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Bitcoin Means Business

 

Bitcoin has not yet graduated from the niche market to mainstream currency. However, with the increasing digitalization taking place in the currency exchange process, Bitcoin has successfully grabbed the public eye, which has increased its reach across the globe.

Fundamentally, Bitcoin operates on the premise of scarcity. One can purchase Bitcoins online through a process called ‘mining’ or via various cryptocurrency portals. Bitcoin-mining, however, favors the fastest machines, so users prefer to buy Bitcoin by using Bitcoin ASIC, which is a chip specifically designed for this purpose.

Growing curve

As the network of the Bitcoin market grows bigger, competition for buying becomes tougher. The system is designed in such a way that the virtual currency will never exceed 21 million – currently, 17 million Bitcoins are in circulation. With the rise in its market value and also the limits of scarcity, there is a constant demand for upgraded systems and advanced techniques.

Meanwhile, governments worldwide are avoiding the usage of Bitcoins in the mainstream market due to the cryptocurrency’s reliance on anonymous payments and purchases. One can make payments online without using a formal name or providing other vital information like a bank account or an ID, which could lead to an increase in dark web crimes like hiring assassins, purchasing illegal weapons or narcotics, money laundering, trafficking and more.

Following the recent withdrawal from the market by China, which accounted for almost a quarter of Bitcoin trading, there was a steep fall in its network. Citing cryptocurrencies’ linkage with web crimes, the governments of countries like China are still skeptical about adopting this system.

Why is this futile? Massive transactions conducted using Bitcoins cannot be stopped or frozen by governmental authorities since there are no bank accounts involved.

Chinese authorities fear that the increasing network of Bitcoin can spell financial trouble for the banks in future. Hence, China has banned such exchanges and trading practices.

 

Impact on India

With the recent advent of Crowdfunding, Bitcoin, FinTech-based industries and Blockchain technologies, India has taken steps towards becoming a digitalized nation. The system has also been hailed by major investors. R. Gandhi, Deputy Governor at the Reserve Bank Of India, recently addressed a gathering where he stated that these digital currencies are still in their nascent stage but will one day become an established part of the exchange module.

As for now, Bitcoins have a long way to go before they are adopted by a majority of the Indian population.

A government-authorized grievance cell or a fixed framework for such new concepts keeps this virtual currency under surveillance. These tend to pose financial and security risks, so national authorities have to be cautious at all times.

Any perpetrator of crime has to be held accountable under stringent laws that need to be formulated vis-à-vis Bitcoins and other cryptocurrencies.

Until the time comes when a majority of the people gains more confidence in these currencies, authorities need to remain vigilant at all times. Crime fighting must be a top priority for all government regulators and the community, but that should not stand in the way of innovation.

Ronald K. Noble, RKN Global Founder, on Spoiled Rotten: Corruption in the Meat Industry

The people of Brazil have been victims far too long of corruption in various sectors, several of which have been examined here on this site previously.  As the third anniversary of the infamous “Operation Car Wash” came, the country’s citizens became privy to a new scandal, this one involving the largest meat-packing company in the world, JBS SA.

Ronald K. Noble, founder of RKN Global, draws attention to this case as a very clear, direct example of how corruption can harm ordinary citizens. JBS SA, and another company, BRF SA, which is one of the largest exporters of chicken in the world, are among many that face allegations of corruption that affects the quality of the meat they produce and distribute and potentially causes direct harm to consumers.

JBS and BRF are two of dozens of firms in the meat business in Brazil who face these allegations that they bribed food sanitation inspectors and officials in order to get approval for the sale of meat that did not meet the requisite health standards for consumption.  Some processed meats allegedly contained pig heads and other parts of the animals that were not fitting for the product, and some products were allegedly mixed with cardboard, and even treated with acid in order to cover up the smell of contaminated or rotten meat.  Other allegations include the re-wrapping of expired meat into new packages and the shipment for sale of salmonella-infected meat.   Most of the meat was apparently for domestic consumption, though some of it may have been exported as well.

Brazil is a global powerhouse in the meat industry, second in the world in the production of beef and poultry, and the biggest exporter of chicken in the world.  These corruption allegations thus have the potential to create an earthquake in the global meat business.

Additionally, some of the companies in question are also allegedly involved in other corruption schemes involving loans and pension funds.

RKN Global’s founder, Ronald Noble, notes sadly that Brazilians have had to endure so many revelations of corruption.  The good news is that since corruption thrives in secrecy, the public nature of these revelations will ultimately benefit the good people of Brazil, the primary victims of this alleged corruption.  The companies involved deny the allegations, and they do deserve due process.  Hopefully, if the allegations in this scandal do prove true, it will ultimately mean a more honest meat industry and a safer meat supply for Brazilians and for customers everywhere.

