Monthly Archives: September 2017

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Digging up Dirt: Cleaning up the Mining Industry

The UK’s Serious Fraud Office has recently opened an investigation that delves deep into the life of the mining company Rio Tinto. Based in the Republic of Guinea, Rio Tinto is suspected of corruption.

The mining giant reported itself to authorities based in the United States and the UK. The alleged corruption is thought to involve some of the mining company’s employees. Rio Tinto contacted authorities about specific consultancy payments that were made in conjunction with the Simandou project in Guinea.

The Simandou project provides access to high grade iron ore that is considered to be the largest untapped source in the world, with the ability to keep a mine in operation for more than 40 years. Rio Tinto stated that it became aware of unexplained payments that were worth approximately $10.5 million.

 

Ronald Noble, founder of RKN Global, notes that it is a sign of smart leadership that Rio Tinto turned itself in and wishes to cooperate fully with the investigation that is being carried out by authorities.

In November 2016, Rio Tinto suspended one of its senior executives who was thought to be connected to the unexplained payments. A second senior executive resigned after the payments had been discovered.

Mining industry players, along with authorities around the world, has worked to improve the governance of an industry that has faced many allegations of corruption in bids to secure business in specific countries.

RKN Global’s founder, Ronald K. Noble, observes that industry corruption, like many types of crime, is best tackled by a full-court-press cooperation between the private sector and law enforcement.  Bribery in the procurement of contracts in foreign countries is unfortunately not at all unheard of, and the willingness of Rio Tinto to be proactive in investigating corruption is a good example for other companies that may find themselves in a similar situation.

 

The Dirty Laundry of Cheap Exports: The Case of Sohel Rana

 

Sohel Rana, the owner of Rana Plaza, a tower in Bangladesh which collapsed in 2013, killing 1000 garment factory workers and injuring 2500, was recently found guilty of corruption. It is the first of several counts he faces, including murder, in the wake of the worst industrial accident in Bangladeshi history. The collapsed building housed five garment factories which made clothes for well-known western retailers.

Rana was found guilty of failing to declare his earnings to the Bangladeshi anti-graft commission, earning him a three year sentence. If found guilty on the murder charge, he might face the death penalty.

Bangladesh’s official corruption watchdog found Rana to have earned more money that it was thought possible from running a factory, even though he employed more than 3,000 people. In addition to building the factory with funds of unknown origin, Rana violated building laws by adding three stories to the original six, helping turn the building into a death trap.

Ronald Noble, founder of RKN Global, observes that this case reinforces the phenomenon that opportunity gives rise to corruption. The natural desire in the U.S. and other western countries to get access to cheap merchandise creates the pressure to cut corners and opens the door to corruption in the source countries.

The remaining charges which Rana faces are even more serious. Survivors of the accident claim that they were forced to return to the building even though large cracks had already appeared in the walls. This is also a not-uncommon phenomenon: that corruption is not merely a moral offense but leads to other crimes, with severe ramifications including harm and death to innocents.

RKN Global on Online Shopping Fraud

Shopping online seems to be getting easier, as more and more retailers realize that customers want to shop in the comfort of their own home. Unfortunately, some fraudsters use sophisticated methods to commit online shopping fraud and victimize customers.

In 2016, incidences of digital fraud were up by more than 40% over the previous year, showing that more fraudsters are using our wish to shop online to their advantage.i In May 2017, approximately $120,000 Australian dollars were lost when unsuspecting shoppers paid for products online.ii

Ronald Noble, founder of RKN Global, stresses that shoppers should make sure the website they’re wishing to purchase goods from belongs to an established and reputable company.

Some buyers are also falling victim to fraudsters who appear to be selling goods on auction websites such as eBay.iii A victim bids on a product and finds out a little too late that he or she cannot get a refund nor return the purchase.iv Incidents like this make potential buyers less likely to shop on the website again, meaning genuine sellers could lose out.

