Connecting Human Rights, Politics and Capital

New evidence has been uncovered to show that Dexia, a major Belgian-French bank, is still financing Israeli settlements in the occupied Palestinian territories despite official assurances that such loans have ceased. IPS reports that shareholders confronted company management at its AGM in Brussels this week and caught company executives off guard.

This Franco-Belgian bank is a leader in municipal finance in Europe, with the majority of the market in Belgium and almost half in France. Subsidiary Dexia Crediop is a prominent local government finance company in Italy. Dexia Group also offers retail banking through nearly 1,100 branches in Belgium and Luxembourg and provides asset management, insurance and fund administration services.

As noted by the Israeli NGO, Who Profits? ” the bank announced in June 2009 that financing Israeli settlements is contrary to the bank’s code of ethics, and that it would stop providing new loans to West Bank settlements.”

Last week, Freedom House, the independent watchdog organization supporting and assessing freedom around the world, issued it’s annual “Freedom of the Press 2010″ report. It found that globally, freedom of the press declined in 2009, noting that only one in six people live in countries with a free press.

The report notes several key reasons for this decline:

• Most governments appear unwilling to reform laws used to punish journalists.
• In countries experiencing political upheaval, journalists have become targets.
• Continuing impunity for attacks on journalists is encouraging new attacks.
• The Internet is facilitating means for governments to identify and control citizen communication.

The report goes on to identify the 10 worst countries for press freedom and the names should be no surprise to readers: Belarus, Burma (Myanmar), Cuba, Equatorial Guinea, Eritrea, Iran, Libya, North Korea, Turkmenistan and Uzbekistan.

This report can be found at the Freedom House website.

Last week, the International Labor Rights Forum published its annual report on the worst companies in the world based upon labor rights problems. This year’s report,” Working for Scrooge: Worst Companies of 2009 for the Right to Associate,” focuses on four companies: Kohl’s, Dole, Kraft and Nestle.

A copy of the report can be downloaded here.

This is a picture of one of my kittens, Beanie. She is cute, lovable and needs your help. She was found in a bush on a busy street here on Capitol Hill in Washington DC, flea bitten and underfed. She is now a healthy cat but is being terrorized by my other cat, Binkley. SAVE BEANIE!

No, not really. Beanie can take care of herself. But I bring this up in response to a recent article about how we as readers psychologically respond to compelling social issues bombarding us every day.

New York Times writer Nicholas Kristof wrote an interesting piece in Outside Online that was published this month. His “Advice for Saving the World” makes the argument that people concerned with humanitarian problems are more likely to respond to compelling stories about individuals, not to larger problems. From a writer’s perspective, this is a particularly interesting insight given that I have always been baffled by readership interest and response to various posts I have published here at Global Investment Watch.

Kristof notes that in the context of altruistic responses to humanitarian problems, we are psychologically tuned to respond where we see a direct impact on our efforts. “Recent research in social psychology offers a couple of central lessons. The first is a bit surprising: We intervene not because of stories of desperate circumstances but when we can be cheered up with positive stories of success and transformation. For example, one experiment found that people are quite willing to pay for a water-treatment facility to save 4,500 lives in a refugee camp with 11,000 people in it, but they are much less willing to pay for the same facility to save 4,500 lives when the refugee camp is said to have 250,000 inhabitants. In effect, what matters is saving a high proportion of people, not just a large number of lives. Paul Slovic, a psychology professor at the University of Oregon who has pioneered this field of research, notes that saving a large proportion of a group is very satisfying, while saving a small proportion seems like a failure—even if it’s a high number.”

From my perspective, it’s interesting to note which of our pieces seem to resonate most with our readers. A piece by one of my colleagues about conservative pitt bull Michelle Bachman has been the most popular article at Global Investment Watch. Similarly, an article about Turkish factory workers and U.S. retail giants, received similar reader attention.

Coming back to my kitten Beanie. Would you care more if Beanie were part of the larger homeless kitten problem in America or are you more concerned about her particular problems with her older and bigger sibling?

In a recent newscast, an al Jazeera reporter notes that the situation in Guinea is continuing to deteriorate as its current leader recuperates in a Moroccan hospital after a recent assassination attempt. In an attempt at shifting blame for the massacre of more than 100 civilians in September, factions within the Guinea military are positioning themselves while putting the population at risk from the collapse of the rule of law in that west African nation.

The west African nation of Guinea is facing a crisis that is precipitated by its own natural wealth and sustained, in part, by economic interests out for a piece of the action. Whether the people of Guinea can survive the current crisis remains uncertain. In a post on the International Crisis Group blog today, Richard Moncrieff notes that this problem has become acute as events in recent weeks make clear.

On September 28th of this year, the West African country Guinea was the scene of an anti government demonstration dissolved by the government of Captain Mousa Dadis Camara. The demonstrators were protesting the decision of Captain Camara to run for President in the January 2010 elections. NowPublic

Many of the demonstrators also held placards which stated “Army out of power”.The response of the government was to use tear gas, batons, and live ammunition with the result of being a reported 157 people killed in which 50,000 people participated in the demonstration.

