Monthly Archives: January 2017

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Ronald Noble, RKN Global founder, on Food Corruption

U.S. legislators are calling for sanctions against Venezuelan officials who are taking advantage of the power afforded to them in the midst of a painful food shortage crisis in order to take bribes and corruptly profit off of the misfortune and hunger of the people of Venezuela.

Ronald Noble, RKN Global’s founder, explains that all corruption has victims, even if the victims are not immediately identified.  In the current case, the connection between the crime and the victims is more evident.

Venezuela is an oil-rich country which had enjoyed years of relative prosperity under the rule of its late leader, Hugo Chavez.  The oil revenue that the country generated supported most or all of its national needs, which led to the country’s leadership’s commission of a series of significant mistakes.  Among these mistakes was the failure to develop other aspects of Venezuela’s economy.  With the oil revenue flowing, it was easier, in the short term, to import everything from food to commodities from abroad, than to manufacture it in Venezuela.  As a result, the country became extremely dependent on imports, which did not seem problematic to the lives of regular Venezuelans so long as the oil revenue enabled these imports.  Additionally, the Chavez government did very little to save the money generated from its oil revenue.   As a result of these and other mistakes, when oil prices collapsed in half in 2014 Venezuela found its national income cut in half, its ability to import societal necessities severely curtailed, and its people suffering from shortages that led to widespread hunger, undersupplied hospitals, rising infant mortality, and increased crime.

Recently, the government changed some of its price control policies in order to increase the flow of imports into the country, and put its military in charge of the distribution.  RKN Global’s founder, Ronald K. Noble, notes that this combination—of desperate need by the people and of monopolistic power over that needed commodity by officials—is a recipe for corruption.

That corruption is now being alleged to have happened.  Following an Associated Press investigation, two consecutive Venezuelan Food Ministers, Generals Carlos Osorio and Rodolfo Marco Torres, stand accused of corruption at the expense of the people of Venezuela.  Specifically, the generals are accused of demanding bribes or kickbacks in order for them to release imported food from its port of arrival so it could be distributed to stores and made available to the Venezuelan public.  Additionally, they and other Venezuelan officials are accused of laundering ill-gotten gains through contracts with companies in the United States.

U.S. congressmen and senators are calling for sanctions against those who are corruptly profiting at the expense of Venezuela’s malnourished population.  Relief for the people of Venezuela cannot come soon enough.  In Venezuela as elsewhere, there are real victims who suffer from the harmful effects of corruption.

Ronald Noble, RKN Global Founder, on the Death of Brazilian Corruption Investigator

In light of the corruption allegations and investigations that have reverberated throughout Brazil this past year, the death today of the Supreme Court justice who oversaw an enormous corruption investigation is both tragic and deeply troubling.  While it is too early to know the cause of the plane crash off the Brazilian coast that caused Teori Zavascki’s death, it raises serious red flags.

RKN Global’s founder, Ronald Noble, reiterates the truth of the adage that power corrupts, but clarifies that this includes that those with power will often go to great lengths to avoid losing it.   The death of a principal figure investigating corrupt politicians generates fear that his death itself is a manifestation of this established phenomenon.

Justice Zavascki oversaw the “Car Wash” corruption investigation, which has implicated two presidents of Brazil, Luiz Inacio Lula da Silva, and Dilma Rousseff, governors of Brazil’s biggest province, Rio de Janeiro (in which the city of the same name is located), and the former president of the Brazilian Senate.  Even the current president, Michel Temer, faces  allegations of corruption that may be linked to the investigation.

To President Temer falls the power and responsibility of appointing a successor to Justice Zavascki.  This, in turn, raises a question of conflict of interest, in that the president could be perceived as appointing the person who would be investigating him.

The judge had been examining plea bargains related to one of the major companies implicated in the probe, Odebrecht.  As a Supreme Court justice, he had the authority to approve plea bargains involving politicians.  His approval of the plea bargains would have made them public and potentially revealed the involvement of numerous additional public servants, politicians and powerful businessmen in the corruption scheme.

This intensifies concerns that judge Zavascki was murdered in order to impede or scuttle the investigation.

Ronald Noble, RKN Global’s founder, expresses his hope that Brazil and its great people will nevertheless get transparency in government and business, which they truly deserve.  In the short term, however, it appears that the death of Justice Zavascki, whether caused by foul play or truly caused by an accident, will not help speed up that result.

Ronald Noble, RKN Global’s Founder, on the Overseas Trial for Corruption of a President’s Son

The power afforded to high level government officials offers tremendous temptation for corruption.  At times, this corruption can affect the family of those officials as well.  This may be illustrated by the case of Teodoro Nguema Obiang Mangue, (“Mangue”) the son of the President of Equatorial Guinea, who is standing trial in France for corruption.

Mangue’s father is Teodoro Obiang Nguema Mbasogo, who has held power in Equatorial Guinea since 1979 as the country’s president and as head of the oil-producing country’s only political party.  The president himself has been subject to numerous allegations of corruption.  His son, Mangue, is second vice president of Equatorial Guinea. 

Ronald Noble, founder of RKN Global, notes that situations in which leaders give political power to their relatives—a classic form of nepotism—can be a form of corruption in and of itself, but also makes other forms of corruption more likely as it increases the range and scope of possible conflicts of interest.

