CG Fund: New Investment Tool to Boost Governance Standard

Tags

, ,

Most people now accept that good governance is a basis for long-term business success and sustainability. When it comes to investing in stocks, firms with good governance should be seen as relatively safe bets. Wouldn’t it be great if there were funds that handpicked stocks with such desirable qualifications for you?

Thailand’s investment community took a proactive role by introducing mutual funds that limit its investment portfolio to stocks of companies with proven track records of high governance standards and established internal graft-prevention mechanisms.

Some 11 asset management companies, controlling over 90% of the domestic market share, made a joint announcement in August 2017 that they will separately introduce the so-called corporate governance or “CG funds.” So far, 10 funds have been set up, raising over THB 4 billion orUS$125 million from investors.

One unique element of the Thai CG funds is that all 11 asset management companies agreed to contribute 40% of their fund management fees to organizations that promote corporate governance and anti-corruption.  Read More...

Albanian Ponzi Schemes as an Extreme Case for Strong Corporate Governance

Tags

, ,

Photo Credit: Robert Nagle, Vlore, Money Lenders,1997

At their height in November 1996, a series of Albanian “Ponzi” schemes held money equal to almost half of the country’s total GDP. The schemes were fronted by a series of companies and charitable foundations that sprung up in newly capitalist Albania and offered monthly interest rates on deposits. Over half of the population rushed to invest in the schemes, some of which promised to triple an investor’s money in three months. The government itself ran advertisements for the schemes on state-run television. According to one observer, the country smelled and sounded like a slaughterhouse because of all the farmers selling off their livestock to invest in the schemes. It seemed as if everybody could get rich quick.

The collapse was predictably swift. On November 19th, 1996, the first scheme collapsed when it could no longer bring in enough deposits to pay previous depositors.  Read More...

Can We Make Anti-Corruption Sustainable?

Photo Credit: CIPE

On December 8th, 2017, the Center for International Private Enterprise (CIPE) and the Partnership for Transparency co-hosted an event that asks, “Can We Make Anti-Corruption Sustainable?” Following a brief introduction by Frank Vogl, Co-Founder of the Partnership for Transparency and Transparency International, Dr. Delia Matilde Ferreira Rubio gave her first speech in the United States following her recent election to Chair of the International Board of Directors of Transparency International. Dr. Rubio discussed her vision and strategy regarding the challenges in the fight against corruption. Dr. Rubio’s speech was followed by a panel discussion moderated by CIPE’s Managing Director Andrew Wilson featuring Dr. Rubio, CIPE Senior Program Officer Frank Brown and Alina Mungiu-Pippidi, Professor of Democracy Studies at the Hertie School of Governance in Berlin.

The full video of the event is below:

The full CIPE Democracy that Delivers podcast featuring Dr. Delia Ferreira Rubio is below:

 

   Read More...

How Countries Can Overcome Challenges to Enforcing Anti-Corruption Laws

Tags

, ,

Photo Credit: CIPE

This podcast was originally posted on CIPE’s Development Blog

OECD’s Drago Kos says passing anti-corruption laws is much easier than enforcing them in most countries. Kos, who chairs the OECD’s Working Group on Bribery, was the guest of CIPE’s “Democracy That Delivers” podcast on January 2, where he discussed the difficulties many nations face when implementing anti-corruption measures. He candidly confirms that it is fairly obvious which OECD countries neglect to enforce anti-bribery conventions, especially abroad. Governments may refuse to act but it’s hardly believable that those country’s companies have never once bribed a foreign public official. Kos shares new details about groundbreaking work the OECD is doing to help foreign governments implement anti-corruption policies, fight poverty, and restore confidence in local markets. The OECD is short for Organisation for Economic Co-operation and Development, has 35 member countries worldwide and works closely with international businesses.

   Read More...

Will 2018 be the year Mexico starts to tackle its corruption problem?

Tags

, , , , , ,

Photo credit: GINNETTE RIQUELME / REUTERS

Mexico’s economy did not do particularly well in 2017. In fact, the economic slowdown raises important questions about what politicians throughout the country should be promising in the upcoming July elections and to whom they should feel most accountable. Like much of the Americas this year, corruption will be a major deciding factor at the polls in Mexico. The recent article in Foreign Policy, Corruption is Mexico’s Original Sin written by Luis Rubio not only describes a deeply embedded patronage system of corruption but offers little hope for reform, save for a massive judicial overhaul.

Rubio suggests that despite impressive efforts by anti-corruption activists, Mexican civil society is unlikely to witness Brazil inspired upheaval in their political system; for many years Mexico focused on growing its economy, while Brazil took time to reform its judiciary. Outgoing President Pena Nieto, of longtime ruling party PRI, has earned low approval ratings and widespread contempt due to rampant corruption at the federal and local levels, malfeasance by him and his wife, allegations of espionage, and extreme negligence – particularly in regards to the murder rate of civilians and members of the mediaRead More...