There are steps that can be taken to make sure everyone is less likely to fall victim. Buyers should be on the lookout for websites that ask for payment via direct bank transfers.v Most websites will ask for payment via PayPal or other secure methods, and all genuine websites should have a payment page with a web address that starts with ‘https’, indicating that the connection is secure.vi

Sometimes fraudsters use classifieds websites to place advertisements.vii Unfortunately, not every advertisement is genuine. Users of classifieds websites should always refrain from making payments until they have received the goods or had the opportunity to inspect them.viii

Another trick that fraudsters use involves them asking potential buyers to visit a different website to complete the sale.ix Authentic and reputable websites would not ask buyers to pay somewhere else.

Buyers can potentially protect themselves from falling victim by checking the sites’ or sellers’ feedback history.x If there are a lot of negative comments, buyers should take this as a warning sign. The same is true if there is no feedback. This is not to say that all new sellers and websites are fraudulent; however if there is no feedback, it is more difficult to determine their authenticity.xi

Buyers can further protect themselves by refusing to buy products that are advertised at a very low price.xii If the price seems too good to be true, it probably is. Legitimate websites and sellers typically try to get as much money as they can from a sale, while also hoping that the buyer considers the price to be reasonable. There is little reason for a seller or a website to sell a product or products at an excessively low price.

Those who have been scammed, or suspect that they may have been, should contact the retailer in question, or the auction website.xiii In some cases the retailer, for example, may be able to resolve the issue, but in other cases shoppers may find that they have lost their money.

RKN Global’s founder, Ronald K. Noble, urges those who shop online to take care whenever they make a transaction. Looking out for the tell-tale signs that a site may not be genuine could be one of the best ways to prevent shoppers from falling victim.

i“Breaking news in the industry: December 6, 2016”. December 6 2016. LPM Insider. http://losspreventionmedia.com/breaking-news/breaking-news-in-the-industry-december-6-2016/

ii“Online Shopping Scams Statistics”. Australian Competition and Consumer Commission Scamwatch. https://www.scamwatch.gov.au/types-of-scams/buying-or-selling/online-shopping-scams

iii“Online shopping and auction fraud”. ActionFraud. http://www.actionfraud.police.uk/fraud-az-online-shopping-fraud

iv“Online shopping and auction fraud”. ActionFraud. http://www.actionfraud.police.uk/fraud-az-online-shopping-fraud

v“Online shopping fraud”. National Trading Standards. http://www.tradingstandardsecrime.org.uk/online-shopping-fraud/

vi“Online Shopping Scams Statistics”. Australian Competition and Consumer Commission Scamwatch. https://www.scamwatch.gov.au/types-of-scams/buying-or-selling/online-shopping-scams

vii“Online Shopping Scams Statistics”. Australian Competition and Consumer Commission Scamwatch. https://www.scamwatch.gov.au/types-of-scams/buying-or-selling/online-shopping-scams

viii“Online Shopping Scams Statistics”. Australian Competition and Consumer Commission Scamwatch. https://www.scamwatch.gov.au/types-of-scams/buying-or-selling/online-shopping-scams

ix“Online shopping and aution fraud”. The Little Book of Big Scams. https://www.met.police.uk/globalassets/downloads/fraud/the-little-book-of-big-scams.pdf

x“Online shopping and auction fraud”. ActionFraud. http://www.actionfraud.police.uk/fraud-az-online-shopping-fraud

xi“Online shopping and auction fraud”. ActionFraud. http://www.actionfraud.police.uk/fraud-az-online-shopping-fraud

xii“Online Shopping Scams Statistics”. Australian Competition and Consumer Commission Scamwatch. https://www.scamwatch.gov.au/types-of-scams/buying-or-selling/online-shopping-scams

xiii“Online Shopping Scams Statistics”. Australian Competition and Consumer Commission Scamwatch. https://www.scamwatch.gov.au/types-of-scams/buying-or-selling/online-shopping-scams