.

Necessary measures include enforcing tough constraints on the global sale of “conflict minerals” and strengthening anti-money-laundering approaches. More important still, given the recent Toronto Group of 20 pledge in June to report at the G20 summit in Seoul in November on new anti-corruption actions, every effort should be made to ensure that all governments follow the new US lead and force their companies to disclose payments to governments in the oil, gas and mining sectors – including such G20 members as China, France, Russia, Saudi Arabia and the UK.

Published with permission from The Financial Times
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Former Illinois Governor Rod Blagojevich found guilty by Chicago jury of just one out of 24 corruption charges - Judge declares mistrial - prosecutors to retry.
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Securities & Exchange Commission Set to Force New Era of Corporate Disclosure - Compensation Seen as Key Focus SEC Commission Chairman Mary L. Schapiro discusses the new US financial reform legislation and the SEC actions now...
July 27, 2010

This law creates a new, more effective regulatory structure, fills a host of regulatory gaps, brings greater public transparency and market accountability to the financial system and gives investors important protections and greater input into corporate governance. I believe the Act, especially when fully implemented, will bring us closer to a goal we all share: namely, more stable financial markets that better protect investors and facilitate the capital formation on which our workers, investors, companies and economic growth rely.

… Corporate Disclosure: we will be adopting many rules in this area—especially in the area of executive compensation.

Advisory say-on-pay votes will be required at all companies at least once every three years. Shareholders will have a similar say on golden parachutes that provide payments to executives in the wake of mergers, acquisitions and major asset transactions.

Companies will be required to calculate and disclose the median total compensation of all employees and the ratio of CEO compensation to that of employees. The relationship between senior executives' compensation and the company's financial performance will also be calculated and graphed for shareholders' information.

In addition, companies will be required to develop "clawback" policies for reclaiming incentive-based compensation from current and former executive officers after a material financial restatement. And rules governing when brokers can vote proxies without instruction from beneficial holders will be revised further so brokers cannot vote on compensation matters—like the new say-on-pay requirement—or other significant matters that the Commission determines by rule.
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What is Going On at the United Nations ?

Associated Press reported on August 9, 2010, that Secretary-General Ban Ki-moon has called stinging criticism leveled by two former senior U.N. officials as "unfair." in his first statement after accusations of failing to combat UN corruption, he said, "If anybody, or any member state within the U.N. system, or any colleague of mine in the U.N. secretariat accuses me on the issue of accountability, or ethics, then I regard it as unfair. It was I who have taken this accountability, and the highest standard of ethics by the U.N. secretariat has been held from day one."What is going on at the United Nations?...continuation of story fro m HOME page...

Two times in the past month top U.N. officials who were in charge of fighting corruption within the world body have blasted Ban's leadership and accused him of leaving the oversight agency in tatters by ignoring U.N. hiring rules that require filling vacancies based on experience and qualifications. Inga-Britt Ahlenius, the Swedish former auditor general who stepped down as U.N. undersecretary-general for oversight last month, detailed her frustrations with Ban in a 50-page confidential "end-of-assignment" report, largely blamed Ban for the mess that she said she was unable to fix at the Office of Internal Oversight Services that she headed since mid-2005, because Ban nine times blocked her from hiring a highly respected former U.S. prosecutor as permanent head of the investigation division.

American prosecutor, Robert Appleton, has filed a 76-page grievance accusing Ban of blocking his hiring to the U.N.'s top investigative post because of discrimination based on gender and nationality. Appleton headed the U.N.'s special white collar fraud unit, known as the Procurement Task Force, from 2006 to 2008.
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INSIGHT: A Remarkable Wall Street Journal Article on Money Laundering and Corruption in Afghanistan -

Wall Street Journal reporter Matthew Rosenberg has written a remarkable story - “Afghanistan Money Probe Hits Close to the President” in the August 12 2010 edition of his newspaper. It provides a detailed insight into (a) the possible scale of international money laundering that is transacted via Kabul; (b) the range of possible beneficiaries of these transactions; (c) the substantial skills of U.S. trained Afghan investigators; (d) the potential risks of the investigations being closed by the Afghan government because the findings may well implicate very senior politicians and officials; and (e) the tensions between the U.S. and Afghan governments over how these investigations are handled.

