April 4, 2011 nº 1.025 - Vol. 9


"Everything should be made as simple as possible, but not simpler."

Albert Einstein

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  • Top News

Bribery and the gathering storm over compliance

While insider trading cases have been attracting much of the financial headlines, there is another issue that will have a much greater impact on corporate bottom lines: bribery. The British Ministry of Justice has announced guidelines for the implementation of the far-reaching Bribery Act of 2010, which goes into effect on July 1. Meanwhile, while the Securities and Exchange Commission is set this month to announce rules required by the Dodd-Frank Act to encourage whistleblowers to disclose information about corporate misconduct, most likely including violations of the Foreign Corrupt Practices Act.

The Bribery Act is sure to drive up the costs of compliance programs for american companies doing business in Britain, while the Dodd-Frank Act's whistleblower provisions may well render those programs superfluous, even though they will still be required by the Sarbanes-Oxley Act.

The Foreign Corrupt Practices Act prohibits individuals and companies from paying bribes to foreign officials to obtain or retain business in the country. It also requires corporations that file reports with the S.E.C. to maintain accurate books and records in accordance with the accounting rules. The law, first adopted in 1977, has grown in importance over the past decade as the Justice Department, working with the S.E.C., has brought a number of cases against multinational companies for corrupt payments, resulting in millions of dollars of fines and penalties. Britain's Bribery Act is broader in some respects than the Foreign Corrupt Practices Act, most importantly applying to any type of bribery, not just payments to foreign officials. The Bribery Act makes a company liable for the actions of those "associated" with a "commercial organization," including any employee or agent who acts on its behalf, and the organization is strictly liable for any failure to prevent the bribery.

For american companies, a key facet of the Bribery Act is its application to any organization that "carries on a business" in Britain. The Ministry of Justice's guidance is not particularly helpful on the scope of the law, noting that it would not apply to foreign company that did not have a "demonstrable business presence" in Britain, and that a company is not necessarily liable if it lists its shares on a british exchange or maintains a subsidiary in the country. Rather than explaining what the law does cover, the guidance simply describes what might fall outside the Bribery Act, while noting that the courts will finally decide the issue. This provides little clarity about the scope of the law.

The Bribery Act provides a defense for a company accused of a violation if it can show it had in place "adequate procedures" to prevent an associated person from engaging in bribery, something the Foreign Corrupt Practices Act does not recognize as a basis to avoid liability. The Ministry of Justice outlined six principles for preventing bribery that should guide companies in adopting or expanding a compliance program to help establish a defense to a charge. The principles focus on adequately assessing the risks of a violation and implementing a sufficiently rigorous program of prevention and monitoring.

While almost every publicly traded american company already has a compliance program in place, the potentially broad scope of the Bribery Act is likely to require companies doing any substantial amount of business in Britain to devote even greater resources to preventing bribery of any type, not just that involving foreign officials. Compliance is not cheap, of course, which means the lawyers, accountants and outside consultants who specialize in this field will see an uptick in business.

Yet companies can hardly ignore the obligation to implement vigorous compliance procedures if they do business in Britain and want to remain in compliance with the internal control requirements imposed by the Sarbanes-Oxley Act. So while the Bribery Act strongly encourages companies doing business there to enhance their compliance procedures to lay the groundwork for a defense to any charge, the Dodd-Frank Act may lead employees to bypass those programs in order to report potential wrongdoing to the S.E.C. and reap a reward.

Corporations are used to being whipsawed in the market, where volatility in stock prices can become almost commonplace. It seems that the Bribery Act and Dodd-Frank Act are doing the same thing to corporate compliance programs by encouraging greater efforts to prevent bribery while allowing employees to transmit evidence directly to the S.E.C. without pausing to let the company know about the problems.

Germany urges EU export ban on execution drug

Germany urged the EU on Friday to impose an export ban on a drug used for lethal injections in several US states. Germany's human rights commissioner, Markus Loening, requested that the drug sodium thiopental be placed on the list of drugs that require governmental consent prior to export. Sodium thiopental is one of three drugs used in the lethal injection sequence and is manufactured by three German companies that sell the drug locally for anesthesia purposes. Loening indicated that it was important that no drugs from Germany or the EU were used in US executions. US states are facing shortages of the drug following an announcement by Hospira, Inc., the sole US manufacturer of the drug, that it will cease production of sodium thiopental. The German Medical Association and the Association of Research-Based Pharmaceutical Companies endorse the ban on sodium thiopental exports to the US. Capital punishment is prohibited in the EU.

