Tag Archives: FCPA

Latest Developments, July 25

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In the latest news and analysis…

The UN will hold a donors conference in Nairobi on Wednesday to try to raise $1.6 billion for drought assistance in the Horn of Africa and is looking into allegations that some of its officials are demanding money in exchange for food in refugee camps there. Former US ambassador to neighbouring Ethiopia, David Shinn, lays out some of the obstacles to helping in Somalia, including Al Shabab’s dislike of foreign aid agencies and US policy that is fixated on not helping the Islamist group in any way. A pair of Chatham House experts hold a similar view: “Both parties bear responsibility for treating emergency aid as a political tool.”

The Guardian’s Simon Bowers reports the UK’s Serious Fraud Office is allotting more resources to investigating overseas bribery cases than to fraud schemes hatched in London’s financial offices, “raising concerns that tackling the very biggest UK fraud cases may be slipping as the agency’s top priority.”

Mike Koehler, aka the FCPA Professor, looks at the Foreign Corrupt Practices Act’s facilitating payments exception, arguing the provision, which allows small “grease payments” to foreign officials, is wrongly being ignored by the Department of Justice and the Securities and Exchange Commission: “If Congress wants to remove the facilitating payment exception from the FCPA, let Congress do that, not the enforcement agencies through its charging decisions.” Similarly, a Washington Post headline decries the fact that US companies don’t know “whom to bribe.”

Al Jazeera reports on Vancouver-based Pacific Rim Mining’s El Dorado mine in El Salvador which is reportedly shut down at present due to ongoing protests.“Recent murders and death threats against activists in the region have put the spotlight on the gold mining project there,” according to the report. Pacific Rim, for its part, insists it has done nothing wrong and is itself the victim of unscrupulous tactics: “Despite our consistently professional behavior throughout our time in El Salvador and investigations clearing us of any involvement, we are again being maliciously and falsely tied to a horrible act for the third time,” according to a statement posted on the company website.

Despite continued rumblings within South Africa’s African National Congress about nationalizing mines, Anglo American Platinum, the world’s biggest platinum producer says the government simply does not have the money to follow through.

Declaring “the future of the global economy lies in the hands of poor countries,” Harvard economist Dani Rodrik looks at the long-term growth prospects of these states to see whether we are headed toward a newly egalitarian economic world order. His conclusion: probably not. “Ultimately, greater convergence in the post-crisis global economy appears inevitable. But a large reversal in the fortunes of rich and poor countries seems neither economically likely, nor politically feasible.”

Colombian ambassador to London Mauricio Rodríguez argues no option should be left off the table in the search for a completely new approach to fighting the global drug trade. One key element, he says, is to follow the money: “Let’s be serious about where the big money is. If you look at the trail of cocaine, you’ll find that 5% of the profits remain in the producing countries; 95% is in the distribution networks and laundered. The big money is in the big banks in the big countries; the big money is in the US, Europe and Asia.”

Fox News’s Oliver North recounts his conversation with a young man who asks him what he intends to do “once ‘The Empire’ bans your shotguns,” in reference to negotiations on the UN-sponsored Arms Trade Treaty that would regulate the international transfer of conventional weapons without interfering with “the right of States to regulate internal transfers of arms and national ownership, including through national constitutional protections on private ownership, exclusively within their territory.” The piece ends with the two men, anxious about their guns but filled with mutual admiration, parting ways: “When he got into his truck, I noticed his license plate: Massachusetts. Home of Paul Revere, John Adams, John Hancock. When an empire struck at Americans in 1775, they knew what to do. Let’s hope we still do.”

Howard Berman, a member of the US House Committee on Foreign Affairs, makes the case for his efforts to modernize American foreign assistance. He says the changes he will propose this fall include “reforms in the areas of conflict prevention and mitigation, human rights and democracy, security assistance, and trade and investment programs.”  Berman points out the current legislation is 50 years old and better suited to the Cold War than today’s world. “In this tight budget environment, one thing that can unite Democrats and Republicans is a commitment to make our foreign assistance programs more efficient and more effective.  We may have differing views on how much aid to provide and to which countries, but we should all agree to deliver aid in a way that reaches the intended beneficiaries and achieves its desired objectives.” But the University of Ottawa’s Stephen Brown has argued that, while most can agree on the desirability of making aid more effective, “the definition of what constitutes effectiveness and the choice of means to promote it are highly debatable.”

A Globe and Mail piece entitled “When business charity goes wrong,” uses the example of iwearyourshirt.com as a cautionary tale about the potentially disastrous consequences of acting on good intentions without doing one’s homework first.