This is important because in November 2009 President Obama publicly decried fraud in the presidential elections in Afghanistan. Thereafter, the U.S. President and Secretary of State Hilary Clinton stressed repeatedly in public their concerns about corruption in Afghanistan. This is unprecedented – never before have major world leaders been so critical of a foreign allied government at a time of war over the issue of governmental corruption. In the course of the first six months of 2010 there have been U.S. Congressional investigations into aspects of alleged corruption in Afghanistan, there has been outstanding corruption reporting, notably by The Wall Street Journal and The New York Times, but there has also been concern that President Obama’s comments amount to little more than empty rhetoric.

Mr. Rosenberg’s article suggests that the U.S. President’s admonitions were followed-up with effective efforts by U.S. FBI and other officials to train Afghan anti-corruption investigators and that this in turn is now leading to a set of critical, top level, issues. The reporter provides extensive detail.

The Wall Street Journal article reports that U.S.-trained agents from an Afghan anti-corruption task force raided the headquarters of Afghanistan’s largest "hawala" money-transfer business, the New Ansari Exchange, on January 14 of this year and took away “Tens of thousands of pages of documents.” These showed that the company allegedly was helping to launder profits from the illicit opium trade and moving money earned by the Taliban through extortion and drug trafficking. Links were also said to have been found to money transfers for “some of the most powerful political and business figures in the country, including relatives of Mr. Karzai.”

The article stated, “The New Ansari probe is now threatening to disrupt relations between the Afghan president and his U.S. allies. Last week, Mr. Karzai took more direct control of the task force that staged the raid, the Sensitive Investigative Unit, and another U.S.-advised anticorruption group, the Major Crimes Task Force. He ordered a handpicked commission to review scores of past and current anticorruption inquests. Senior U.S. military and civilian officials with direct knowledge of the events regard Mr. Karzai's move as an effort to protect those close to him and, in the process, to quash the investigation into New Ansari.”

Mr. Rosenberg reported that “Afghan customs documents reviewed by the Journal indicate that $3.18 billion of cash was flown out of the country between the start of 2007 and February 2010. Couriers identified by U.S. and Afghan officials as working for New Ansari carried $2.78 billion of it, according to the documents. One New Ansari courier, identified by the documents only as Rahmatullah, personally carried at least $2.3 billion out of the Kabul airport between the start of 2008 and the middle of 2009, much of it to the United Arab Emirates financial center of Dubai, a senior U.S. official said. New Ansari's manager, Haji Muhammad Khan, said in a recent interview the company did nothing wrong. The money being flown out of the country was declared, so moving it was legal.”
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• ETHICS OF LOBBYING - MORE TROUBLE FOR BP AS ITS LIBYAN CONNECTIONS REVEALED
  

• The New York Times reported July 15, 2010, that BP has publicly confirmed that it lobbied the UK Government of then Prime Minister Gordon Brown for the release of Abdel Basset Ali al-Megrahi, who was in prison in Scotland for the 1988 Lockerbie plane bomombing that killed 270 people. The Government released the prisoner and sent him back to Libya last year claiming his acute illness gave him just 3 months to live - he is still alive today. Meanwhile, BP's efforts related to its negotiations with the Government of Libya over a $900 million offshore oil and gas exploration and development deal. The US Senate is investigating.
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  Thurgood Marshall Jr., son of legendary US Supreme Court Justice and a former White House legal advisder joins the Board of Directors of the US Ethics Resource Center.
  
  Marshall is a partner in the Washington, D.C. office of Bingham McCutchen LLP.served as assistant to the President and Cabinet secretary to President Clinton from 1997 to 2001. Earlier in the Administration, he was director of legislative affairs and deputy counsel to Vice President Gore.
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  TRUST ....Viewpoint from Frank C. Bucaro
  
  "Is Trust Taking a Hit?" asks this US ethics commentator.
  
