July 6, 2011 nº 1,062 - Vol. 9


"The first sign of corruption in a society that is still alive is that the end justifies the means."

Georges Bernanos

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Read Migalhas LatinoAmérica in Spanish every Tuesday and Thursday. Visit the website at www.migalhas.com/latinoamerica

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  • Top News

The cost of corruption

Many companies are unaware of their vulnerability to prosecution under both local and foreign anti-bribery and corruption laws. It can be a serious gap in their risk management and governance models. Businesses selling or marketing products and services overseas, or engaging in any kind of business activity beyond Australian shores, should review their vulnerability to legal sanctions designed to curb bribery and other corrupt behavior here and abroad. CEOs and boards often underestimate their exposures to this kind of risk. Even organizations that pride themselves on the strictness of their legal compliance and their ethical conduct can be caught out. Potential vulnerabilities arise not only from the conduct of company officers and employees, but can also extend to business partners, associates, agents and contractors. It can involve unexpected places and circumstances. The potential costs of even unwitting involvement in bribery and corruption are not trivial. Individuals can be exposed to large fines and long terms of imprisonment. (In most countries bribery and corruption are serious criminal offences, even if enforcement can be erratic in many places.) Companies can suffer heavy fines, serious reputational damage and the threat of shareholder class actions. Investors usually treat such events as a serious governance failure. Investigations and resulting criminal and other legal proceedings can drag on for years, prolonging the pain and multiplying the cost.

Many companies decide not to do business in certain countries because it is just too hard to avoid becoming involved, even unwittingly, in corruption. Others are staying put, but are trying to control their exposures to these illicit activities. To make matters more difficult, the extension of the legal reach of the relevant legislation is being accompanied by more aggressive enforcement, at least in some jurisdictions. Eight of the 10 largest combined criminal and civil fines and penalties ever against corporations in America under the Foreign Corrupt Practices Act were levied in 2010 alone. Unsurprisingly, this enforcement is leading to a renewed emphasis on strong internal AB&C - anti-bribery and corruption compliance measures. Dealing with these matters can present some cruel dilemmas and tough choices because avoiding countries as a result of corruption issues can mean turning one’s back on attractive business and investment opportunities. What we can be sure of is that there is no shortage of places in which bribery and corruption is endemic.

The following initiatives will help organizations develop the necessary self-knowledge and start building the foundations of an effective ant-bribery and corruption framework.

  • Appointing a senior officer accountable for the oversight of AB&C activities, including the compliance program.
  • Issuing a strong statement from the board or executive management making it clear that bribery and corruption will not be tolerated and that managers and other employees are obliged to report any such activities that come to their notice. This statement should be backed by a consistent disciplinary approach.
  • Ensuring that in a bribery and corruption context the nature of third-party dealings, including agents, is properly understood and that such third parties have been informed of, and understand, the organization’s anti-bribery policy. Third parties and associates should be subjected to appropriately rigorous vetting, due diligence and risk assessment measures.
  • Assessing risks specific to the organization and ensuring controls are sufficiently robust to enable bribery prevention, detection and response.
  • Making sure that relevant financial controls and record keeping are part of the anti-bribery framework.
  • Developing policies and procedures to cover such matters as gifts and hospitality, the use of external advisers and other third parties, and political contributions and lobbying activities.
  • Training and motivating staff to embed a strong anti-corruption culture.
  • Establishing appropriate whistle blowing procedures.
  • Conducting regular checks and audits, particularly of high risk areas and processes. Introducing procurement and contract management procedures to minimize opportunities for corrupt behavior on the part of contractors and suppliers.

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  • Crumbs

1 - How lawyers can use LinkedIn to connect to new clients - click here.

2 - Portugal's decision to decriminalize drugs and treat users as addicts is having positive results - click here.

3 - Wal-Mart launches medical-legal partnership to aid low-income families - click here.

4 - Freedom camping law could impact on hikers and mountaineers - click here.

5 - Suitcase escape bid foiled at Mexican prison - click here.

6 - Bayer agrees to pay $750m to end lawsuits over gene-modified rice - click here.

7 - With $4.5bn bid, group led by Apple and Microsoft claims Nortel patents - click here.

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  • MiMIC Journal

China metals export ban ruled illegal

The World Trade Organization rules that China broke international rules by restricting the exports of certain metals.

Nestle in tie-up talks with China's Hsu Fu Chi

Chinese confectionery group Hsu Fu Chi has said it is in preliminary discussions about a tie-up with Swiss food giant Nestle. Hsu Fu Chi has been looking for a partner in the US, Japan and Europe for a number of years.

China said to discuss allowing SEC probes of mainland firms for first time

U.S. and Chinese officials will meet next week to discuss giving American securities regulators the right to investigate companies within China for the first time, said two Chinese officials with direct knowledge of the plans.

China installing countrywide surveillance cameras

China is working on installing a network of up to 500,000 surveillance cameras within the country. Officials claim that they will be used to prevent crime, but activists are worried that they will only contribute to political unrest. Western companies like Cisco Systems have agreed to help deploy the project.

