bribery

The timing is ideal — a compelling, action-packed thriller about a massive multinational corporation that is up to no good. Take your pick, this movie could have been about any number of real life corporations that are in the headlines these days. We are sure to see more films in the corporate bad guy genre in years to come; there is simply no shortage of material out there. And in fact, this film was inspired by the Bank of Credit and Commerce International banking scandal that broke in the 90s. More on that in a bit.

The International is an American-German action thriller film directed by Tom Tykwer and starring Clive Owen and Naomi Watts. The film follows a pair that investigates corruption within a powerful bank: the International Bank of Business and Credit. Interpol agent Louis Salinger (Clive Owen) and Manhattan Assistant District Attorney Eleanor Whitman (Naomi Watts) are determined to bring the bank down for its flagrant practices. The pair gradually uncovers illegal activities including money laundering, arms trading, and the destabilization of governments. The investigation takes them from Berlin to Milan, where the IBBC assassinates an Italian prime ministerial candidate who was not a fan of the bank.

Following a lead on the assassin to Manhattan, Salinger is involved in a gunfight in the Guggenheim. Art lovers beware; this is a tough scene to handle. Keep in mind it takes place in a set in Germany. An ally of Salinger’s in the NYPD tracks down the assassin’s handler, who helps Salinger reach Istanbul, where the CEO of the IBBC is conducting an arms deal. After Salinger’s plan to record the CEO’s conversation and expose him as a fraud is bungled, Salinger faces off with him on a rooftop. After the CEO explains that killing him will accomplish nothing, since many other unscrupulous bankers would eagerly take his place, the CEO is killed by an assassin hired by the family of the assassinated Italian politician. During the credits, we see newspaper clips that reveal that the bank continues with its plans and is successful, regardless of the death of its CEO. Clearly you can kill a banker, but not the will of collective greed. Good luck with that project President Obama.

As for art imitating life, on to the defunct Bank of Credit and Commerce International (BCCI). BCCI was a major international bank registered in Luxembourg and founded in Karachi, Pakistan in 1972 by Agha Hasan Abedi, a leading Pakistani financier. It operated in around 80 countries and had assets in excess of US$ 20 billion making it the 7th largest private bank in the world by assets. In 1991 BCCI became the focus of one of the largest scandals in world financial history. Regulators in the U.S. and the UK discovered the bank’s involvement in money laundering, bribery, support of terrorism, arms trafficking, the sale of nuclear technologies, the commission and facilitation of tax evasion, smuggling, illegal immigration, and the illicit purchases of banks and real estate. Yes, boys will be boys.

Investigators revealed that BCCI had been “set up deliberately to avoid centralized regulatory review, and operated extensively in bank secrecy jurisdictions.” Bank officers were sophisticated criminals whose objective was to keep their affairs secret, to commit fraud on a massive scale. After more than a decade of lawsuits, the liquidators were able to recover 75% of the lost funds.

Again, there is no shortage of material along these lines. Stay tuned for more action-packed thrillers at a theater near you!

Popularity: 3% [?]

As thousands are laid off around the world, fear not, the defense industry is hiring! Goodness knows that we really need to be able blow each other away right now. In January, London’s The Daily Telegraph reported that BAE SYSTEMS, Europe’s largest defense contractor and the largest foreign player in the U.S. defense market, will add almost 8,000 jobs in the UK and US this year. The company is apparently getting a boost by state orders while the rest of the manufacturing industry struggles. Too bad for BAE that there is not another war monger in the White House, they could increase their ranks even more.

[click to continue...]

Popularity: 2% [?]

In this edition of 2N2, Rob Kellogg discusses the fallout from the Siemens bribery scandals and the U.S. regulators’ responses.

Popularity: 7% [?]

In this edition of our weekly video, 2N2, Rob Kellogg discusses two companies: Banco Santander, a Spanish banking company and BAE Systems, a U.K. based aerospace and defense company.

Popularity: 11% [?]

While relations between France and the U.S. have warmed up since Nicolas Sarkozy was elected President of France in 2007 — Sarkozy even visited George W. Bush at his summer house in Kennebunkport, mon dieu! — things don’t seem to be improving for Alcatel-Lucent. A recent AP Financial Wire reported that “Not Much has gone right in the two years since France’s Alcatel joined with its American counterpart Lucent to form a powerhouse in the telecommunications equipment business.” An ongoing corruption scandel in Costa Rica, massive job cuts resulting in strained union relations, and the fact that the company has yet to post a profit since the merger among other issues, have stakeholders crying “quel bordel!”

[click to continue...]

Popularity: 10% [?]

Campaign Finance and the Undermining of Universal Rights

This is the first in a series of articles on corporate influence and corruption of the American political process and its implication on human rights.

Corporate funding of politics in America has corrupted our system of government and threatens our basic freedoms. Having grown accustomed to the status quo in campaign finance, we have lost sight of the fact that this system threatens our basic freedoms and put our basic rights as humans at serious risk.