  He suggests: “Is it just me, or is trust “taking a hit” lately? How about the lead story of the past several weeks; Do you feel the information released has been 100% accurate on the situation in the Gulf of Mexico? How about politics? Do you feel totally confident about the accuracy of information circulated by political candidates? What about consumer products? Do you ever question the safety or effectiveness of a product, even if backed by a big name brand? How about your healthcare provider? Ever questioned a diagnosis or treatment plan?”
  Bucaro draws attention to the need to “Pay attention to your Moral Compass!”
  Find the full article at his website.

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• And talking about trust.....
  DENNY SWENSON,Executvie Producer of Lighthouse Productions, has made a thought-provoking documentary on business ethics. Key questions about the need to build trust in American corporations are put by University of Pennsylvania, Wharton Schoiol ethics Professor Tom Donaldson to an array of experts. The most facinating interview involves Aaron Beam, the former finance director of Health South, who went to prison for cooking the books.
  
  The TV program, shown earlier this year on US public television (learn more - click here) asserts that. "Every day in corporations around the world, careers, capital and time-honored brands that may have taken decades to build are put at risk. Because – as a never-ending stream of news stories keeps proving – corporate ethics scandals can sweep them away in the blink of a news cycle."
  
  While the experts agree on the range of risks involved and the critical importance of good corporate ethics, the film provided few practical and fresh answers. Nor did it raise the key issue of the huge gap in the US between top compensation and average pay, which for many workers is seen as an ethical issue. Nor, did it bore down into the key finding of many Ethics Resource Center surveys that the CEO must provide, every minute of the day, model ethical leadership.
  
  Key point -- more documentaries of this kind are needed to take business ethics from the sidelines into the mainstream.

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Group of 20 Summit Declaration Features Anti-Corruption...June 27, 2010 - extract - "We agree that corruption threatens the integrity of markets, undermines fair competition, distorts resource allocation, destroys public trust and undermines the rule of law. We call for the ratification and full implementation by all G-20 members of the United Nations Convention against Corruption (UNCAC) and encourage others to do the same. We will fully implement the reviews in accordance with the provisions of UNCAC. Building on the progress made since Pittsburgh to address corruption, we agree to establish a Working Group to make comprehensive recommendations for consideration by Leaders in Korea on how the G-20 could continue to make practical and valuable contributions to international efforts to combat corruption and lead by example, in key areas that include, but are not limited to, adopting and enforcing strong and effective anti-bribery rules, fighting corruption in the public and private sectors, preventing access of corrupt persons to global financial systems, cooperation in visa denial, extradition and asset recovery, and protecting whistleblowers who stand-up against corruption."
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South African police chief found guilty of corruption. Jacob Sello Selebi, seen to have been involved with organized crime, could face 15 years in prison. His trial, reported the BBC, “has been described as one of the defining trials of post-apartheid South Africa.” He was appointed to head the police force after having served as South Africa's permanent representative at the United Nations in Geneva for three years and then as director general in the Department of Foreign Affairs. July 2, 2010.
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The 1984 Bhopal calamity

Mindful of the Gulf of Mexico oil disaster it is enlightening to recall the greatest of all corporate humanitarian tragedies. Article by S. Viswanathan the Hindu, India - excerpt

Afghan Women: Artfully Unforgotten By Heather Metcalfe

Excerpt from Policy Innovations June 10, 2010

Photo: Heather Metcalfe © 2009.

Rabia Balkhi wrote her last poem on the bathroom wall with her blood while dying. She had fallen in love with a servant and her brother ordered her killed. Rabia died a violent and unjust death, but the people of Afghanistan now remember her as a hero.

In June 2009, I asked men and women in Afghanistan about heroines. Rabia's name was always mentioned. She was a famous poet who had challenged the cultural norms by falling in love with her brother's servant. Her brother's honor was therefore ruined and he ordered her dead. Nobody could tell me what poem she wrote on the wall, but that was not the point. The point is she refused to give up and die a victim. She defied her brother by having the last word.

Rabia was a strong woman who refused to be silenced, and women and men alike visit her grave in honor. While in Mazar-i-Sharif where I learned of Rabia's story, I decided hers was a story that needed to be told, together with the stories of the women of Afghanistan.