Fukushima nuclear crisis worse for atomic power than Chernobyl

The crisis unfolding at the stricken Fukushima Dai-Ichi plant north of Tokyo is likely to hurt the nuclear power industry's credibility more than the Chernobyl disaster in 1986, UBS said. The accident in the former Soviet Union 25 years ago "affected one reactor in a totalitarian state with no safety culture," UBS analysts said. "At Fukushima, four reactors have been out of control for weeks -- casting doubt on whether even an advanced economy can master nuclear safety."

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  • MiMIC Journal

China to shut nearly 50% of dairies after safety audit

Nearly half of China's 1,176 dairies are being shut down after failing to obtain new licences, the country's quality inspection agency says. It says that 533 dairy producers have been ordered to halt productions after a government safety audit. The announcement comes as China tries to shore up its milk industry after a baby milk health scandal in 2008. At least six babies died and another 300,000 were made ill by drinking infant formula tainted with melamine.

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  • Brief News

Brazil banks sued for Amazon deforestation

Brazil's biggest bank - the state-run Banco do Brasil - is being sued for allegedly funding deforestation in the Amazon. Public prosecutors say the bank lent money to companies that illegally cleared the rainforest and used labor practices bordering on slavery. The smaller state-owned Banco da Amazonia is also being sued. Brazil says it has drastically reduced the rate of deforestation in the Amazon in recent years. Prosecutors in the state of Para said they had uncovered 55 loans worth nearly $5m that the Banco do Brasil approved to farms that had broken environmental and employment laws. They also said they had uncovered 37 loans worth $11m given to farms with similar violations by the Banco da Amazonia. The loans violated Brazil's constitution, environmental laws, banking regulations and international agreements signed by Brazil, the independent prosecutors at the Public Ministry said.

Transocean gives bonuses after Gulf of Mexico BP spill

The offshore drilling firm responsible for running the Deepwater Horizon rig has given its top executives bonuses for its "best year" for safety. Transocean was blamed along with BP and Halliburton after last year's massive spill in the Gulf of Mexico. Eleven workers, nine of whom worked for Transocean, died when the Deepwater Horizon exploded almost a year ago. A presidential commission concluded that the explosion had been caused by cost-cutting and directly blamed Transocean, BP and Halliburton for the disaster. But Transocean said there had been a drop in the rate of recorded incidents and also in their potential severity.

Bankrupt mortgage company CEO pleads guilty to $1.5bn fraud scheme

The US DOJ - Department of Justice announced on Friday that the former CEO of mortgage company TBW - Taylor, Bean & Whitaker pleaded guilty on charges of fraud related to the TARP - Troubled Asset Relief Program. Paul Allen pleaded guilty to making false statements and conspiring to commit bank and wire fraud for his role in a US$1.5bn fraud scheme that contributed to the failure of the mortgage company. Allen admitted that from 2005 through August 2009 he and other co-conspirators engaged in a scheme to defraud financial institutions that had invested in a lending facility called Ocala Funding.

Wreckage from Air France jet found in Atlantic

Wreckage from an Air France jet lost over the Atlantic nearly two years ago with 228 people on board has been found, french investigators say. With the cause of the crash still unknown, a fourth attempt to locate the plane's voice and data recorders got under way last month. A french judge recently filed preliminary manslaughter charges against Air France over the crash. Airbus, the maker of the jet, says no one can know for sure how the crash occurred unless the so-called "black boxes" are found.

India telecom corruption probe

An Indian parliamentary panel investigating the controversial award of telecoms licences is due to question some of the country's biggest tycoons. Ratan Tata and Reliance's Anil Ambani are among those due to appear at the hearing, which begins on Monday. Police say that in 2007-08, when India issued 122 new telecoms licences, several rules were violated and bribes were paid to favour certain firms.

Privacy group wants Google cash

A leading US privacy group has filed an objection to agreements Google has reached over its social network Buzz. The Buzz experiment was heavily criticized because it automatically enrolled all Gmail users without seeking prior permission. Legal action was taken by a group of Gmail users, with Google agreeing to set up a $8.5m privacy fund. The EPIC - Electronic Privacy Information Center is unhappy that it is not one of the beneficiaries of the fund. This is despite the fact that it filed the original complaint about the service with the Federal Trade Commission.

