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The Morning Risk Report: France Moves to Embrace Fight Against Corporate Corruption
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French Justice Minister Nicole Belloubet during the weekly session of questions to the government in Paris earlier this month. PHOTO: CHRISTOPHE PETIT TESSON/SHUTTERSTOCK
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Good morning. The prosecution of French companies by the U.S. for their business practices abroad has long been a sore point for some in France. Now, France’s top law enforcement official has released guidance suggesting that it could adopt an approach to corporate corruption and bribery championed by the country it once criticized, Risk & Compliance Journal’s Dylan Tokar reports.
The French Ministry of Justice this month sent a memo to prosecutors outlining how it plans to investigate and prosecute illegal bribes paid by French companies to secure business in foreign countries. The techniques and tools outlined closely resemble the ones used for nearly two decades in the U.S., where prosecutors have tried to encourage companies to detect and voluntarily disclose allegations of bribery, and reward the ones that do with more lenient settlements and discounts on fines.
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The memo even hints that French prosecutors may do exactly what many in the country found so controversial about the U.S. approach: They could prosecute foreign companies for misconduct in countries outside of France, even if the companies have only tenuous links to France.
In the mid-2000s, the U.S. Justice Department began actively enforcing the Foreign Corrupt Practices Act, an antibribery law that prohibits the payment of bribes by companies with ties to the U.S. The enforcement effort wasn’t just focused on American companies. U.S. prosecutors secured hundreds of millions of dollars in fines against a number of French companies, including transportation company Alstom SA and oil and gas company Total SA.
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Coronavirus Threatens Anti-Corruption Progress in Parts of Latin America, Report Says
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The coronavirus pandemic is threatening to erode the progress some Latin American countries have made in their ability to combat corruption, according to an index published by Control Risks, a global risk consultancy, and the Americas Society/Council of the Americas, a think tank.
The report—which assessed and rated 15 Latin American countries’ capacity to detect, punish and prevent corruption—said a region-wide anti-corruption push that started around 2015 has lost steam. This year’s indices of some countries, such as Mexico, show the efforts may have stagnated or receded.
The pandemic may exacerbate the trend, as the environment of emergency government spending, remote work and a relaxation of controls in procurement procedures have heightened the opportunity for corruption, the authors of the study said. The financial strains placed on governments from handling the pandemic may result in them dedicating less resources to fight corruption, the authors said.
International anti-corruption organizations have warned that the economic fallout and human suffering from the pandemic could create an environment ripe for bribery. When employees face pressure to perform for fear of job losses in difficult financial times, the risk of mismanagement of funds can increase.
Geert Aalbers, a partner at Control Risks in São Paulo and a co-author of the report, called Covid-19 “a real game changer and a really impactful exogenous factor” that would be felt by countries and companies over the next year. The potential fallout will more clearly be reflected in next year’s scores, he added.
—Mengqi Sun
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An Amazon fulfillment center in California, where investigators are conducting an inquiry into the company. PHOTO: TERRY PIERSON/ZUMA PRESS
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California investigators are examining Amazon’s business practices as part of an inquiry into the tech giant, according to people familiar with the matter.
The state’s review focuses at least in part on how Amazon treats sellers in its online marketplace, these people said. That includes Amazon’s practices for selling its own products in competition with third-party sellers, one of the people said. Neither Amazon nor California has disclosed an antitrust investigation.
The inquiries come as Amazon faces antitrust scrutiny from Washington, D.C., and abroad. The European Union is planning formal antitrust charges against the firm over its treatment of third-party sellers, The Wall Street Journal reported Thursday.
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Alex Saab Morán, traveling in a private jet, was arrested during a refueling stop on the West African island nation en route to Iran, where U.S. officials believe the 48-year-old is helping cut deals to exchange Venezuelan gold for Iranian gasoline and other oil products, according to a person familiar with the case. The person described Mr. Saab as one of Washington’s top targets as it ramps up its pressure campaign to financially cut off Venezuelan strongman Nicolás Maduro and force him from office.
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More than 1,300 Chinese medical-device companies that registered to sell protective gear and other equipment in the U.S. during the coronavirus pandemic listed as their American representative a purported Delaware entity that uses a false address and nonworking phone number, according to a Wall Street Journal analysis.
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A politically connected medical supply company alleged that the improper actions of its bank caused it to lose a $600 million order for coronavirus supplies, ruined its business, triggered death threats to its founders and ruined their reputation. In a lawsuit filed Friday in a Virginia federal court, Blue Flame Medical contends that as it was waiting for a down payment from the state of California, an official at Chain Bridge Bank told California’s treasurer that the company might be “fraudulent.”
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Small businesses that received government-backed loans to ease the pain of the coronavirus pandemic are beginning to turn to a process some say is as complex as getting the money: figuring out whether they have to pay it back. Meanwhile, finance chiefs are puzzling over how to account for the government assistance their companies received under the $2.2 trillion Cares Act.
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The use of facial recognition technology by U.S. law enforcement agencies isn’t dead, despite the withdrawal this week of Microsoft and Amazon from the market. NEC, Clearview AI Inc., and Ayonix Corp., which sell facial recognition products to police agencies in the U.S. and around the world, said they have no plans to change their sales strategies.
