Unaoil Allegations Expose Extractive Industries’ Vulnerability to Corruption Risk

Last week The Huffington Post and its Australian partner Fairfax Media published a bribery and corruption investigation into Monaco-based company Unaoil. The title of the article, ‘World’s Biggest Bribe Scandal’, may sound like journalistic sensationalism, but the allegations threaten to draw in many global firms. The company allegedly bribed government officials on behalf of multinational corporations to secure technology business deals in the energy sector. The media outlets allege Unaoil secured contracts for its clients in the Middle East, Africa and countries in the former Soviet Union by paying an estimated $1 trillion in bribes to corrupt officials. Will it turn into a compliance nightmare for firms like Rolls-Royce, Samsung, Hyundai, Halliburton and Leighton Holdings? Unaoil itself refutes the allegations, but these companies have committed to investigate such allegations.  While regulators are just kicking off their investigations, any evidence of wrongdoings will likely result in actions by enforcement agencies.

 Anti-bribery and Corruption Enforcement on the Rise in Extractives Industries

 In May 2015, the Australian global resources company BHP Billiton agreed to pay a $25 million penalty to settle charges from the U.S. Securities and Exchange Commission that they violated the Foreign Corrupt Practices Act. The global resources company sponsored foreign government officials as guests, mainly from Africa and Asia, at the 2008 Summer Olympics in Beijing. Only yesterday the company was reported to be embroiled in the Panama Papers scandal, with links to the law firm Mossack Fonesca, which is accused of manipulating the grey area of international financial secrecy.

 Statistics indicate that enforcement actions against firms in the extractive industries are on the rise. TRACE’s annual Global Enforcement Report showed that 61 such cases were brought between 1977 and 2010, rising rapidly to 113 by 2012. The 2014 report again shows the sector facing the brunt of all investigations and actions, with the highest number of actions concerning domestic and foreign officials.

 The extractive sector now accounts for the highest number of enforcement actions taken in any given industry. An OECD report found the sector responsible for 19% of all foreign bribery cases between 1999 and 2014.

 There are many possible reasons for this trend. Oil and gas sectors are vulnerable to high risk of bribery and corruption because of companies’ reliance on third parties to support the extraction of resources.

Transparency International notes that over the next 20 years, 90 percent of production of oil and gas will take place in developing countries where: “too often, wealth stays in the hands of politicians and industry insiders.”

 Some companies may therefore fear they cannot develop in emerging growth markets without engaging in bribery and corruption. The fall in the price of oil in recent years might also tempt companies to cut corners to stay competitive. But as the TRACE report shows, regulators will not turn a blind eye to corruption because of market conditions.

 Cross-border Enforcement Action

 The Unaoil case may become the latest demonstration of regulators in different countries being more willing and able to work together to pursue allegations of bribery and corruption. The majority of the companies implicated come from nations that are members of the Organization for Economic Co-operation and Development (OECD). All member governments have a commitment to protect against bribery of public officials, and we could therefore see investigations into all the companies, across all the jurisdictions known to have been involved.

 Already, towards the end of last week, authorities in Monaco announced that they had raided Unaoil’s offices and the homes of its executives in response to a request from Britain’s Serious Fraud Office. The FBI, U.S. Department of Justice and anti-corruption police in Britain and Australian have also launched a joint investigation into the allegations. Meanwhile in the Middle East, the Iraqi Prime Minister Haider al-Abadi has called on the country’s watchdog to take legal action following the media reports.

 Anti-bribery and Corruption Compliance as a Positive Business Force

 The case for companies to maintain anti-bribery and corruption policies and processes is compelling. Firms that engage in bribery and corruption face large fines, reputational damage and may be excluded from lucrative procurement opportunities.

 Yet it is not too late for companies with a poor reputation to turn things around. A report by MLex last month showed how Siemens rebuilt its reputation and integrity after a number of corruption cases over the last 10 years. It introduced a new compliance program, based around preventing, detecting and responding to risk.

