HP fined for bribing officials, Brunei-linked businesses boycotted, why working on a tobacco farm is bad for children and linking climate and country credit ratings

Dodgy dealings

Computer maker HP has paid $108m in a settlement with the US Securities and Exchange Commission under the US Foreign Corrupt Practices Act (FCPA). The settlement resolves a case in which HP in Mexico, Poland and Russia paid bribes to officials in exchange for government contracts. In Poland, HP was investigated for giving $600,000 in cash and gifts – including cars, motorcycles and televisions – to secure police and interior ministry contracts. In Russia, according to the SEC, the company paid $2m to government officials in relation to a contract with the federal prosecutor’s office. The SEC says HP “lacked the internal controls to stop a pattern of illegal payments”. The firm says dodgy deals were “limited to a small number of people who are no longer employed by the company”. US semiconductor giant Qualcomm is also under investigation for FCPA breaches, for alleged bribery in China.
[pic of HP (credit: Justin Sullivan), caption: Lack of control at HP]

Sharing economy

Large companies that hold a wealth of information on risks and management of their supply chains should share it to help their smaller counterparts benchmark their performance, according to the World Bank Institute (WBI). The institute is teaming up with Sedex, an exchange platform on supply chain sustainability, to create the Open Supply Chain Platform, to which companies can “upload, share and track core information in areas of business ethics, labour standards, environmental footprints and governance practices”. This, as the jargon has it, will “help create a more level playing field for supply chain data by offering a range of functionalities to drive sustainability performance in global supply chains”. Benjamin Herzberg of the WBI says it is time for companies to “adopt open and collaborative behaviours that favour social, environmental and governance outcomes”. The platform should be available later in 2014.

Tobacco’s child workers at risk

Children as young as 12 are working – entirely legally – on tobacco farms in the US, and are suffering health problems as a result, research from Human Rights Watch has shown. In the main tobacco states of North Carolina, Kentucky, Tennessee and Virginia, children are allowed to work picking tobacco outside school hours if they have parental permission. Human Rights Watch has found many of the young workers were from Hispanic immigrant families, and reported problems such as exposure to pesticides and nicotine poisoning. Human Rights Watch says that buyers such as British American Tobacco, China National Tobacco and Imperial Tobacco Group “do not sufficiently protect children from hazardous work”. The US administration should “endorse regulations that make it clear that work on tobacco farms is hazardous for children”, Margaret Wurth of Human Rights Watch says.

Climate ratings

Country credit ratings will be progressively put under pressure by global warming, though no country so far has been downgraded because of climate vulnerability, according to a ranking published by Standard & Poor’s (S&P) in May. Alongside ageing populations, global warming is a “megatrend for sovereign risk”, S&P says, and is likely to affect countries’ economic growth, exports and public finances. A ranking prepared by S&P finds that the nations most vulnerable to climate-related downgrades are Vietnam, Bangladesh, Senegal and Mozambique. Britain ranks as the 12th least vulnerable, while the most secure are Austria, Switzerland and Luxembourg. Unfortunately for country creditworthiness, global warming is a “collective action problem” that can “confuse politicians and voters alike and can lead to procrastination and inaction”, S&P says.

Information black hole

The FTSE 100 suffers from an “information void” that might negatively affect investors, because of the difficulty of obtaining details of tax-haven-based subsidiaries of listed companies, a report from Christian Aid says. According to the charity, FTSE 100 companies have about 30,000 subsidiaries, but information about turnover, assets, shareholder funds and number of employees is freely available for only a quarter of these companies. In a fifth of cases, subsidiaries exist in a “black hole”, and there is significant use of “highly secretive” jurisdictions, especially by finance, mining and real estate companies, the Christian Aid FTSEcrecy report adds. “The secrecy is so deep and widespread that it is like a blindfold on everyone who has financial dealings with these companies,” report co-author Katharine Teague says.

The report is available here.

Brunei bashing

Luxury hotel group the Dorchester Collection has said its revenues have been hit by a boycott that started because of anti-gay legislation in Brunei, the fiefdom of the group’s owner, the Sultan of Brunei. Among the boycotters is Virgin chief Richard Branson, who says his executives will no longer use the upmarket chain. Brunei’s legal code was recently augmented with severe penalties, up to and including death, for “offences” such as adultery and homosexuality, which was already a crime in the country. However, Ruth Hunt of gay rights group Stonewall says the Dorchester boycott was misplaced. Hunt wrote in the UK’s Daily Telegraph that it could “limit the opportunity for dialogue and put the lesbian, gay, bisexual and trans people of Brunei at far greater risk”.

Plastic progress

Belgian laundry powder and washing-up liquid brand Ecover has made a small start in removing plastic from the ocean and turning it into something useful. The company has produced what it calls the first ever bottle made from waste plastic fished out of the seas – though the bottle contains only 10% recycled ocean plastic, combined with plastic recycled from other sources. According to the company, there are 46,000 pieces of waste plastic in every square mile of ocean, so there is a long way to go. But the bottle could become “a big step both in raising awareness of ocean plastic and also beginning the process of prevention and a much needed clean-up in our oceans”, Ecover says.

Waning support

Support for fracking – hydraulic fracturing of rock to release trapped shale gas – is steadily declining in the UK according to the latest YouGov survey of attitudes to the technology. Despite hopes that shale gas could help offset rising UK energy price rises, only 49.7% of people now think fracking should be allowed, down from 53.3% in January 2014 and 58% in July 2012. Although the government wants to explore fracking, and support for fracking is higher among Conservative voters than Labour voters, the problem for the government seems to be that as knowledge about fracking grows, so does resistance to it. The latest YouGov poll finds that more people than ever understand the term fracking and its connection to shale gas, but at the same time the perception of fracking as a cause of water contamination has increased. Meanwhile, people are less likely to believe that shale gas represents cheaper or cleaner energy.

The latest YouGov poll is available here 

British American Tobacco  Brunei  Child labour  Dorchester Collection  Fracking  FTSE 100  HP  open supply chain platform 

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