Then earlier this month, Captain Camara was flown to Morocco for treatment after he was shot by his top aide, fuelling worries of a power vacuum. General Sekouba Konate, Guinea’s vice-president and defence minister, became the country’s de facto leader after returning from Lebanon early on Saturday.

Whatever the immediate aftermath of the shooting of junta leader Moussa Dadis Camara, this latest spate of violence clearly demonstrates the dangers of military rule for Guinea, and the sub-region. ICG

Part of what happened is clear enough. Certain members of the presidential guard, who were involved in the massacres of 28 September, obviously felt threatened by the United Nations commission of inquiry, which was wrapping up its first field investigation into those killings. Toumba Diakite, the leading red beret who shot Dadis Camara, probably feared being made to carry the can.

The core members of the military junta are violent and volatile thugs, who drink to excess and roam the streets of the capital, Conakry, armed to the teeth. And it is not the first incident of this sort. In early October, another argument about responsibility for the 28 September events ended with shots being fired in the main military camp.

Guinea has had a history of authoritarian rule since gaining its independence from France in 1958. Lansana Conte came to power in 1984 when the military seized the government after the death of the first president, Sekou Toure. Guinea did not hold democratic elections until 1993 when Gen. Conte was elected president of the civilian government. He was reelected in 1998 and again in 2003, though all the polls were marred by irregularities. History repeated itself in December 2008 when following President Conte’s death, Capt. Moussa Dadis Camara led a military coup, seizing power and suspending the constitution as well as political and union activity. Guinea has maintained some semblance of internal stability despite spillover effects from conflict in Sierra Leone and Liberia. As those countries have rebuilt, however, Guinea’s own vulnerability to political and economic crisis has increased. Declining economic conditions and popular dissatisfaction with corruption and bad governance prompted two massive strikes in 2006, and a third nationwide strike in early 2007. CIA World Factbook

Guinea possesses major mineral, hydropower, and agricultural resources, yet remains an underdeveloped nation. The country has almost half of the world’s bauxite reserves. The mining sector accounts for more than 70% of exports. However, long-run improvements in government fiscal arrangements, literacy, and the legal framework are needed if the country is to move out of poverty.

Investor confidence has been sapped by rampant corruption, a lack of electricity and other infrastructure, a lack of skilled workers, and the political uncertainty because of the death of President Conte in December 2008.

Guinea is trying to reengage with the IMF and World Bank, which cut off most assistance in 2003, and is working closely with technical advisers from the U.S. Treasury Department, the World Bank and IMF, seeking to return to a fully funded program. Growth rose slightly in 2006-08, primarily due to increases in global demand and commodity prices on world markets, but the standard of living fell. The Guinea franc depreciated sharply as the prices for basic necessities like food and fuel rose beyond the reach of most Guineans. Dissatisfaction with economic conditions prompted nationwide strikes in February and June 2006.

There are two likely outcomes to the situation in the short term, and neither looks good. If Dadis Camara pulls through and retains control of the situation, he could become more paranoid and his clampdown on civil society and human rights activists could harden. On the other hand, if he loses control there are four or five strong men ready to take over, and each will probably be prepared to fight for power.

After announcing that Global Investment Watch is back up and posting articles again, I received a number of emails from readers commenting on our return. All of your emails were very much appreciated. Thanks you.

John Richardson

The title of this post is a question I hear when I talk about proxy voting and corporate governance to individuals not “in the game” so to speak. Among those in the field of corporate governance and shareholder activism, the answers come rapid fire: “Good corporate governance improves shareholder value,” “Executive compensation is out of control and needs to be reeled in,” ” Voting is a fiduciary duty.” and so on. But when the question is posed to individual investors, there is silence, at best. More likely, I hear comments like, “I throw mine away,” or “It doesn’t matter. If I really don’t like what a company is doing, I sell my shares and move on.” While these comments are anathema to the views of those of us involved in the field of corporate governance, the rest of the investing world couldn’t care less.

It strikes me that the problem lies, in part, with the way many investors view voting and investing in general: They are in it for the money. Okay, some investors have a conscience, want to make sure that their companies “do the right thing” and so on, but at the end of the day, most investors just want a return on their investment. Herein lies the problem: There is a real disconnect between investing and proxy voting. To my knowledge, nobody has made a compelling case to individual investors to vote their proxies as part of the investment process.

This problem is demonstrated in the numbers. Voting by individual shareholders, always a low figure (in the low double digits, I believe) has plummeted in recent years as more companies deliver proxy materials to their shareholders via the Web. I recently heard a number bandied about suggesting that individual voter turnout at American corporations hovers around 5%.

Am I wrong here? Can anybody make the case for why proxy voting provides value for individual investors? The tired, “corporate governance is good” arguments are fine but they don’t motivate shareholders to act. What’s in it for Joe Hubcap to open the blue plastic package and read and understand a torpid proxy statement then make a decision about the issues when dinner is getting cold and American Idol is about to start?Why Should I Vote My Proxies?W

In today’s Washington Post, writer Belinda Cooper, the editor of “War Crimes: The Legacy of Nuremberg,” and a senior fellow at the World Policy Institute and an adjunct professor in New York University’s global affairs program, has written an interesting op-ed piece entitled, “5 Myths about putting the world’s worst on trial.” I am posting this article verbatim because is serves to make several interesting points. [click to continue...]