From the monthly archives:

November 2008

Mayhem in India’s Financial Capital

by on November 30, 2008

On the evening of November 26th, Bombay – one of the world’s most important financial cities – was rocked by violence. The coordinated attacks occurred in at least seven locations starting around 9:30 PM. So far, 160 people are confirmed dead. A little know group calling itself the “Deccan Mujahideen” is claiming responsibility for the attacks.

On a personal level, these attacks resonated with me. During a visit to Bombay in 2006, I had spent some time at two of the locations targeted this week. These spots include the lobby of the famed Taj Mahal Hotel (owned by the Tata Group) which is a frequent meeting area for ex-pats living in the city, and Leopold’s Cafe along Colaba’s chaotic thruway made famous by author Gregory David Roberts in his best selling novel Shantaram.

A Farewell Dinner to Remember

The day after the incident, Unilever announced that its current CEO, its incoming CEO and a number of senior executives from its Indian subsidiary Hindustan Unilever were in the Taj Mahal Palace Hotel when it came under attack. The executives were attending a farewell dinner for the company’s outgoing CEO, Patrick Cescau, when the terrorists opened fire in the lobby and restaurant. All representative from Unilever safely escaped the attackers, according to a press release on the company’s website.

A Growing Hotbed of Political and Religious Extremism

This latest incident in Bombay follows five bomb blasts on September 13th, 2008 in a shopping area of New Delhi regularly frequented by western tourists and ex-pats. And on May 13, 2008, seven bombs ripped through the centuries-old Indian city of Jaipur (the “pink city”) killing 60 people in a jewelry market on the steps of a Hindu temple. The spot is a popular tourist destination. Islamic fundamentalist groups have claimed responsibility for all three of these incidences in 2008.

Terrorism in India has been in the rise in recent years and it is coming from a multitude of sources. Probably the most widely documented threat involves allegations by the Indian government, journalists and political scientists that Pakistan’s intelligence agency, the Inter-Services Intelligence (or the ISI), is actively playing a direct role these attacks. Recently, both the US and Afghanistan have also publicly accused the ISI of carrying out terrorist acts in Afghanistan.

Moreover, tensions still exist between the Indian government in Delhi and ongoing separatist movements in the northeast region of the country. For example, in the Indian state of Manipur, militants with the People’s Liberation Army clashed with Indian security forces during much of the 1990s. In the state of Assam, the United Liberation Front of Assam has actively clashed with the government for the past four decades. The primary goal of these groups is to establish independent states governed by the local tribal populations.

In addition to these groups, the well document conflict in Kashmir has gone on for the last thirty years pitting Hindus against Muslims, the Indian army against the Pakistani army, along the famed “line of control.” Perhaps most worrisome for government officials, however, is the rise of the Naxalite movement, an informal name given to Maoist rebels which originated in the state of West Bengal and which is rapidly spreading through rural areas along the eastern side of the country.

“This is Sad”

Three weeks ago I received an email from a good friend. Ritu is a former colleague of mine from when I lived and worked in India back in 1998. Believe me when I tell you that she is not someone who is not easily frightened or intimidated. But the escalating violence in 2008 has even put her a little on edge. She wrote to me on October 30: “Things have become so insecure with bomb blasts happening every month. For the first time I have started feeling a little insecure while traveling on trains, visiting shopping centres and sitting in railway stations. It’s so sad.”

The Next Front on the “War on Terror”

Make no mistake; India is the world’s next battleground in the so-called “War on Terror.” For years, my Indian friends have been pointing out to me that they, too, have been under siege by religious fundamentalism and political radicalism. The government of India has repeatedly requested formal diplomatic support from the US and Europe in combating this growing insurgency and for years these requests have fallen on deaf ears by the international community.

Now is the time for Western governments to wake up and begin supporting the world’s largest democracy and the world’s second most populated Muslim country in their campaign to uproot religious and political extremism from within. India is one country the global business community cannot afford to tip in the wrong direction.

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Bush Inc.: A Presidency for Sale

by admin on November 29, 2008

Like a worn out car sent south of the border for reuse as a taxi cab, Bush Administration insiders capitalize on their access to anyone with a checkbook. An exposé by the Sunday Times of London (TimesOnline) tells the story in print and on camera.