Inter Press Service’s Thalif Deen looks at how much progress has been made since last July’s UN resolution making water and sanitation a human right. The answer, according to those he interviews, is not much.

Latest Developments, July 21

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The World Bank has released a report on the challenge posed by the theft of public assets from poor countries, which it describes as “an immense problem with a staggering development impact.” The report’s authors estimate that about $5 billion in assets have been recovered over the last 15 years, which amounts to 1/1,500th of the World Bank’s lowest estimate of the total stolen over that time. But the Tax Justice Network argues the real proportion of repatriated assets may be more like 1/3,800th of illicit financial flows out of the Global South.

Four Kenyans claiming to have been tortured by British soldiers during the Mau Mau uprising of the 1950s have taken a major step towards obtaining reparations, as a British judge has ruled the plaintiffs have sufficient grounds to pursue a lawsuit. “This is not about money,” their lawyer said. “It is about restoring people’s dignity.” The UK’s Foreign Office argues it is not responsible for any wrongdoing during the colonial period and Kenya’s government should take care of compensating victims, an argument the judge termed “dishonourable.”

The UN has “strongly welcomed” new data providing further evidence that male circumcision is an effective way of preventing HIV in men. “Scaling up voluntary medical male circumcision services rapidly to young men in high HIV prevalence settings will help reach the 2015 goal of reducing sexual transmission of HIV by 50 per cent,” according to UNAIDS executive director Michel Sidibé. One of the leaders in this trend is Tanzania which “plans to circumcise at least 2.8 million men and boys between the ages of 10 and 34 over a five-year period.” Meanwhile, in San Francisco where HIV/AIDS was the fourth leading cause of death among men aged 25-54 in 2007, the battle is heating up over a proposed measure that would ban the circumcision of boys under the age of 18. The so-called Male Genital Mutilation Bill will be put to the California city’s voters in November.

Global Financial Integrity’s Tom Cardamone has announced the imminent launch of an international petition to fight perceived efforts by the US Chamber of Commerce and Wisconsin congressman Tom Sensenbrenner to weaken the Foreign Corrupt Practices Act, the 34 year-old piece of legislation aimed at punishing individuals and corporations who pay bribes overseas.

The Economist appears to have coined a new acronym, MIFF, to describe the “the emergence of a group of middle-income but failed or fragile states” that, despite moderate prosperity at the national level, account for 17 percent of the world’s people living on less than $1 a day. That figure has skyrocketed from one percent in 2005. “Anybody concerned with alleviating world poverty must reckon with the MIFFs,” the author argues.

Peru’s ambassador to the UN Gonzalo Gutiérrez makes a similar point in arguing “the cold figure of GDP per capita does not reflect the actual state of development in a particular country.” He is calling on the donor community to change the criteria it uses when devising aid policy and to recognize that most of the world’s poor live in so-called middle-income countries. “It is illogical to leave 70 percent of those who suffer most in the world, simply because a general index says that they are already in the medium-income countries,” he said.

And in a Project Syndicate piece entitle “Debt and Delusion,” Yale University economist Robert Shiller warns of the dangers of obsessing over economic indicators, such as debt-to-GDP ratios. Fear of “some magic threshold” beyond which a country will become insolvent is causing a stampede towards austerity measures which are likely to do more harm than good. “We should worry less about debt ratios and thresholds, and more about our inability to see these indicators for the artificial – and often irrelevant – constructs that they are.”

The Royal United Services Institute’s Knox Chitiyo says the relationship between Europe and Africa has moved beyond “handouts and hoopla” and the “scramble for Africa.” In fact, he believes we are now seeing the beginning of “Africa’s scramble for the world.” Now that Africa can boast some of the world’s fastest growing economies, Chitiyo says Europe needs its southern neighbour in order to dig out of its recession.

Washington-based economist Thomas Palley makes the case for a global minimum wage to counteract “globalization’s undermining of the income generation process.” Palley does not suggest introducing a rich-country level of wage floor to poor countries, but rather “establishing a global set of rules for setting country minimum wages.” Rather than calculating specific wage levels that would then rise with inflation, he proposes agreeing on a fixed percentage of median wages that would vary according to national and regional economic conditions. “Just as globalization demands global trade rules for goods and services and global financial rules for financial markets, so too labor markets need global rules,” Palley argues.

Recapping the events of last week’s Arms Trade Treaty negotiations, Transparency International’s representatives at the meetings say they are “delighted” by the apparent broad support – from investors, industry and governments – for including anti-corruption language in the agreement. And Oxfam’s Scott Stedjan refutes US gun lobby objections to the proposed treaty, saying an ATT would have “no impact on the Second Amendment freedoms.”