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  • Historia Verdadera

Acuerdo

El ministro de Comercio, Industria y Turismo de Colombia,, Sergio Díaz-Granados, informó que pasó a sanción presidencial el acuerdo celebrado entre el Reino Unido de la Gran Bretaña e Irlanda del Norte y la República de Colombia. El mismo que estableció un marco jurídico justo y transparente para la promoción de la inversión, que incluye estándares reconocidos por el derecho internacional. (Presione aquí)

Nulidad

Un tribunal de apelaciones de Estados Unidos ordenó el martes levantar un congelamiento sobre US$ 100 mlls. que el Banco Central de Argentina mantiene como depósitos en la Reserva Federal de Nueva York, en el marco de las demandas de bonistas contra el país.

Nestlé

Nestlé negocia comprar al mayor fabricante de confites de China. Hsu Fu Chi, la mayor firma de la repostería de China, reconoció mantener contactos con compañías similares en Europa, Japón y Estados Unidos, con el fin de establecer sociedades y poder hacer crecer su negocio en China.

  • Brief News

More law firms raid competitors to poach rainmakers

Intense demand for lawyers with large, established books of business has led corporate law firms to recruit them more aggressively and offer record pay packages.

U.K. bribery act goes into effect

A law going into effect July 1 potentially raises the personal liability of CFO whose companies do business in the United Kingdom. The U.K. Bribery Act builds off of the 33-year-old U.S. FCPA - Foreign Corrupt Practices Act and is expected to have a broad reach. Violators could face up to 10 years imprisonment and hefty fines. The new law suggests executives may be held liable if they don't take certain steps to prevent bribery from occurring on their watch. The illegal activity could happen miles away, outside of the United States and the United Kingdom, and still be subject to the U.K.'s enforcement.

Portugal debt downgraded to junk

The credit ratings agency Moody's downgrades Portugal's debt to junk status saying there is a growing risk it will need another bail-out.

Obama to meet congressional leaders over debt

Obama has called Democratic and Republican lawmakers to the White House on Thursday for talks on raising the country's debt ceiling, as a deadline for action looms. The government risks defaulting on its debt if Congress does not enact more borrowing authority by 2 August. Republicans say they refuse to consider raising taxes, while Democrats hope to protect favored social programs. It is unclear how close the two sides are to a deal. Unless the debt ceiling is increased, the government — which now borrows more than 40 cents of every dollar — would suddenly find itself without a working credit card. That means after Aug. 3, the US would be entirely dependent upon incoming cash flows to pay its bills.

UK looks to US on piracy blocking

Websites hosting pirated material could be blocked in the UK if the US introduces a similar system. Internet providers in the States are "rumored" to be considering a voluntary filtering. Such an agreement would be a "game changer" elsewhere. There have been no official announcements from the US to substantiate this claim. To date, UK ISPs have resisted pressure from rights holders to police their users.

International body ICSPA to fight cybercrime globally

The ICSPA - International Cyber Security Protection Alliance has been set up to fight cybercrime on a global scale. Launched in London on Tuesday, the new body unites governments, international businesses and law enforcement agencies, including Europol. Major security companies such as McAfee and Trend Micro have also signed up.

Denmark beefs up border controls

Denmark, part of the Schengen border-free zone, has deployed extra customs officers on its frontiers in a move causing concern among EU neighbors. Denmark's government is under pressure to curb illegal immigration. But many have questioned the legality of the Danish move under the 1995 Schengen Agreement, which abolished internal borders, enabling passport-free movement inside much of western Europe.

California lawmakers pass bill to teach gay history

A bill to require California public schools to teach the historical accomplishments of gay men and lesbians passed the state Legislature on Tuesday in what supporters call a first for the nation.

Tunisia ex-president Ben Ali sentenced in absentia to 15 years on drug and gun charges

Former Tunisian president Zine Al Abidine Ben Ali was sentenced to an additional 15 years in prison on Monday by the Tunisian Court of Criminal Appeal after being found guilty in absentia on charges of illegal possession of drugs, weapons and stolen archaeological artifacts. This follows last month's verdict by the Tunisian Court of First Instance against Ben Ali and his wife, Leila, on charges of theft and unlawful possession of money and jewelry. The two were sentenced to 35 years in prison and fined USD $65.6 million. Ben Ali's defense team asked for an adjournment to put together a defense and consult with their client, but their request was denied.

German court considers challenge to EU bail-outs

Germany's Constitutional Court is hearing a challenge to the country's participation in bail-outs of Greece, the Republic of Ireland and Portugal. A Berlin professor argues that the process violates constitutional provisions and should be blocked. Germany's finance minister rejected the claim, saying all rescue packages had been made on solid legal ground. The complaint comes as EU negotiations continue over a second Greece bail-out, worth about 120bn euros ($173bn).

Ratko Mladic led from court

Ex-Bosnian Serb army head Ratko Mladic has been removed from a hearing at The Hague war crimes tribunal after quarrelling with the judge. Mladic was ordered out after continually interrupting the proceedings. The court entered a plea of not guilty on Mladic's behalf, after Mladic refused to do so.