Ken Silverstein, writer and contributer to Harpers magazine and author of Turkmeniscam: How Washington Lobbyists Fought to Flack for a Stalinist Dictatorship, turned me on to this piece that I frankly overlooked when it broke back in July of this year. Admittedly, this is an old tale as news goes. But like loose change in the folds of the sofa, its fun to shake off the lint and have a go of it.

In a nutshell, a reporter from the Sunday Times teamed up with Eric Dos, whose full name is Yerzhan Dosmukhamedov. Dos told Steven Payne, that he was representing another Kazakhstani political figure who was looking to meet the top people in the US government.

Dos had good reason for believing that Payne could make it happen. Payne has accompanied Bush and Cheney on foreign trips to the Middle East and Asia, and he sits on the influential advisory council to the Department of Homeland Security. Payne is also president of a lobbying company, Worldwide Strategic Partners (WSP), which specialises in connecting business and political interests with the US government.

Akayev, who is in exile in Moscow after being ousted from power three years ago in a people’s revolt, was seeking an endorsement from senior US figures in order to help rehabilitate himself in the eyes of the world, Dos told Payne.

For those of us who have lost any sense of surprise at the depths of political depravity within the White House, the direction that this story goes will come as no surprise. Suffice it to say that Payne was willing, if not eager, to represent the interests of a deposed Kazakhstani dictator.

For an adventure in political corruption, read and view the following items in sequence:

This is the piece published in the Sunday Times back in July that exposed the sordid mess.

In addition, the Times collected a number of photographs of Mr. Payne and George W. Bush working on Bush’s Crawford, Texas ranch.

Pay particular attention to page 3, which describes some of Mr. Payne’s qualifications and his intimate relationship to the Bush White House.

  • White House Responds to Lobbyist Access-for-Donations Report

Here White House Press Secretary Dana Perino makes light of the relationship between Steven Payne and President Bush, referring to the “hundreds of volunteers” working with the Administration.

[youtube]http://www.youtube.com/watch?v=4NZNC0ViS0g[/youtube]

The Bush Administration is all but over in the next few weeks and I am beginning to worry. With something resembling ethical government fast approaching, I may have to turn to blogging about kittens or some such thing. Geeesh.

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Western movies and an occasional outcry about the humanitarian crisis seems to be the only attention paid to the Democratic Republic of the Congo. The horrific situation in that remote country deserves much more attention, concern and action by the rest of the world.

The human rights situation in Congo as “a cause for grave concern,” according to a report issued by the office of U.N. Secretary-General Ban Ki-moon for the Security Council. Ban’s report accuses rebels and people on the side of the government, which could undermine Security Council confidence in Congolese President Joseph Kabila. [click to continue...]

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Coalition Issues Human Rights Reform Plan

by admin on November 27, 2008

A coalition of legal and human rights groups led by the Constitution Project, a Washington DC think tank, has issued recommendations to the Obama Administration on reforming the immoral and largely illegal practices of the Bush Administration and its “War on Terrorists.”

The paper, “Liberty and Security: Recommendations for the Next Administration and Congress” “reflects the ongoing, collaborative efforts of a coalition of more than 25 leading organizations and 75 individuals to provide policymakers with a framework for addressing liberty and security issues. The catalogue includes recommendations drawn from the shared knowledge and experience of a broad coalition of groups devoted to exploring the intersection of civil liberties and national security,” according to one of its lead contributors, Becky Monroe, Policy Counsel at the Constitution Project.

The paper specifically identifies 62 items for congressional action and 118 items for executive action. Its 20 chapters cover five broad issue areas: (1) detention, interrogation, and trials, (2) immigration and national security, (3) secrecy (4) separation of powers, and (5) charities and foundations.

The importance of these recommended reforms cannot be overstated. The paper, which can be viewed at www.2009transition.org/libertyandsecurity describes in sometimes agonizing detail the degree in which U.S. government officials have engaged in illegal activities in the name of national security. The paper covers a wide range of topics including torture, kidnapping, denial of due process, incarcerating innocent individuals, ethnic and religious discrimination, and indiscriminate and arbitrary detention of individuals without trial without evidence to justify detention. The list goes on at length.