In this case, Mangue faces charges of corruption, money laundering and embezzlement.  He stands accused by French authorities of stealing millions of dollars of funds from his home country in order to enrich himself.  His role as minister of farming and forestry, which prohibits him from engaging in other business, provides a salary of $80,000 per year.  Yet he has purchased a $26 million home in Paris, $6 million of high-end cars, and spent about $20 million on works of art.

French authorities are not the only ones interested in Mangue.  He has been investigated by Switzerland as well as by the United States, which went after $70 million worth of his U.S. assets.  Ultimately, Mangue compromised with U.S. authorities and sold $30 million of assets, including a mansion and a dozen luxury cars, in order to return the value of assets that the U.S. alleged he had obtained through corrupt means.

RKN Global’s founder, Ronald K. Noble, emphasizes the importance of maintaining transparency in government in order to avoid conflicts of interest and to minimize the opportunity for corruption.  By instituting safeguards and accountability, the chance of corruption is reduced and the opportunity for creating a culture of integrity in governance becomes more likely.

Ronald Noble, RKN Global’s Founder, on Bribery in Getting Contracts

The year 2015 offered the public a very public view of a massive FBI operation against executives of FIFA, the world football (soccer) organization, and of various individuals and companies that allegedly were involved in corrupt dealings in soccer.   As we now enter 2017 and the case progresses, one of those companies, Torneos y Compentencias, an Argentine broadcasting company and sports communication firm, has agreed to pay a penalty for its role and the role of its former head in the scheme.

Ronald Noble, RKN Global’s founder, applauds the FBI and prosecutors for their diligent and professional work in penetrating the corruption scheme and securing the guilty plea of Alejandro Burzaco, former head of Torneos y Compentencias, and his former company.

Burzaco had escaped the sting operation that saw the arrest of FIFA officials in a Swiss hotel in May 2015, and was sought by authorities until he came out of hiding and turned himself in to Italian police in June 2015.  Burzaco is alleged to have paid millions of dollars in bribes to soccer officials in South America and the Caribbean, in exchange for media contracts for sporting events.  For example, Burzaco was accused, together with other defendants, of paying $110 million in bribes to officials of the South American Football Federation, Conmebol, and to the Confederation of North, Central American and Caribbean Association of Football, Concacaf, in order to gain lucrative contracts—worth hundreds of millions of dollars–for exclusive rights to cover major sporting events.  The indictment alleged that Burzaco was involved closely with the handling of the bribe payments and concealing them so that they would not be detected as corruption or bribery.  This and similar behavior of Burzaco and other defendants is said to have continued over the course of 24 years.

Burzaco pled guilty to conspiracy to commit racketeering, wire fraud and money laundering last year, and last month the company he headed agreed to a settlement with federal prosecutors in Brooklyn, NY.  The settlement involves a forfeiture of $89 million and a penalty of over $23 million for the company’s involvement in conspiracy to commit wire fraud in order to corruptly get rights to broadcast the FIFA World Cup for 2018, 2022, 2026 and 2030 in Argentina, Uruguay and Paraguay.

RKN Global’s founder Ronald Noble notes that since the payments are part of a deferred prosecution agreement, Torneos y Compentencias, which is under new management, has incentive to maintain honest business dealings or risk future punishment by the court in the future.

Ronald Noble, RKN Global’s founder, on Political Corruption Allegations in Hong Kong

Another former political leader has made headlines with allegations of corruption.  Donald Tsang, who was the chief executive of Hong Kong from 2005-2012, entered his plea of not guilty in court on January 3rd as he stands trial for corruption.

RKN Global’s founder Ronald Noble believes strongly in the presumption that one is innocent until proven guilty. Accordingly, it must be borne in mind that even as we draw lessons from the allegations against Mr. Tsang,that he enjoys a presumption of innocence as his trial is still ongoing.

Mr. Tsang faces up to 21 years in prison if he is convicted on three charges of misconduct and bribery, each carrying a possible sentence of seven years.  The charges alleged by prosecutors involve a broadcaster that was seeking a government license to operate during Mr. Tsang’s term.  Allegedly, an investor in the broadcaster leased a luxury penthouse apartment to Mr. Tsang, and Tsang later approved the license request for the broadcaster.  Additionally, prosecutors allege that an architect who Mr. Tsang later nominated for an honor did interior designer work for him for free on the penthouse apartment.  These charges follow allegations that he accepted trips on yachts and private jets from businessmen, allegations for which he apologized in 2012.

The receipt of gifts or benefits by public leaders and officials is commonly considered bribery if in exchange they utilize their power and influence to unfairly benefit the gift giver.  However, because it is so difficult to avoid the undue influence caused by gifts, many governments prohibit the receipt of gifts or benefits by public officials, or severely limit them and impose strict reporting requirements, even if the public official subjectively has no intention of issuing favors in exchange for the gifts.  Such rules create bright-line definitions for proper and improper behavior, and discourage situations that can lead to corruption even if they are not intrinsically corrupt.

Ronald K. Noble, RKN Global’s founder, notes how the abundance of corruption cases in politics throughout the world indicates how difficult it is to steer clear of impropriety or the appearance thereof; indeed, one Hong Kong politician, Lam Chuek-ting stated his strong belief that “the chief executive has to (maintain) close relations with special interest groups and tycoons.” Perhaps we can generalize and say that in other words, government and business have important areas of intersection, and it is at those areas of intersection that both the opportunity for civic growth and the dangers of corruption lie.