 Through initiatives such as safe whistleblowing procedures for employees to report misconduct confidentially, Siemens’ built a culture of compliance now recognised as a positive force within the business. An outlook that views compliance as a strategic growth enabler, establishing the company as a credible and attractive business partner and helping it compete in the international marketplace.

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Avoid Risk Knowledge Gap with Better Due Diligence

 We’ve all seen what happens when due-diligence efforts fall short. In addition to tainting a company’s reputation, the bad actions of a third-party can lead to criminal investigations, hobbled business operations and hefty fines that impact a company for years. Wish you could see risk warning signs sooner? 

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Media Monitoring Reveals One of the Most Fashionable Macrotrends

Is Wearable Tech Redefining the Role of Technology in our Lives?

Wearable technology has come a long way since our first Walkman and its constant evolution is not only giving us more options for integrating technology into our daily living, it’s also changing our thoughts on what we should and can expect from technology. It’s no secret that we’ve always relied on it for information, verification and to simplify our lives. But today, we’re turning to technology for fashion, motivation, inspiration and seamless integration into all that we do.

Fashion Forward: Wearable Tech Gets a Facelift

Gone are the days of ugly technology. Big and small designers are clamoring to outfit wearables. One interesting blend of fashion and tech is Ringly, a customizable ring that syncs with your iOS or Android devices. It alerts you to calls, messages and emails you might miss if you’re away from your phone and works with popular apps like Facebook®, Twitter®, Instagram, Snapchat®, Vines and Tinder™. Ringly is also partnering with MasterCard® for contactless payments, turning the socially connected accessory into a wallet as well.

What are some of the other top wearable tech fashion trends to watch? According to CNBC.com, here’s the tech we’ll be turning to in the near future:

• Clothing that charges our devices through solar power
• Bracelets and cuffs that purify the air around us
• Clothing that moves and reacts to stimulus, like sound
• Bike helmets with built-in navigation systems
• Designer handbags that contain audio systems
• “Smart” socks that track athletic movements to better understand patterns and performance

Our new BFF:  Wearable Technology Inspires, Motivates and Validates Us

How long did I sleep? How much did I eat? Is my pulse in a healthy range for my age? We are no longer asking these questions of ourselves; we’re asking our fitness trackers. 

And when we look at share of voice, two brand giants dominate the field – Apple and Fitbit. And it’s no wonder, given the surge in fitness technology. We’ve been trained to track everything from our calories and steps, to heart rates and sleep. As more trackers enter the market, consumers have their pick for the features they want the most, but how will they – and you – track and tailor all of that data?

Brands like Fitbit and Apple are the most adept at helping us organize and use our data. Through apps that pull all the facts and figures together to give us a larger picture of our fitness and ones that are integrating with other brands, we are able to get a robust picture of where our health is and where it can go.

A Look Ahead for Wearable Tech

What does the future hold for wearable tech?  While all areas are certainly poised to grow, wearable medical tech is growing significantly.  The Brainband from Samsung is a rubber strap that fits around an athlete's head and is packed with sensors that read and register the movement of the brain, while a series of LED lights on the band can indicate when a football player has taken a hit. Samsung hopes getting that data quickly to the right people will help medical staff to effectively treat the athlete. It could mean a new era of concussion prevention and management.

Where else can we expect wearable tech to take us? From telling us where to go with integrated navigation systems, to clothing to responds to light, movement and sound, wearable tech will continue to permeate all areas of our lives and raise our expectations on what technology can help us accomplish.

 

Connecting the Dots

How do today’s tech trends relate to you?

• Today’s consumer wants a seamless experience. What are you doing in product development and UX to create moments that shift and evolve with your customers?  
• If your company leverages technology, are you making that experience as personal as possible?  How are you using consumer insights to tailor campaigns and apps?
• Tech companies are now partnering with fashion brands, jewelry designers, credit card companies and hospitals.  What unexpected partnerships could you leverage to delight the market?  