“Human rights,” a term commonly used in the context of gross human injustice, refers to the “basic rights and freedoms to which all humans are entitled.”  This includes rights and freedoms, which we think of as civil and political rights, such as the right to life and liberty, freedom of expression, and equality before the law. But the term also includes and social, cultural and economic rights, including the right to participate in culture, the right to food, the right to work, and the right to education. While genocide is clearly covered by such a definition, so too are other rights that we as Americans take for granted.

The growing power of transnational corporations and their extension of power through privatization, deregulation and the rolling back of government intended to protect its citizens cuts against the very rights set forth in this basic definition of human rights.

When these interests conflict, we often find that the later prevails. This can often be attributed not to what is best but what is most expedient for those decision makers who are unfairly influenced to make a decision not in the interests of citizens.

In many places in the world, this conflict is obvious. An official is bribed or a conflict is waged. In either case, the result is an infringement on a basic right of human kind. However, in developed countries, most notably in the U.S., human rights are infringed upon in much more subtle ways. The means by which human rights are violated can occur in a variety of ways: violence, abandonment of the rule of law, denial of the freedom of expression, corruption of the institutions of government. These are all means by which human rights can be abused.

When corruption is the means, the most successful tool developed by those of wealth and power is an art form of sorts known as political influence or campaign finance.

Miss “Corruption 2008″ – the Corporate Contribution

In the U.S., the greatest form of corruption that has been developed in all of history for influencing the lives of practically everybody on this planet is the campaign finance and political influence process. This system employs literally tens of thousands of people, involves billions of dollars and has massive implications for every aspect of our lives. This process takes various forms: political contributions, lobbying, issue advertising and so on. We hear about it on the news, we bemoan the fact that it happens and we have become numb to what it really is – Bribery.

Much has been written about this problem, laws have been passed to control it but it remains virtually intact. Anyone who has spent any time in Washington can attest to its continued vitality. As the presidential elections approach and millions are spent to influence both the election of our new president, senators and congressmen, we must not lose sight of who has bought their way into the political process and what that will mean for every American.

Who Stands to Gain

In the business world, politics is money. What happens in Washington impact business in myriad ways. The consequences of the mortgage and banking crisis will play out in unforeseen ways. Health care will remain at the top of the legislative agenda. Privatization of government services and government contracting will remain a huge item on the Congressional agenda. How these events will play out will occur as a result of an army of influence peddlers and political check writers and how they manage the process of corrupting the political process.

Exposing this process is the first step to limiting the power of political corruption. The information is readily available and the tools to expose the corruption are available to everybody with a computer and time. The greatest limitation is the will to do something about the problem and the recognition that allowing this process to continue will inevitably undermine our basic rights to life, liberty and pursuit of happiness.

Popularity: 8% [?]

Some years ago, I had a conversation with an FBI agent at a cocktail party. In the course of our conversation, I asked the agent what the difference was between a bribe paid to an elected official and a campaign contribution. He didn’t know the answer. I have thought about this discussion many times over the years. Watching the events unfold at both the Democrat and Republican conventions in the coming weeks, I am reminded that this question remains not only unanswered but unasked.

What is the difference between a bribe and a campaign contribution?

Election lawyers, lobbyists and politicians all have their own pat answers but none of their responses get to the problem with politics and campaign finance in America. Moreover, the duplicity in this process remains the great hypocrisy in American politics today and for the foreseeable future.

Black’s Law Dictionary defines a bribe as the offering, giving, receiving, or soliciting of any item of value to influence the actions of an official or other person in discharge of a public or legal duty. The bribe is the gift bestowed to influence the recipient’s conduct. It may be any money, good, right in action, property, preferment, privilege, emolument, object of value, advantage, or merely a promise or undertaking to induce or influence the action, vote, or influence of a person in an official or public capacity.

Wikipedia oddly has no definition for the term political contribution. However, the search produces a definition for fundraising which is defined as “the process of soliciting and gathering money or other gifts in-kind, by requesting donations from individuals, businesses, charitable foundations, or governmental agencies. Although fundraising typically refers to efforts to gather funds for non-profit organizations, it is sometimes used to refer to the identification and solicitation of investors or other sources of capital for-profit enterprises.”

These definitions smell suspiciously similar.

