Guatemala President Otto Pérez Molina has resigned from office and currently resides in jail while a judge examines corruption charges that have left his government shattered. The country’s Congress approved the resignation in an emergency session, while former Vice President Alejandro Maldonado has succeeded Pérez for the remaining months of his term. The decision to leave office has been welcomed by the thousands of protesters who were calling for Pérez’s resignation.
Indonesia’s National Police is investigating the corporate social responsibility (CSR) arm of state-owned oil and gas firm Pertamina for possible corruption. The Pertamina Foundation received money from state funds for a number of projects between 2012 and 2014, some of which did not complete. A state audit is yet to estimate how much the state lost from the alleged malpractice, but an investigation by the National Police’s directorate of special economic crimes (Bareskrim) has put the amount at almost US$16 million. The incident highlights the importance of subjecting every aspect of the business to compliance processes, even ones that would appear innately ethical such as CSR.
The city of Chicago has successfully sued its former red light camera operator Redflex Traffic Systems for more than US$300 million. Redflex was allegedly able to install the city’s camera system as a result of a US$2 million bribery scheme that has already resulted in corruption convictions. The camera system programme raised more than US$500 million in traffic fines for the city since being implemented in 2003, but it lacked oversight which resulted in unfair ticketing practices and corruption allegations.
Parents in the United States have taken to social media to complain about the presence of ‘shiny particles’ in baby wipes made by the ‘Huggies’ brand. The concern arose following the posting online of a video allegedly showing specks of glass on the cloths. Although the source of the shiny particles remains unclear, all of the complaining parents agreed that the substance was irritating the skin of their children. In an attempt to mitigate reputational damage, Huggies manufacturer Kimberly-Clark instructed an independent firm to investigate the allegations. However, its release of the findings has received a mixed response.
Fast food chain McDonald's and its supplier Tyson Foods have both cut ties to a chicken farm in Tennessee after activists released a video purporting to show farm employees stabbing, clubbing and stomping on chickens. ‘Mercy For Animals’ filmed an undercover video that aired at a news conference in Los Angeles depicting inhumane practices at T&S Farm, which was under contract to Tyson Foods. The incident demonstrates that supply chain management needs to go as far down the supply chain as possible. Due diligence needs to be conducted not only on your third parties, but also on their third parties.
The Law Commission of India has submitted a report to the country’s government in which it has called for the criminalisation of passive bribery. If the draft bill on Prevention of Bribery is passed, India would sit alongside Malaysia and Switzerland as one of very few countries that has laws against the acceptance of bribes by foreign officials. The draft bill also includes a seven year prison sentence for the bribery of foreign officials and officials of multinational corporations (MNC). This serves as a reminder to companies to train their staff on the relevant laws in order to encourage them to comply with company standards.
Cruel forms of animal testing have allegedly been found at three well known food manufacturers. Danone, Nestle and Yakult have been accused of testing products already on the market in an attempt to find new money making angles. Some of the alleged practices include replacing 25 percent of the dietary needs of dogs with glucose injections. Animal testing is not necessarily illegal if conducted in a manner compliant with the law, but even then the practice remains offensive to some. With animal activist groups calling on the public to boycott the three brands, companies need to consider if any potential reputational damage is a price worth paying for the benefits gained from the scientific findings.
Three affiliated hedge funds and their management company have settled with the United States Federal Trade Commission (FTC) for allegedly failing to comply with filing and waiting requirements of the Hart-Scott-Rodino Act before purchasing Yahoo! shares. Third Point Partners Qualified, Third Point Ultra and Third Point Offshore Fund, together with management company Third Point, rebutted the accusations by saying that they were exempt from antitrust obligations due to the fact that the purchases were purely for investment purposes. This was rejected by the FTC’s Bureau of Competition.
The CEO of online retailer Amazon has responded to a New York Times article criticising the company’s “bruising workplace” by writing a letter directly to his employees. CEO and founder Jeff Bezos wrote that the “shockingly callous management practices” alleged in the article would not be tolerated, and that employees should contact him directly should they learn of such practices. The matter serves as a useful reminder that, in addition to nurturing a compliant workplace, a strong ethical company culture can also ensure the fair treatment of employees and an open line of communication with senior management.