Former Somalia PM can be questioned under oath in federal suit

A judge for the US District Court for the Eastern District of Virginia on Friday denied a motion to dismiss a federal suit against former Somali prime minister and defense minister Mohamed Ali Samantar. Lawyers for Samantar argued that the case should be dismissed because the statute of limitations had expired and because the courts should not interfere in political matters. In addition to allowing the case to move forward, the ruling also means that Samantar can be questioned under oath regarding allegations that he spearheaded a campaign of ethnic repression against the northern Somali Isaaq clan during his tenure in office. Representatives for the plaintiffs indicated that they were pleased with the ruling, which will force Samantar to face his accusers. Samantar continues to deny any wrongdoing and was not present at Friday's hearing.

Toyota wins first U.S. jury verdict over acceleration

Toyota Motor Corp is not responsible for causing a New York doctor's 2005 Scion to accelerate unexpectedly and smash into a tree, a federal jury ruled on Friday. The plaintiff had argued that the accident was caused by design defects in his Scion TC's floor mats or its electronic throttle control system. He also said Toyota failed to install a brake override system that could have prevented the crash. Toyota countered that Sitafalwalla caused the crash by stepping on the accelerator pedal rather than the brake. Toyota faces hundreds of lawsuits over allegations that some of the Japanese automaker's vehicles sped up without warning.

NYSE Euronext gets rival bid from Nasdaq and ICE

US exchanges Nasdaq and ICE have mounted a $11.3bn bid for NYSE Euronext, topping a previous offer from Deutsche Boerse. The bid compares with Deutsche Boerse's offer of $10.2bn. But the move could raise competition questions, as it would bring together the two largest US stock exchanges. ICE, an Atlanta-based futures specialist, is interested in NYSE's derivatives business while Nasdaq would like the stock exchanges and options businesses.

Coca-Cola wins dismissal of Diet Coke Plus lawsuit

Coca-Cola Co has won the dismissal of a lawsuit accusing it of deceiving consumers into believing its Diet Coke Plus cola drink is healthy. U.S. District judge Noel Hillman in Camden, New Jersey rejected arguments in the 2009 case that the world's largest beverage maker broke that state's consumer fraud laws and federal Food and Drug Administration rules in packaging the soda. The plaintiffs, two New Jersey residents, had argued that Coca-Cola's "boasting" on the soda's label, including use of the term "Plus" and the language "Diet Coke with Vitamins and Minerals," falsely suggested the soda was healthy and nutritious. But the judge said there was no showing that Atlanta-based Coca-Cola made false statements. He cited an FDA letter explaining that the soda contains at least 10 percent of the recommended daily value of several vitamins and minerals.

Fed fights debit card fee lawsuit

Lawyers for Federal Reserve Chairman Ben S. Bernanke and a regional savings and loan association are squaring off over debit-card fees in a South Dakota courtroom 1,075 miles from the debate in Congress on the same issue. U.S. District judge Lawrence L. Piersol in Sioux Falls will hear arguments today on coming Federal Reserve regulations to limit "swipe fees," the money merchants must pass along to banks in exchange for being able to accept cards as payment. TCF National Bank, a Sioux Falls-based unit of TCF Financial Corp., sued the board seeking a bar to rules it said will cause them to lose money on debit-card services. "The purpose of sound regulation is to introduce or advance competition, not to destroy it," TCF's lawyers wrote in a court filing, alleging the measure is unconstitutional. The new rules could mean a $75m to $90m drop in swipe- fee revenue.

  • Weekly Magazine Review

Time
This rock could power the world. The Gas Dilemma. Natural gas from shale rock promises to provide cleaner, abundant energy for the U.S. and the world. But there's a catch. It could come with significant environmental and social costs. Can the energy industry be trusted to deliver the goods so that everyone.

Newsweek
Citizen Kate. Here comes the smart, sexy, grocery-buying, blessedly normal commoner who could save William—and the royal family.

Business Week
Johnson & Johnson's Quality Catastrophe. After 50-plus product recalls in 15 months, the $60 billion company is fighting to clear its once-trusted name.

The Economist
Islam and the Arab revolutions. Religion is a growing force in the Arab awakening. Westerners should hold their nerve and trust democracy.

Der Spiegel
Die Kernfrage - Wie Deutschland auch ohne Atomkraft funktioniert.