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Lou Cannon: Trump Endangers Republican Control of Statehouses

Republicans have flourished in U.S. statehouses during the Obama presidency, winning a best-ever number of legislative chambers and a near-record majority of governorships. But GOP legislative domination, as well as control of Congress, may be threatened by the rise of Donald Trump.

 

“Trump is causing extreme anxiety, even dismay, among Republicans at state and congressional levels,” said Tim Storey, who analyzes politics for the National Conference of State Legislatures. Storey said there is widespread concern that Trump would have a toxic effect on Republican legislative candidates if he is the GOP presidential nominee.

 

This concern dominates private conversations of Republican officeholders, some of whom have spoken out publicly. In Wisconsin, for instance, Assembly Majority Leader Jim Steineke denounced Trump for lacking a “moral compass.” Steineke, who had originally backed Florida Sen. Marco Rubio, endorsed Texas Sen. Ted Cruz in the Badger State primary earlier this month. Cruz won an overwhelming victory and with it 36 of Wisconsin’s 42 delegates to the Republican convention.

 

Republicans enter the 2016 elections in a commanding position in the statehouses. They hold 68 of 99 legislative chambers, more than ever before, and have 4,120 legislators, more than any time since 1920. (Nebraska has a unicameral legislature, which is nominally non-partisan but functionally Republican.) The GOP leads the Democrats in governorships 31-18, with one independent. Since Obama became president, Democrats have a net loss of 816 state legislative seats. Republicans also hold the U.S. Senate 54-46 and control the U.S. House by more than 50 seats.

 

Republicans have used their dominance, especially in the 23 states where they control the governorship and both legislative chambers, to advance a mostly conservative agenda of lower taxes, reduced business regulations, tighter abortion controls and strict voter identification laws. Democrats hold only seven such “trifecta” states, where they have pushed climate and minimum wage legislation.

 

What happens at the top of the ticket usually matters in a presidential election year, and orthodox Republicans fear that a landslide loss for Trump could cost the GOP congressional control and translate into heavy statehouse losses. Trump is viewed unfavorably by two-thirds of Americans, according to a recent Gallup survey. In 1964, when President Lyndon Johnson defeated GOP presidential nominee Barry Goldwater in a landslide, Republicans lost 530 state legislative seats. In 1984, when President Ronald Reagan carried 49 states and won re-election over Democrat Walter Mondale, Republicans picked up 300 legislative seats.

 

Despite his Wisconsin loss and Cruz’s subsequent pickup of 34 more delegates in Colorado, Trump has a large delegate lead going into the April 19 primary in New York State, in which he is favored. Trump has 743 delegates compared to 545 for Cruz and 143 for Ohio Gov. John Kasich. With 854 delegates yet to be chosen, Trump needs to win 494 of them – 58 percent – to reach the 1,237 required for nomination. He was behind this pace even before his setbacks in Wisconsin and Colorado.

 

Trump has a hard core of support, concentrated among working class whites and persons without a college education. He has won many more votes than any other candidate in the primaries and sparked heavy turnout. Historically, however, there has been little correlation between how a candidate performs in the primaries and what happens in the general election. That’s because only a fraction of those who vote in November participate in the primaries. By the time of the final primary in California on June 7 about 30 million people will have cast ballots in the primaries, estimates the New York Times. The turnout in November is expected to be four times as much: it was just under 130 million in 2012 and could be higher this year.

 

Storey said that Republicans enter the state legislative elections this year with the principal goal of holding what they have already won. Still, there are opportunities for both parties in November. Democrats aim at capturing Republican-held senates in Colorado, Maine, Nevada, New Hampshire, New York, Washington and West Virginia. They are also targeting Republican-held houses in Iowa, Minnesota, New Hampshire and New Mexico and hoping to reduce Republican legislative super-majorities in states such as North Carolina. Republicans are targeting Democratic-held senates in Iowa and Minnesota and Democratic-held houses in Colorado, Kentucky, Maine and Washington.