Storytelling is what I do. Throughout my life I have told stories by acting in the theatre. I transitioned into telling the stories of battered women and children while serving as a legal advocate, and I went to law school to expand my ability to present those stories in court. Yet I found myself drawn to advocating through art rather than in the courtroom. Instead of jumping into the practice of law, I founded Artfully Unforgotten, a nonprofit where artists raise awareness and resources for vulnerable communities through telling stories that don't often get heard, such as Rabia's.

Today there are women like Rabia Balkhi all over Afghanistan. These women refuse to give up and be victims, even though they experience severe oppression. I realized when hearing their stories that it serves no one to think of Afghan women as merely victims, because they are the last ones to see themselves as such. Nor does it help the cause for women's empowerment worldwide. Thus, the NGOs and media working in Afghanistan should tell these stories of strength and accomplishment among Afghan women.

Ferishta is one such woman, the founder of a soccer ball manufacturing company. Ferishta said, "The women of Afghanistan are strong. All the men in the world would not be able to bear the pain that they have endured." Ferishta fled to Pakistan during Taliban rule. She returned to Afghanistan upon the fall of the Taliban with nothing in hand and no home. She got a job with the UN, married a childhood friend, and started her own company. It never crossed her mind to merely be a victim.

The article concludes...According to UN Resolution 1325 [PDF], women are to be included in the rebuilding of society, especially post-conflict. If women are constantly viewed as victims, then the resources women have to offer are likely to be overlooked. If NGOs and donor governments want to further the cause of Afghan women, then more stories of their accomplishments need to be told. Not only will these stories encourage a belief in their ability to rebuild Afghanistan, but they will also inspire hope in women worldwide.
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• Congratulations -- ProPublica Wins America's Top Journalism Prize -- Pullitzer Award Goes to Investigative Reporting on Katrina - New Orleans Health Mystery
  
  ProPublica, established with philanthropic funds to pursue investigative journalism on the web into critical social and political issues of our time, is the first web-based Pullitzer journalism winner.
  
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  “The conduct would make Lincoln roll over in his grave." --- US Federal prosecutor Patrick Fitzgerald describing the mass of alleged corruption schemes involving former Illinois Governor Rod Blagojevich.  

  June 2 -- The Blagojevich trial has started in Chicago. It highlights both the outrageous kinds of abuse of public office for personal gain that involve powerful politicians, as well as the strength of independence and integrity of the legal system. For all the corruption that exists in US politics – and it is extensive – the counterweight time and again is the independence and authority of the police, the public prosecutors and the judiciary.

  Among the 24 counts of fraud, bribery, extortion, racketeering, conspiracy and other political corruption charges brought against the former Governor and his brother, Robert Blagojevich, none has been seen as more sensational than the effort to sell a U.S. Senate seat. When Barack Obama was elected President he vacated his Senate seat and it fell to the Illinois Governor to select a successor. It is alleged that a covert extortion game was attempted, where the brothers Blagojevich suggested (in telephone conversations taped by the FBI) that the person selected would need to find ways to compensate the brothers in return.

  Indeed, President Abraham Lincoln, who grew up in Illinois politics, may well, as Fitzgerald said, “turn in his grave.”

  Setting the court scene in Chicago, US National Public Radio recalled in its report that in late December 2008 Blagojevich told reporters, "If anyone wants to tape my conversations, go right ahead; feel free to do it." Little did he know that the FBI was doing just that and the evidence to be brought to court includes 500 hours of the Governor’s chat.  
  
  NPR reported that Federal wiretaps approved in late October of 2008 recorded Blagojevich allegedly scheming to sell the Senate seat to the highest bidder. The tapes allegedly expose schemes involving not just the Senate seat, but also attempts to extort big campaign contributions from a highway contractor, the owner of a horse racing track and an executive of a children's hospital.  
  
  The federal wiretaps only recorded Blagojevich's conversations less than two months before he was arrested. The indictment alleges corrupt activity dating back six years.  Three former top aides have pleaded guilty and will testify against the Governor.
  