In a recent article in the New York TImes, it was noted that “[a]t Invesco Field, the site of Barak Obama’s acceptance speech for the Democrat nomination, “Mr. Obama would allocate his skyboxes to “staff, supporters, family members and friends.” Among those getting skyboxes are Quest, Comcast, Xcel Energy and Tom Golisano, the New York Republican who recently gave $1 million to the Denver host committee.” [1. New York Times, August 22, 2008] In addition, the following corporate sponsors are participating in a range of events:

A.T.&T. and Genworth are among the sponsors of Blue Night in Denver, an event Sunday honoring the Blue Dog Coalition, a group of fiscally conservative Democratic House members.
Corporations and other donors are being solicited to buy “sponsorship packages” for events costing $25,000 to $50,000 and honoring the New Democrat Coalition, a group of moderate Democrats.
Donors to the New Democrat event will get V.I.P. tickets and access to the exclusive area, with amenities, for a party at Union Station, a Rockies game at Coors Field and a jazz brunch at “an incredible private residence” in Denver, according to the invitation.
Visa and U.S. Bank are also sponsoring a reception honoring the freshman Congressional class.
Of course the Democrats don’t have a lock on this sort of corruption nor is this phenomena new. Certainly in our contemporary memory, corporations have sponsored and heavily participated in the party conventions at many levels. Despite campaign finance reforms that have sought to tighten up the flow of political money, the conventions remain veritable sink holes of corporate cash into the political influence process in America.

What differentiates the American campaign finance system with backroom payoffs of politicians in third world countries is really only a matter of style. We have glamorized, regulated and legitimized the payoff system in America so that it has become the accepted norm. By comparison, smoking marijuana is illgeal and people are jailed for using and possessing the substance. However, alcohol is legal, it’s taxed and regulated and many more people die and suffer debilitating injuries and disease from its use. The later substance is commonly accepted in our society and is treated as a higher form of substance abuse. Social norms not objective consequences drive this differentiation.

Corporate influence through the expenditure of large sums of cashs may anger ordinary folk witnessing such activity but nothing more comes of such corrupting activities. However, like bribery and corruption in its more banal forms, it has a dramatic affect on the lives of people throughout the world. As noted by Transparency International:

Political corruption affects us all. We elect politicians and political parties expecting them to act in the public interest. By electing them we give them access to public resources and the power to take decisions that impact on our lives. Given this privileged position, immense damage can be inflicted by politicians or parties acting out of greed, or in the service of those who bankroll their ascent to power. It is not surprising that people the world over are demanding absolute probity of their political leaders: citizens in three out of four countries polled by TI and Gallup International in 2003 and in 2004 singled out political parties as the institution they perceived as most corrupt.

 While it is unlikely that there will be any dramatic transformation in the way corporations get to influence politics in America, bringing a measure of transparency or openness to the process is critical. Every effort must be made to reveal both direct and indirect contributions to political candidates and parties and related causes. Currently, this is not happening in the U.S. We continue to convince ourselves that pigs at a trough are really socialites at a Southampton tea party. This does not bode well for humanity.

Popularity: 26% [?]

BAE Systems Announces New Ethical Standards for Business Conduct

Last Tuesday, BAE Systems announced that it has adopted all 23 recommendations from the Woolf Committee, which was established in the wake of a corruption scandal at the company.  As noted by GIW earlier this year, the committee, which was asked to examine the ethical principles and practices underlying the company’s business, identified various areas for further improvement that the Company should address in its business operations.

Dick Olver, Chairman of BAE Systems said, “This programme is of fundamental importance to how we do business now and in the future and it will derive benefits for our shareholders, employees and customers. We believe the Woolf Report provides valuable insight and observations that BAE Systems, the defence industry and all global companies can learn from.”

Commissions or Bribes? The £32M Question

Earlier this year, the Serious Frauds Office (SFO) in the U.K. interviewed several executives about their roles in the payment of commissions to sales agents going back to the 1980s. They pointed to Mike Turner, BAE CEO, as the person who authorised the payments. It is understood the SFO was concerned about a lack of documentation to show where sales commission payments of up to £32m a time actually went.

The company has maintained the commissions paid are legal, legitimate and not bribes and believes Turner is being unfairly targeted.

It has also been reported that BAE kept documents detailing the payment of commissions outside the UK in the city of Zurich. When the SFO asked BAE why they were kept there, the company responded it was because they were worried arms trade activists could seize them if they were on UK soil. The SFO had focused on arms sales in Romania, Czech Republic, South Africa, and Tanzania.

The implementation programme will be managed by a programme director and will focus on several areas:

1. Changes to and the monitoring of application of policies and procedures;
2. Revised training needs and the subsequent delivery of training programmes;
3. A programme to consult and communicate with stakeholders on the Company’s plans;
4. Communication and engagement with 97,500 employees.

The full implementation programme will be rolled out over three years. A Steering Committee, comprising senior executives globally from across the business and reporting to the Executive Committee, has been established with responsibility for providing oversight of the implementation programme. The Committee met earlier this month. In addition, six Working Groups comprising senior managers and functional experts have been established covering specific areas such as the global code of conduct and leadership in business ethics. These Working Groups will address between them all the recommendations contained in the
report said company spokespeople.

CEO Turner’s last few years at Britain’s biggest defence contractor have been blighted by the SFO probe. A leaked SFO document published by a South African newspaper last year named Turner and BAE’s former chairman Sir Dick Evans as suspects in the inquiry. The document, which was a request for assistance from the SFO to the South African authorities, said there was “reasonable cause” to believe Turner, Evans and the company were guilty of corruption. 

Popularity: 9% [?]