Happy Birthday to the FCPA and OECD Anti-Bribery Convention

Tags

, ,

Photo Credit: http://riadzany.blogspot.com/2013_08_01_archive.html

Forty years ago, President Jimmy Carter signed into law a novel statute called the U.S. Foreign Corrupt Practices Act (FCPA). It was the first-ever such statute in the world to govern business conduct abroad and address corruption violations involving bribery of foreign government officials. While the enforcement was initially slow, over time the FCPA gained prominence and became one of the most powerful forces to shape the new global norm: corruption is no longer an acceptable part of doing business.

The landmark corruption case against Siemens brought under the FCPA in 2008 resulted in a record-setting $1.6 billion in fines in the U.S. and Germany. Siemens has since cleaned up its act and put in place an impressive compliance program that not only encompasses the company’s employees but also extends to its suppliers and business partners around the world. This case clearly demonstrated that the key value of the FCPA enforcement is not just penalizing companies for past wrongdoings but incentivizing them to better prevent and detect corruption going forward.  Read More...

The Dilemma of Corporate Governance and Business Ethics in Sudan

Tags

,

 

Photo Credit: CIPE

Decades of conflict, civil war, and the secession of South Sudan in 2011, combined with the slump in global oil prices, have had a profound effect on Sudan’s economy and developmental progress. As the country attempts to emerge from conflict and integrate into the global economy following the lifting of sanctions, it must continue to navigate institutional challenges and steady itself in the aftermath of multiple economic shocks. With reduced international investment and a private sector that faces complex obstacles, fighting corruption is paramount to a successful transition and an imperative for future growth.

To this end, CIPE and its local partner, Al Oula, launched an anti-corruption initiative to support the private sector in mitigating corruption at the firm level while engaging in advocacy to promote transparency and limit opportunities for illicit behavior. Dirdeiry M. Ahmed, Ph.D., a passionate advocate for effective, sustainable development in Sudan, delivered a speech at the initiative’s inaugural summit to call attention to the challenges facing the business community in Sudan.  Read More...

Local Businesses can Bolster Moldova’s Anti-Corruption Efforts

Photo Credit: CIPE

In 2014, Moldova suffered a massive corruption scandal involving dubious loans that led to the disappearance of $1 billion, or 12% of the country’s GDP, from its banking system. The scandal forced the central bank to issue $870 million in emergency loans to the three implicated banks in order to prevent economic collapse. Prominent politicians and business people were involved. The scandal ignited popular anger and triggered street protests. While it may be difficult to see a silver lining in this bleak turn of events, one positive outcome may be this: the scandal of this magnitude was a wake-up call for Moldovans to build better safeguards against future abuses and renew commitment to address corruption at all levels.

Although Moldova has adopted laws to align its anti-money laundering legislation with the European Union rules, other major reforms must still take place at the national level. Importantly, though, efforts to combat corruption must extend beyond the public sector and involve building integrity mechanisms in the private sector as well.  Read More...

Saudi Arabia Anti-Corruption Crackdown: How will it Affect the Country’s Future?

Tags

,

Photo Credit: Outernationalist

On November 4, 2017, Saudi Arabia launched an anti-corruption campaign aimed to tackle the various corruption problems throughout the Kingdom. King Salman bin Abdulaziz issued a royal order to establish the anti-corruption committee and appointed Crown Prince Mohammed bin Salman as the leader of the initiative.

It appears that the goal of this crackdown is to eradicate corruption at all levels of government, and so far it has demonstrated considerable momentum. Since the issuance, 208 individuals have been called in for questioning, and seven of them have been released without charge. According to a list obtained by CNN, 17 prominent figures have been arrested; including Prince Alwaleed bin Talal, the billionaire businessman of Kingdom Holding, the formal head of the royal court Khaled Al-Tuwaijri, Saudi media mogul Waleed Al-Ibrahim, and Prince Turki bin Nasser. Three ministers were removed from their positions, and 10 former ministers were detained.  Read More...

Canada Outlaws Facilitation Payments

Photo Credit: Four Season Canuck

On October 31, 2017, the Government of Canada amended its anti-corruption law to explicitly bar facilitation payments. This move is part of an ongoing effort by Canadian authorities to tighten its anti-corruption regulations.

The aggressive move to improve both Canada’s legal regime and its enforcement of anti-corruption stems from several significant developments in 2011. In March of that year, Canada was shamed by the Organization for Economic Cooperation and Development (OECD), which criticized Canada for its relatively weak framework and limited enforcement actions in combatting foreign corruption. In October of that year, the Government of Quebec appointed the “Charbonneau Commission”, which uncovered significant governance lapses and corruption in the contracting of public works in the province.

Since that time, tolerance for corruption in Canada and for improper dealings by Canadian firms abroad have steadily diminished. The Corruption of Foreign Public Officials Act (CFPOA), which was passed in 1999, bars bribery of foreign public officials when the act occurs wholly or partially in Canada.  Read More...