  "This was allegedly paid to play on ultra steroids, says Andy Shaw, executive director of the Better Government Association.”Everything was for sale, this was government for sale….If the government's case is true, this was the most cynical, hypocritical, disingenuous, approach to government in the history of Illinois and maybe most other states."
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  I have support of Vatican, says cardinal accused of corruption

  Reuters reported on June 22, 2010 that an italian cardinal, caught up in a vast corruption probe that has already tainted the government, said he had done nothing wrong and had the support of the Vatican.

  "I did everything with the utmost transparency," said Cardinal Cresenzio Sepe, the archbishop of Naples, who is under investigation by Italian magistrates for questionable real estate transactions when he was a top Vatican official in 2005.

  Sepe, 67, is being investigated for alleged corruption when he was running the Congregation for the Evangelisation of Peoples, a cash-and-real-estate-rich department of the Vatican that finances the work of missions abroad.
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  BP's Fund - The Ethical Response To Unprecedented Political Pressures?
  
  The massive US Gulf of Mexico oil spill created an unprecedented agreement by BP, the major company widely seen to be responsible for the initial accident. BP chief executive, Tony Hayward told Congress on June 17 that he was “deeply sorry” for the disaster and that, after a White House meeting, the company is set to establish a $20 billion fund to pay damage claims to thousands of fishermen and others along the Gulf Coast. BP also said it would suspend dividend payments to shareholders. Who will be able to obtain compensation form the fund will pose major practical, legal and ethical challenges for Kenneth Feinberg, who the White House has apppointed as the independent administrator of the fund - he ran the fund for victims of the Sept. 11 attacks.

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  Common Purpose: Joel Kurtzman

  How Great Leaders Get Organizations to Achieve the Extraordinary
  
  Publisher: Jossey-Bass

  The Milken Institute's Joel Kurtzman tackles the central question of leadership: What is common purpose? It is that rare, almost palpable experience that happens when a leader coalesces a group, team or community into a creative, dynamic, brave and nearly invincible we. It happens the moment the organization's values, tools, objectives and hopes are internalized in a way that enables people to work tirelessly toward a goal. Common purpose is rarely achieved.

• United Kingdom Passes New Corruption Legislation
  
  The past failures of the UK Government to prosecute companies that bribed foreign officials, and the blunt rebukes that showered down on the UK, including from the OECD, prompted the drafting of a new law. On the eve of the dissolution of the UK Parliament following the announcement of national elections, the Houses of Parliament voted for the new law.
  
  Transparency International-UK says this represents an effort "to restore Britain's reputation."
  
  On April 8, 2010 Chandrashekhar Krishnan, Executive Director of Transparency International UK said: “We congratulate the Government for fulfilling its commitment to modernise UK bribery law in this Parliament and applaud the all-party consensus that has made this legislation possible.  For twelve long years Transparency International UK has been calling for modern, effective anti-bribery legislation.   The new Bribery Act is fit for purpose and will ensure the UK is compliant with the OECD Anti-Bribery Convention.   It will also give UK law enforcement a sound legal framework to prosecute offenders.

  This Act sends out a strong message to UK plc and the rest of world – the UK will not tolerate bribery.  Ethical practices must be firmly embedded in all echelons of business. The era of ‘business as usual’ is over.   

  “Corruption disproportionately affects the poor and is a persistent threat to development and democracy.   The UK will now have greater credibility in encouraging good governance in countries that receive UK aid and in persuading major emerging economies to stop their own companies paying bribes”.

  Transparency International UK congratulates all the major political parties for their resolve to pass this historic and long overdue legislation.  One further step remains to be taken -  the bribery offences in the Act will only come into effect after the Government issues guidance on adequate procedures for companies to prevent bribery.  Transparency International UK urges the incoming government after the general election to ensure that the guidance is issued in sufficient time that the offences will take effect in October 2010.   

THE COSTS OF THE FINANCIAL CRISIS AS SCANDAL DETAILS ARE REVEALED
- 3 NEW STORIES

- ICELAND - A 2,300 investigative report by a special commission has found "gross negligence" on the part of key government pofficials that resulted in the gravest financial and economic crisis in Iceland's history. The Wall Street Journal reported of April 13, 2010, that during October 2008, all three of Iceland's big banks—essentially the entire banking system—melted down within days. "The private banks failed, the supervisory system failed, the politics failed, the administration failed, the media failed, and the ideology of an unregulated free market utterly failed," Prime Minister Johanna Sigurdardottir said in a statement after the report was released. The investigation pointed a finger at seven top officials including then-Prime Minister Geir Haarde.