As an example of the gross disregard for the rule of law, competent investigative techniques and human rights, the paper notes the following example of the problem:

For nearly two years, Shafiq Rasul and Asif Iqbal, along with another friend from Tipton, Rhuhel Ahmed, consistently and vehemently denied any involvement in any terrorist activity. However, under extreme duress caused by hundreds of hours of interrogation, long periods of isolation, and physical and psychological abuse, Shafiq, Asif, and Rhuhel confessed to having been in a terrorist training camp in Afghanistan, and to have appeared in a videotape with Osama bin Laden in August 2000. Shafiq explained that he had been held in complete isolation for two long periods-many months–when an interrogator showed him the video of bin Laden, and he agreed that he was one of the people in it. “I could not bear another day of isolation, let alone the prospect of another year,” he said.[viii] The British intelligence agency MI5 undertook an investigation to determine the veracity of the men’s Guantanamo confessions. It took the agency less than 24 hours to determine definitively that “the men had been in England when the video was shot, and during the time they were supposed to have been in Al Qaeda training camps.”

The paper sets forth concrete recommendations for the President and Congress to consider in the coming months. What should be added to that list is the prosecution of the war criminals within the Administration, at the CIA and Justice Department and within the Department of Homeland Security for the gross violation of U.S. and International law and the fundamental disregard for human rights. Only then can America begin to restore its reputation in the world.

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Aegon and Roche Face Responsibility Challenges

by admin on November 26, 2008

In this report, Aegon and Roche receive their comeuppance as responsible public companies.

[youtube]http://www.youtube.com/watch?v=bPh-Pcw4Gjg[/youtube]

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Executives of the U.S. auto industry – flanked by their cadre of lobbyists – are now busy begging lawmakers for handouts. So far, GM, Ford and Chrysler have failed to present a strong case for using taxpayer money in their resuscitation. We know that Wagoner (GM), Mulally (Ford) and Nardelli (on behalf of Cerberus Capital, owner of Chrysler ) will get one more chance to prove their case once Obama takes office, if not sooner. And regardless of whether the “big 3″ automakers end up filling their golden chalices with federal money, a mandate stipulating an increase in the production of plug-in electric cars will emerge. This much is sure.

So it seems that this is an opportune time to consider what the next era of America’s auto industry might usher in. Let’s start by taking a quick trip back to high school chemistry class since the future of the auto industry and the new fleet of next generation cars starts with the letters “Li” on the periodic table.

The element lithium is one of nature’s more flexible atoms. Lithium salts were used during the 19th century to treat various ailments and millions of people around the world today rely on it to treat psychosis and manic-depression. Lithium is also used as an industrial agent to kill algae and to filter carbon dioxide from the air in spaceships.

Lithium is the lightest metal and the least dense solid element and because of this it is very effective in heat transfer applications used in rechargeable and primary batteries because of its high electrochemical potential, light weight, and high current density. A lithium-ion battery is the “engine” (non-combustion of course) of today’s electric cars and will likely remain so in the foreseeable future.

[click to continue...]

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5 Reasons to Save the Big Three

by admin on November 24, 2008

During the past week, the media has railed about the performance by the CEOs from Chrysler, General Motors and Ford. Like beggars in mink coats, Mssrs. Wagoner, Nardelli and Mulally marched to Washington DC last week to plead for $25 billion in financial aid from the government to an incredulous audience. Ill prepared for the onslaught by Congressional inquisitors, the Big Three CEOs looked like angry zebras ready to face down a brood of lions. What was obvious to everybody but the “zebras” was the fact that that the even angrier public and Congress have lost patience for these business leaders who expect financial aid, no questions asked. Lions 1, Zebras 0. [click to continue...]

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California Dreamin’…and Warmin’

by on November 22, 2008

The University of California at Berkeley and the not-for-profit Next 10 have released a research report regarding the long-term economic threat to California from global warming. The report explores the potential toll on the state’s assets under three scenarios ranging from climate stabilization to high emissions. It also examines seven economic sectors and the issues they will likely face.

Here are three key passages from the report:

Taken together, real estate and insurance represent the largest economic climate risk for California, yet they are the least studied to date. The report finds that the state has $4 trillion in real estate assets, of which $2.5 trillion are at risk from extreme weather events, sea level rise, and wildfires, with a projected annual price tag of $300 million to $3.9 billion over this century, depending on how warm the world gets. If no action is taken in the face of rising temperatures, six additional sectors, including water, energy, transportation, tourism and recreation, agriculture, and public health, would together incur tens of billions per year in direct costs, even higher indirect costs, and expose trillions of dollars of assets to collateral risk.