  • Daily Press Review

Gaddafi sons looking for way out of conflict: report
Al Arabiya, Online news, Dubai, United Arab Emirates

Foreign Ministry estimates Goldstone Report will not be rescinded
Haaretz, Liberal daily, Tel Aviv, Israel

Libya poses immigration challenge to Italy
IPS Middle East, International cooperative of journalists, Rome, Italy

'Lehi considered assassinating Winston Churchill'
JPost, Conservative, Jerusalem, Israel

Obama gears up for second term bid
Nahamet, Online news portal, Beirut, Lebanon

Iran asks Ban to stop West intervention in region
Times of Oman, English-language daily, Muscat, Oman

Saleh willing to sacrifice himself for Yemen
Yemen Observer, Sana'a, Republic of Yemen

Abidjan facing 'rapid offensive'
BBC News, Centrist newscaster, London, England

Bale open to move abroad in the future
BreakingNews.ie, Online news portal, Cork, Ireland

Japanese plant workers shift to Plan C
CNN International, London, England

Iain Duncan Smith justifies raising retirement age: 'People don't want to retire at 65'
Daily Mail, Conservative daily, London, England

Air France crash: fresh hopes of solving 2009 mystery
EuroNews, International news, Ecully Cedex, France

IVORY COAST: Gbagbo defiant as Ouattara prepares 'final offensive'
France 24, Issy-les-Moulineaux, France

New daily paper for Zimbabwe
Guardian The, Liberal daily, London, England

Libyan Foreign Minister flies to Greece on 'peace mission'
Independent The, London, England

Cracks found in other Southwest jets
Irish Times The, Centrist daily, Dublin, Ireland

Blast in Northwest Pakistan kills at least six
Radio Free Europe, Prague, Czech Republic

Ivory Coast: Fears for 250,000 refugees
Sky News, Independent newscaster, Middlesex, England

British ambassador to US denies he helped Saif Gaddafi with PhD
Telegraph The, Conservative daily, London, England

Apartment prices in Beijing possibly fall quarter II-2011
WNC News, London, England

Yemeni soldier gunned down in south: military
Antara News, News agency, Jakarta, Indonesia

GE will help TEPCO supply electricity in summer: CEO
China Post, English-language daily, Taipei, Taiwan

Do japanese politicians have a firm grip on reality?
Chosun Ilbo, Conservative daily, Seoul, South Korea

Assad names new PM, faces defiant suburb
Daily Jang, Left-wing daily, Karachi, Pakistan

Afridi all set to tour West Indies
Dawn, English-language daily, Karachi, Pakistan

Protests against Quran burning continue
Hindustan Times, New Delhi, India

Assembly election: Polling underway in Assam
India Express, News portal, Mumbai, India

Medical services in Lucknow resumed
India Times, Conservative daily, New Delhi, India

New zealander in Ashika trial jailed
New Zealand Herald, Conservative daily, Auckland, New Zealand

Japan struggles to study new methods against contamination
People's Daily Online, English-language, Beijing, China

Pentagon defends lifting ban on gays in military
Sify News, Chennai, India

NTSB: Cracks found in 3 grounded Southwest planes
Straits Times, Pro-government, Singapore

Sons plan to oust Gaddafi
Sydney Morning Herald, Centrist daily, Sydney, Australia

Ivory Coast: Abidjan holds its breath, awaiting final battle
Taiwan News, English-language daily, Taipei, Taiwan

Law and order different from public order: High court
Thaindian News, Bangkok, Thailand

Bomb attack kills up to six at Pakistan bus terminal
Times of India, Conservative, New Delhi, India

Liberals lay out $8B 'families' platform
Canadian Broadcasting Centre, Toronto, Ontario

Haiti seeding reconstruction or destruction?
Caribbean360, Online news portal, St. Michael, Barbados

Dominican doctors remove petrified fetus from Haitian woman
Dominican Today, Independent daily, Santo Domingo, Dominican Republic

Kazakhstan's leader claims landslide re-election victory
Globe and Mail The, Centrist daily, Toronto, Canada

Fukushima radiation may spew for months
Newser, News web site, Chicago, U.S

TEPCO told to hurry to stop radiation leaks, tries bath salts
Reuters, New York, U.S

Toronto woman suspected of being lured by terror group has link to Somali PM
Toronto Star, Toronto, Ontario

Keep abreast of changing technology
Trinidad Guardian, Independent daily, Port-of-Spain, Trinidad

Charlie Sheen booed off stage in live debut
Vancouver Sun The, Conservative, Vancouver, Canada

Abidjan facing 'rapid offensive'
BBC News, Centrist newscaster, London, England

Militiamen sent to testify in warlords trials at ICC
CongoPlanet.com, Independent online news aggregator

There can't be justice for Ya-Na with Kufuor judges in place - Rawlings
GhanaWeb, Online news portal, Amsterdam, Netherlands

Gaddafi sons want 'change'
iafrica, Online news portal, Cape Town, South Africa

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