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Beijing authorities said more than 8,000 of some 10,000 workers at the Xinfadi market had been tested as of Sunday. At a sports center, a health worker took swabs from people who had visited or live near the market. PHOTO: NOEL CELIS/AGENCE FRANCE-PRESSE/GETTY IMAGES
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Chinese health authorities shut parts of Beijing and adopted tight controls after the capital confirmed a record number of new Covid-19 infections, sparking growing concerns about a coronavirus resurgence. The new outbreak is resurrecting coronavirus fears that had largely subsided as China moved to reopen its economy and regain a semblance of normalcy. For weeks, China’s leaders have touted the success of their strict response to the first wave of infections, which included iron-fisted lockdowns and mass testing around new clusters.
Meanwhile, Peru, which implemented one of the Western Hemisphere’s strictest lockdowns to slow the pandemic, is now grappling with Latin America’s worst outbreak outside of Brazil. Peru’s plight underscores the struggles facing developing nations now bearing the brunt of the pandemic.
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BP is writing down up to $17.5 billion of its assets and might leave some of its oil and gas in the ground because of lower energy prices and weakened demand amid the global crisis caused by the novel coronavirus.
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Protesters in Washington, D.C., last month. A political group worked to collect location data in the area during the protests. PHOTO: MANDEL NGAN/AGENCE FRANCE-PRESSE/GETTY IMAGES
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For political operatives, protests around the U.S. present a unique opportunity to harvest data on potential voters. Advocacy and voter-registration groups are gathering a trove of data from protests by tracking the cellphones of participants and sending them messages about registering to vote or taking other actions. The tactics, which one user called “deeply spooky yet extremely helpful” are the latest example of ways political groups are using cellphone data to target voters.
Tracking individuals through location data gathered by apps on their phones, often referred to as geofencing, has been used by businesses for years and has more recently caught on among political groups. That data allows firms to reach people’s phones with ads or other messaging—in real-time or later—without identifying individuals, proponents say. But some argue that collecting protesters’ location data is akin to surveillance.
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Airbnb and New York City have ended their tussle over information sharing as both confront how they will accommodate tourists once travel resumes. Airbnb said it would dismiss its lawsuit against the city that challenged a local law on information-sharing for its short-term rentals. The city agreed to scale back on the kind of information it collects.
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The Organization for Economic Cooperation and Development is the forum for global tax talks. PHOTO: CAROLINE BLUMBERG/SHUTTERSTOCK
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The coronavirus pandemic blew a hole in global tax collections while technology companies prosper in the work-from-home environment. That combination is putting more pressure on already-contentious international negotiations over how nations divide up billions in taxes on the profits of multinational corporations.
Facing growing budget deficits, countries are increasingly reluctant to trade away revenue for the certainty of new rules. Profits earned by U.S. tech giants such as Google and Facebook are becoming even more tempting to European nations that are looking for money and ways to respond to their citizens’ criticism that multinationals aren’t paying their fair share.
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A group of hedge funds and other investment-management firms have begun using apps to track where their New York-based employees are working day to day. Their goal is to show that a large portion of the fees paid to investment managers were for services performed outside the city and therefore not subject to a New York City tax that raises about $2 billion a year for the city.
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At reopened restaurants, workers are being retrained to limit contact with diners. PHOTO: EMILY ELCONIN/BLOOMBERG NEWS
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As restaurant owners restart dining rooms shut down during coronavirus outbreaks, they are rejiggering operations to maximize public health while still making diners feel welcomed. Much of that juggle falls to servers, who must spark customers’ confidence in health procedures, build rapport and generate tips at a time when the staple of hospitality—a simple smile—is obscured behind a mask.
Across the country, workers are being retrained to limit contact with diners, from uncorking a bottle of wine and setting it on the table instead of filling diners’ glasses themselves, to having to wear a mask for the entire shift. Another change: Tables are now spread farther apart to ensure social distancing.
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Hotel general managers are attempting to convince guests during a crucial wave of summer reopenings that an arsenal of cleaning fluids, electrostatic disinfectants, temperature-vetted employees, and social-distancing guidelines will keep everyone safe. Their ability to pull this off will determine how rapidly the industry can recover from its worst blow in modern times.
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Auto makers are grappling with absent U.S. factory workers and Covid-19 cases at their reopened plants, complicating the companies’ efforts to recoup production lost to the pandemic.
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Starbucks said it would distribute 250,000 T-shirts bearing social slogans including ‘Black Lives Matter’ and ‘It’s not a moment. It’s a movement.’ to employees. PHOTO: JUSTIN SULLIVAN/GETTY IMAGES
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Starbucks said it would make T-shirts bearing the “Black Lives Matter” slogan available to employees, reversing an earlier directive not to display the slogan on their person at work. The coffee chain said it would distribute 250,000 T-shirts bearing social slogans including “Black Lives Matter” and “It’s not a moment, It’s a movement” to employees at company-owned stores in the U.S. and Canada. Until they arrive, Starbucks said baristas could wear their own attire in support of the social movement.
The shift reflects the decisions facing big businesses navigating calls to support racial justice amid the national outcry stemming from George Floyd’s killing, as well as to devote more attention and funding to increasing diversity and tolerance within their workplaces.
Starbucks previously told employees that the company had a longstanding policy against buttons or pins that advocate for a political, religious or personal issue, according to a memo viewed by The Wall Street Journal. For some Starbucks employees, not being able to wear personal displays of their support for the issues of racial injustice at work was upsetting.
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