[click to continue...]

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Chevron: Burning Oil for the Environment?

by admin on November 21, 2008

Is it just me or does anybody else find corporate ad campaigns eschewing social responsibility a bit duplicitous?

I was standing on the subway platform in Washington DC this weekend. Looking around, I saw this ad sponsored by Chevron. They have been waging this campaign on billboards and television for a while now touting all things sustainable: save energy, turn off lights, drive a hybrid car, and so on. These are nice virtues that we can all agree with. The problem is I am being told to be more environmentally responsible by a FREAKING OIL COMPANY!

Here is my question: Do campaigns and non-core business activities like this serve the public interest or is this really just a bad publicity stunt that wastes money?

From a corporate social responsibility perspective, I want to see companies behave better and be responsible to all stakeholders. The problem is that I often notice that companies choose form over substance: a corporate ad campaign condemning energy use or smoking cigarettes (Chevron, RJR), charitable giving while destroying social infrastructure (Wal-Mart), helping children while undermining public health (McDonalds). For those of us looking at and evaluating companies from a social and environmental perspective, it’s easy to take a quick look at what a company says it does and give them a thumbs up or down. Sustainability reports, charitible giving and codes of conduct are nice to see but at the end of the day, does it really matter? Isn’t what companies “do” as companies the primary if not the only factor by which we should measure their true responsibility?

I invite your comments on this question. I would also like to hear from you about examples of what you would consider corporate social hypocrisy. Email me at info@jmr-financial.com

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Last month, important news came out of the U.S. Department of Labor (DOL) which was overshadowed by presidential election coverage. The news involved two agency “interpretive bulletins” issued on October 17 intended to revise previous guidance for ERISA funds in two important areas; investing in economically targeted investments (Bulletin 94-1) and the exercise of shareholder rights, including proxy voting (Bulletin 94-2). However, instead of providing clarification these bulletins stirred a hornet’s nest of activity among pro-business groups (applauding the move) and shareholder advocates (deriding the rulings). While likely viewed as arcane by many outside financial regulatory circles, this announcement is important for two reasons.

The first is that proxy voting is the main method shareholders have to weigh in on the governance of public companies they own. The proxy vote at annual meetings allows pension funds and other investors to vote against the re-election of directors if there are excessive pay practices, possible conflicts of interest on the board of directors or shady accounting practices. So any change as to how pension trustees and other fiduciaries might interpret their responsibility as it relates to voting proxies is an important public policy matter in corporate America.

The second reason these recent DOL rulings are important is that these changes would seem to reflect the strong lobbying efforts by the Chamber of Commerce and other right-wing business groups. Since the Enron meltdown, the U.S. Chamber of Commerce has been on the defensive in trying to counterbalance – some would say rather unsuccessfully – the substantial progress made by investor advocates over the past few years. As a result of these efforts, today corporate executives and directors at public companies are now held to much higher standards of ethics and responsibility which has undoubtedly made corporate boards more accountable to investors and, therefore, more effective in the context of the broader economy. Clearly, the pro-business community and its cheerleader-in-chief Tom Donohue, the Chamber’s CEO since 1997, are hellbent on reversing this progress. It shouldn’t be a surprise that Mr. Donohue serves on the boards at Union Pacific and Sunrise Senior Living, two companies with their share of corporate governance problems.

According to insiders familiar with the matter, officials at the DOL are asserting that the new bulletins are primarily intended to clarify previously established interpretations. If this was indeed the goal, then the agency appears to have missed the mark. The jury is still out as to whether this guidance will dramatically alter the landscape for corporate governance activists in the coming proxy season and beyond. For example, the DOL does cite as an example a proposal requiring corporate directors or officers to disclose their political contributions. So while this new guidance may not impact traditional corporate governance resolutions, it could have an indirect influence on how fiduciaries vote on more “socially directed” items that appear on ballot.

Many are rightfully questioning the DOL’s motive in adopting these interpretive bulletins at the end of an outgoing Administration. Once Obama takes office in the new year, expect investors to seek an official clarification of the new rules. Depending of the outcome of that process, some institutional investors could even mount a legal challenge to reverse the recent rulings.

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