Berlusconi withdraws "Save Fininvest" law

Berlusconi withdrew a draft regulation that would have directly benefited his Fininvest financial holding company, following strong criticism from media and the opposition. The measure would have averted a 750 million euro ($1.09 billion) penalty Fininvest was ordered to pay to rival conglomerate CIR in a dispute over the takeover of publisher Arnoldo Mondadori Editore in the 1990s. Slipped unexpectedly into a package of budget measures currently being evaluated by President Giorgio Napolitano, the clause was attacked as an "abuse of power" by the centre-left opposition after it was first reported on Monday.

  • Daily Press Review

Torture, murder, mutilation, rape: Amnesty accuses Syria of crimes against humanity
Al Arabiya, Online news, Dubai, United Arab Emirates

Syria accused of crimes against humanity
Al Jazeera, Doha, Qatar

3 Mubarak ministers acquitted, 1 convicted
Arab News, Pro-government, Jidda, Saudi Arabia

Pro-Palestinian activists occupy embassy in Athens
Asharq Al-Awsat, Pan-Arab daily, London, England

Turkey extends military mission in Lebanon
Egyptian Gazette, English-language, Cairo, Egypt

Netanyahu: Israel must be resolute in face of pro-Palestinian provocateurs at airport
Haaretz, Liberal daily, Tel Aviv, Israel

MIDEAST: Women on a Political Backslide
IPS Middle East, International cooperative of journalists, Rome, Italy

Arab Spring fails to lure exiles home
JPost, Conservative, Jerusalem, Israel

French protest boat still headed toward Gaza
Ma'an News Agency, Bethlehem, Palestinian Territories

Sri Lanka war crimes video proven false: military
Times of Oman, English-language daily, Muscat, Oman

Rampant theft of cargo in Asia puts global firms in a tight spot
Times of Oman Business, English-language daily, Muscat, Oman

Claims 7/7 families 'were hacked'
BBC News, Centrist newscaster, London, England

Amnesty: Probe Syria over use of 'devastating' violence
CNN International, London, England

Stress tests for Japan nuke plants
Daily Express, Conservative tabloid, London, England

Poland's EU presidency outlook
EuroNews, International news, Ecully Cedex, France

UNITED KINGDOM: British MPs wage in on press phone-hacking scandal
France 24, Issy-les-Moulineaux, France

RTK member detained in Turkish arm of Lighthouse probe
Hurriyet Daily News, (Liberal, English-language), Istanbul, Turkey

Boat capsizes off coast of Sudan killing 197
Independent The, London, England

Mechel plans London IPO
Moscow News The, Independent, Moscow, Russia

Officials: Russian cargo plane crashes in Afghanistan
Radio Free Europe, Prague, Czech Republic

Syria: '14 shot dead by Government forces'
Sky News, Independent newscaster, Middlesex, England

News of the World 'spied on detective during murder inquiry'
Telegraph The, Conservative daily, London, England

New Zealand soldier shot by friendly fire
Antara News, News agency, Jakarta, Indonesia

Thepthai resigns as spokesman
Bangkok Post, Independent, Bangkok, Thailand

Taipei thief tricks shopkeeper with fake security drill
China Post, English-language daily, Taipei, Taiwan

UK MPs detail serious concerns on government IT strategy
Computer World, IT information, Fairfax, New Zealand

Talk of drift, corruption is propaganda: Manmohan
Hindu The, Left-leaning daily, Chennai, India

Australia slashes aid budget for fast-growing India, China
Hindustan Times, New Delhi, India

'NIS food supplement ran out, we took what coach gave us'
India Express, News portal, Mumbai, India

Slum kids dread passing by Army enclave
India Times, Conservative daily, New Delhi, India

11 dead as Kandahar clashes enter 2nd day
Pajhwok Afghan News, (Independent news agency), Kabul, Afghanistan

Bahrain's rulers start dialogue with opposition
Sify News, Chennai, India

Libya rebels launch assault on gateway to Tripoli
Straits Times, Pro-government, Singapore

France: Writer files assault charge against Strauss-Kahn
Taiwan News, English-language daily, Taipei, Taiwan

UBS wealth management boss sees need to cap costs
The Economic Times, Business, Mumbai, India

Chávez returns amidst continuing uncertainty
Caribbean360, Online news portal, St. Michael, Barbados

Thousands flee as floods damage 1,800 homes
Dominican Today, Independent daily, Santo Domingo, Dominican Republic

Obama's Twitter meeting: What is your question?
International Business Times, Business news organization, New York, U.S

Tabloid targeted families of UK terror victims
Newser, News web site, Chicago, U.S

China bank stocks drop, euro steadies
Reuters, Business News, New York, U.S

Thai business fears wage inflation under new government
Reuters, World News, New York, U.S

Red Sea boat sinking 'kills 197'
BBC News, Centrist newscaster, London, England

PNC and CPP to combine their efforts in the 2012
GhanaWeb, Online news portal, Amsterdam, Netherlands

Gaddafi 'ready to cede'
iafrica, Online news portal, Cape Town, South Africa

South Sudan plans to review oil contracts after independence
Sudan Tribune, Khartoum, Sudan

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