- LEHMAN BROTHERS - The New York Times lead story on April 13 on page one highlighted an investighation into the collapse of former Wall Street giant bank Lehman Brothers, which showed that it had hidden risky assets and a host of activities from shareholders and investors alike through what it called a small "alter ego" company.

- WASHINGTON MUTUAL - one of the casuses of the largest commercial bank collapse in US history in 2008 was fraud, according to an 18 month investigation into Washington Mutual by a U.S. Congressional team. "Using a pay policy that rewarded employees for originating loans regardless of their quality, Washington Mutual flooded the market with shoddy loans that went bad,” Senator Carl Levin said, as reported by Bloomberg bon April 13, 2010. He added, “It built a conveyor belt to dump toxic mortgage assets into the financial system like a polluter dumping toxic substances into the river.”

• More Bad News on Giant Corporations -

• Reuters reported that Germany’s Daimler AG allegedly earned $1.9 billion in sales and at least $91.4 million in illegal profits from transactions tainted by bribes, according to the U.S. Securities and Exchange Commission. There were more than 200 transactions in which it made at least $56 million in improper payments to foreign officials, the SEC said. Daimler issued a statement on April 1, which you can find in full ...see Investigations & Prosecutions
  
  The Times (London), meanwhile, reported that the UK Serious Fraud Office has carried a series of  searches in connection with suspected corruption by Alstom, the French transport and infrastructure group.  The SFO said  it was investigating suspected bribes paid by Alstom's UK subsidiaries in order to win contracts in foreign markets.
  
  
  

• More Extortion in Congo -.Global Witness in an investigative report says that in the eastern Democratic Republic of Congo (DRC) former rebels have established mafia-style extortion rackets covering some of the most lucrative tin and tantalum mining areas.  Global Witness campaigner Annie Dunnebacke stressed, “For more than a decade now, the country’s mineral wealth has provided an incentive and a cash base for the conflict to continue. Unless the government and international donors implement a comprehensive strategy which tackles once and for all the economic drivers of this conflict, the local population will continue to suffer and the country’s future will continue to be blighted.”

• India Sets Key Corporate Governance Mandate for Public Enterprises. The Business Standard reported that the government announced that central public sector enterprises will have to mandatorily follow corporate governance norms, which was introduced on a voluntary basis in 2007. The guidelines cover issues like composition of boards of CPSEs, audit committees, subsidiary companies, disclosures, code of conduct and ethics, risk management and reporting, the statement said.

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RIO TINTO EXEC GETS 10 Years In China - The Verdict: Australian & RIO Responses

(April 9, 2010 - The Wall Street Journal reported that executvie Stern Hu, an Australian national, will not appeal his 10 year sentence.)

March 30, 2010 - VERDICT -- The China Daily reported form Shanghai that a Chinese court sentenced four employees of the UK-Australian mining company, Rio Tinto, to jail terms of seven to 14 years on bribery and commercial secrets charges. The court found Australian national Stern Hu and three Chinese co-workers guilty of all charges. It sentenced Hu to 10 years on bribery and stealing commercial secrets charges and gave him a fine of 1 million yuan.The longest term of 14 years was given to Wang Yong, of which 13 years was for accepting bribes. He was also given a fine of 5.2 million yuan. Media reports last week said Wang was accused of receiving $9 million from a Chinese steel tycoon Du Shuanghua, who hoped to set his own agreements with overseas ore suppliers. The judge told the court that the case had caused "severe" losses to China's steel-making industry and had hurt the interests of the country.

AUSTRALIAN REACTION - Australia’s Foreign Minister, Stephen Smith, has described the shock 10-year jail term handed to the Australian businessman as ''on any measure a very tough sentence'' which put at risk the confidence the international business community needs to operate in China, according to the Sydney Morning Herald. Mr Smith said the verdict left ''serious unanswered questions'' for both the Australian and international business communities over the handling of the charge of stealing commercial secrets.