 

In this year’s governor’s races, it is mostly Democrats who are playing defense. Democrats hold eight of the 12 contested governorships, and five Democratic governors are retiring or termed out. If Republicans net even a single gain, they will match their modern high of 32 governorships.

 

Governorships are the most stable offices in American politics, perhaps because voters tend to judge governors on their merits independently of national trends. In 1964, when the Johnson landslide carried Republican congressional and state legislative candidates to defeat, every GOP gubernatorial candidate ran ahead of Goldwater, and Republicans wound up gaining a governorship. As Kevin Robillard of Politico has observed, sitting governors have won 50 of the past 53 contested races, and most turnover occurs when there are open seats.

 

Republican hopes of adding to their total of governors this year rest on three of the five states in which Democratic governors are departing: West Virginia, Missouri and New Hampshire. The best chance is probably West Virginia, where popular and relatively conservative Democrat Earl Ray Tomblin is term-limited. In Missouri, Democratic Gov. Jay Nixon is also term-limited. New Hampshire is up for grabs because the well-liked Gov. Maggie Hassan is running for the U.S. Senate. All three states have yet to hold gubernatorial primaries.

 

Republicans have two vulnerable incumbent governors, according to separate analyses by political scientist Larry Sabato and The Washington Post. Indiana Gov. Mike Pence faces a rematch with Democrat John Gregg, who lost by 3 points in 2012. North Carolina Gov. Pat McCrory, under fire for conservative policies, is seeking a second term. He faces a primary and then a challenge from Democrat Roy Cooper, North Carolina’s attorney general.

 

Divided government persists in the United States in part because the electorate in presidential election years differs from the electorate in mid-term elections, when Republicans have made most of their congressional and legislative gains. In off-year elections, the electorate is older and whiter than in presidential years, when more minorities and young people, who tend to vote Democratic, cast ballots.

 

Latinos are a target group in 2016. In previous elections they have voted in lower percentages than whites or African Americans, but a Trump nomination might bring them to the polls in protest. A rolling Gallup survey taken from January through March found 77 percent of Hispanics opposed to Trump, who has made building a high wall on the Mexican border a centerpiece of his campaign.

 

Many Republicans are also concerned that Trump will alienate women voters. A CNN poll in mid-March found he was viewed unfavorably by nearly three-fourths of women despite doing almost as well among women as men in several primaries.

 

Storey said that some Republicans fear that Trump’s unpopularity with women and minorities could cause a three to five percent vote drop off in November if he is the presidential nominee. A decline of this magnitude could threaten the GOP majority in Congress and Republican dominance of statehouses across the land. It would be an “absolute disaster” for the party, said Rob Stutzman, a Sacramento-based GOP consultant who previously worked for Gov. Arnold Schwarzenegger and is now trying to mobilize anti-Trump forces in the California primary.

 

But it’s only April, far too early to know how voters will behave seven months from now. If the rise of Donald Trump holds any lesson, it is to expect the unexpected in politics.

 

 

 

 

 

Partisan Shifts Possible In Several Statehouses

This year’s statehouse elections offer opportunities for both Democrats and Republicans to shift majority control of legislative chambers, according to Tim Storey of the National Conference of State Legislatures. Democrats are eyeing Republican-controlled senates in Colorado, Maine, Nevada, New Hampshire, New York, Washington and West Virginia, and GOP-led houses in Iowa, Minnesota, New Hampshire and New Mexico. Republicans are targeting Democrat-led senates in Iowa and Minnesota, and Democrat-controlled houses in Colorado, Kentucky, Maine and Washington.

 

Source: Tim Storey of National Conference of State Legislatures

 

Legend:

 

States with chambers Democrats targeting in 2016: Colorado*, Iowa*, Maine*, Minnesota*, Nevada, New Hampshire, New Mexico, New York, Washington, West Virginia

 

States with chambers Republicans targeting: Colorado*, Iowa*, Kentucky, Maine*, Minnesota*