The United States Securities and Exchange Commission (SEC) is understood to have agreed to assist German prosecutors in their investigation of Ford for allegedly bribing Russian customs officials to facilitate the passage of containers. The investigation into Ford and German freight business Schenker began in 2013 after both were accused of giving bribes and committing other corrupt acts in the port of St Petersburg. The SEC’s decision to assist German prosecutors is indicative of increasing levels of cooperation between regulators around the world.
More than half of the animals used in experiments in Israel in 2014 were subject to maximum levels of pain, with more than 99 percent of them killed upon completion of the experiments, according to a new report by the Council on Animal Testing. The number of such tests in Israel increased year-on-year by 12.1 percent to 340,000. This does not include the tens of thousands of experiments conducted by the country’s defence establishment, which were not independently monitored. The rise in the number of experiments on animals serves as a reminder for companies to monitor their supply chains for such testing, and ensure that any practices found are consistent with their own ethics.
Three quarters of United Kingdom companies believe that if they were subjected to a data breach they would not be able to detect it. A recent survey by software provider Informatica has revealed that only 33 percent of companies believe that they are ‘very good to excellent’ at detecting and containing breaches. The results show that companies need to invest more in the latest software and train their employees so that they can use the software and identify red flags, or risk being hacked.
Ride sharing service provider Uber is expanding its data security team to quell customer worries, combat hacking and safeguard its own employees from physical attacks. The company’s current security team of 25 will be expanded to 100 staff members before the end of the year. The announcement follows an incident in February in which as many as 50,000 Uber drivers had their personal information stolen in a cyberattack. All companies face the threat of a cyberattack and should therefore be investing in its cybersecurity, whether in the form of personnel or software.
The United States Federal Trade Commission’s (FTC’s) issuance of guidelines on how and when to bring cases against companies engaging in unfair competition has been criticised by a number of commentators for being too ambiguous. FTC chairwoman Edith Ramirez announced the formal principles, which are the first to cover Section 5 of the FTC Act in more than 100 years. Section 5 addresses unfair methods of competition, and the new guidelines will encompass invitations to engage in anti-competitive acts whether or not the suggestion is accepted.
Nine people in the United States and Ukraine have been charged in connection with a five-year hacking scheme that saw financial criminals and online criminals align their goals. Brooklyn and New Jersey-based federal prosecutors, together with regulators from the Securities and Exchange Commission and other law enforcement agencies, allege that the accused made US$100 million by hacking into business newswire services and using relevant information to make illegal stock trades. The case is a good example of the range of cybersecurity risks now facing every company.
The parliament in Iraq has unanimously passed a series of reforms aimed at curbing corruption in the country, eliminating government waste and easing sectarian tensions. Prime Minister Haider al-Abadi’s plans will see a reduction in government spending and the removal of senior government positions. The decision follows widespread protests against the country’s policy of sharing government positions. This has led to unqualified candidates rising to positions of authority in Iraq in order to meet sectarian or party quotas, which has only encouraged corruption.
Fast food firm McDonald’s has expressed support for calls by fellow World Cup sponsors Coca-Cola and Visa to create an independent reform commission to tackle FIFA’s reputational problems. The move follows criticism of the Reform Task Force, which was set up by FIFA in the wake of corruption scandals and is made up of 10 representatives from its regional confederations. The sponsors’ ability to use their financial leverage to change FIFA’s approach to compliance is an example of how reputational damage can impact commercial relationships. It also comes at a time when many companies are starting to conduct internal audits in order to establish whether they have had exposure to any of the reported misconduct.
Kenya’s auditor general Edward Ouko has released his country’s annual audit report, which shows large scale financial mismanagement and has promoted accusations of corruption. According to the report, only 1.2 percent of the country’s 2013-2014 US$10 billion budget was accounted for, while approximately US$600 million was found to be missing altogether. Commentators blame corruption for the missing money, and it serves as a reminder for companies to conduct thorough due diligence when operating in high risk countries.