RIO RESPONDS - The Australian reported that RIO Tinto has ordered a fresh independent review of its processes and controls following the hefty sentences handed out to executive Stern Hu and three of his colleagues yesterday. Rio last night insisted the illegal activities of the employees were conducted "wholly outside its systems" while admitting the evidence in court had showed beyond doubt the four employees had accepted bribes. Rio Tinto Iron Ore chief executive Sam Walsh said: "Receiving bribes is a clear violation of Chinese law and Rio Tinto's code of conduct, The Way We Work. "We have been informed of the clear evidence presented in court that showed beyond doubt that the four convicted employees had accepted bribes. “By doing this they engaged in deplorable behavior that is totally at odds with our strong ethical culture. "In accordance with our policies we will terminate their employment."

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GOOGLE QUITS CHINA
When should business leave on human rights grounds? - Aron Cramer and Dunstan Allison Hope of Business for Social Responsibility Provide the Answer.

With Google’s decision today to shut down its Chinese-based search engine, google.cn, the company has won considerable praise from organizations concerned about its human rights record. This approval stands in stark contrast to the condemnation the company received when first entering the country in 2006. The Financial Times cartoonist Ingram Pinn captured these contrasting perspectives perfectly, depicting Google as the speech-suppressing “Great Firewall of China” in 2006, then casting the company as the lone protestor stopping the tanks in their tracks in 2010.

Google’s decision again raises a question of serious interest to business, the public, and governments: When is it right to cut ties and leave a country on human rights grounds?

Leaving often seems like the clear-cut ethical winner in this debate. There often is, however, a case for companies to stay, provided there is a commitment to making a positive impact on human rights. Leaving may look and feel great to those of us in the West, but exiting a market may not always have the desired impact.

Consider the case of the consumer electronics companies. They are increasingly under fire about whether the metals they source from the Democratic Republic of Congo (DRC)—tin, tantalum, and tungsten—may be helping fund the purchase of weapons that fuel violence and human rights abuses in one of the world’s toughest conflict zones. There is a consensus that “conflict minerals” should be eliminated from the electronics industry, and the tempting next step is to cut out all minerals sourced from the DRC.

But that decision isn’t as simple as it may seem: Because end buyers purchase from refiners that often combine ore from multiple sources, traceability remains a problem, and it might not even be practical to “leave” the country.

By contrast, what if companies were to leverage their purchasing power to drive positive change in the DRC? Perhaps there is a role for business to bring “development-oriented metals” to market by identifying specific mines where the benefits of mining are shared locally and production upholds human rights. As an alternative to leaving, companies could also explore diplomatic channels to encourage a sustainable trade in minerals in the DRC and the surrounding region.

GE is taking a related approach in China and Vietnam, where the issues are very different than those in the DRC. Among the company’s top corporate responsibility priorities is “rule of law.” GE’s leadership believes that effective government in emerging markets is critical for both business success and human rights, and the company therefore works with government and civil society to establish transparent legal systems, encourage open law-drafting processes, and develop well-trained judges and lawyers. For example, GE attorneys teach classes at law schools in both countries, and the company’s foundation also invests in rule-of-law initiatives by providing grants such as one in China to an organization focused on commercial law, intellectual property rights protection, and citizens’ rights, and another in Vietnam to a program that aims to strengthen courts and enhance legal transparency.

One might conclude that the comparisons between countries don’t work, because all situations are different. In fact, that is exactly the point: When it comes to determining whether a company’s decision to enter or exit a market is good or bad for human rights, there’s no one-size-fits-all rule, and the ethics of the decision will vary considerably with the context.

As such, “are you in or are you out” may be the wrong question. No company automatically advances human rights by leaving a country, and, likewise, no company automatically improves the situation by staying. In all but the worst cases, it’s how business participates in challenging markets that is the ultimate test. Does the company have a clear understanding of how its products, services, and market presence will impact human rights? Has the company identified its most significant human rights risks, and does it understand how to mitigate them? Is it working with sympathetic government partners to advance human rights?

Let’s also remember the opinions of the people these decisions are designed to support: the local population. Many companies leave certain countries because democratically legitimized local movements called for mass divestments, which is not the case in China today.

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