RKN Global on Corruption by Local Public Officials

The mayor of Paterson, New Jersey was recently accused of public corruption charges, allegedly involving a bid to provide members of his family with free labor by getting tax payers to pay the workers’ salaries.1 The charges allege that Mayor Jose Torres and three other staff members hired municipal employees to work in a warehouse that had been leased by the mayor’s family.2

Normally, hiring someone to work for family doesn’t sound like such a big problem. But in this case, the arrangement was allegedly carried out at the expense of the tax payers. These alleged acts included conspiring to pay workers for overtime, while exploiting public funds for the benefit of the mayor’s family. The company which was set to benefit from the free labor was known as “Quality Beer”, located in the city of Paterson.3

RKN Global founder, Ronald K. Noble, notes that the use of taxpayer money needs to be tightly and transparently controlled so the public’s money is only ever used in an appropriate way.

What is corruption?

Corruption often involves the abuse of power for private gain.4  It can have many consequences, costing people their money, freedom, and in some cases their lives.5

In addition to the charges being brought against the mayor, three individuals who worked with him were also charged with the same crimes. The mayor, along with Joseph Mania, Imad Mowaswes, and Timothy Hanlon, have face six charges in total:

  • Theft by unlawful taking or disposition
  • Falsifying or tampering with public records
  • Pattern of official misconduct
  • Conspiracy
  • Falsifying or tampering with records
  • Official misconduct7

Undermining public trust

The mayor’s case highlights issue of a public official misusing a power that was entrusted to him for the public good. 

The trust that the public had put in their mayor seems to have been undermined by his alleged behavior. In 2002, Mayor Torres ran an anti-corruption campaign against Martin G. Barnes, who had served as mayor of the city before Torres and had previously been charged with extortion.8 Mayor Torres has in fact been a part of another lawsuit which involved city employees reportedly being paid overtime for carrying out work in his home.9 It seems that the most recent allegations  that lawsuit share a common theme: Using public funds to achieve private gains.10

The current charges allege that carpentry, electrical, and painting work had been carried out by municipal employees in 2014 and 2015 at the taxpayers’ expense.11 The warehouse, which is owned by the mayor’s daughter and nephew, is thought to have been used as a distribution facility as part of their wholesale liquor company.12

How to protect yourself from corruption

While we as individuals may not be able to protect ourselves from corruption, whether it’s being carried out by those who work in our government, or the businesses we work for, we can refuse to partake in activities that may not be legal.14 It is important to report anyone engaged in corrupt activity.15

Mayor Torres and his three city employees face up to 10 years in prison for the charges.16  The mayor continues to protest his innocence and says that the charges have left him “extremely disappointed and surprised.”17

Ronald K. Noble, founder of RKN Global urges governments and businesses to work together to combat corruption and foster a culture of integrity.

Corruption affects the lives of millions—even billions– of people all around the globe. While it may be impossible for governments and authorities to fight corruption in “one big sweep”, working on a case by case basis can help.18

RKN Global on Public Perception of Corruption

A recent survey of perceived corruption in Asia does not offer much good news.

Transparency International, an anti-corruption watchdog, surveyed almost 22,000 people from sixteen different countries in Asia over a year and a half, focusing on the prevalence of corruption.  The vast majority of respondents painted a picture of corruption which is widespread, even endemic, in countries throughout Asia.

RKN Global’s founder, Ronald Noble, observes that corruption is a natural consequence of human nature, and that various factors in any given social structure or society are at play in making it more or less prevalent.  One crucial factor is the prevalence of corruption that already exists.  The more likely a person thinks he or she is surrounded by a culture of corruption, the more easily he or she will in fact engage in corruption.

In light of this, the study’s findings are disturbing, because they indicate both that corruption is widespread in Asia, but also that people perceive corruption as being widespread.  This, in fact, makes it more difficult to eradicate corruption.

Among the surprising results, the study found that almost 70 percent of respondents from India had paid bribes in order to access fundamental public services like elementary education and health services in the previous year.  The survey extrapolated from this and other data that in Asia, more than 900 million people had paid such bribes in the previous year.  This is an extraordinary number:  Put otherwise, it essentially says that in Asia alone, 16% of the world’s entire adult population paid bribes in order to access services that are widely considered a fundamental human right.

Along similar lines, almost one third of the survey respondents admitted to bribing a police officer in the previous year, twenty-two percent had bribes for public school, and eighteen percent paid to be able to get medical treatment in a public hospital.

High-profile government scandals, though certainly not unique to Asia, undoubtedly contributed to the perception of widespread corruption.  Hong Kong’s former mayor, Donald Tsang, was recently handed a prison sentence, and South Korea’s president was impeached due to a corruption scandal involving her sharing classified information with an adviser without security clearance, who used her proximity to the president for corrupt personal enrichment and also entangled the leader of the corporate giant, Samsung.

Ronald Noble, RKN Global’s founder, agrees with Transparency International that enhanced government transparency and a zero-tolerance policy for corruption can help reduce corruption.   Other important measures include education and the provision of options for safe and easy reporting of corruption, in order to raise the price of engaging in corruption and building a culture which is more supportive of honest behavior.

Ronald Noble, RKN Global’s founder, on Corruption’s Finding Opportunity: Sports and Referees

We have previously discussed that corruption abhors a vacuum, and whenever there is an organizational or institutional structure, gaps and opportunities in that structure will be exploited for corrupt purposes if the costs do not outweigh the benefits for the perpetrators.  In the realm of sport, we have examined how tennis, which as a one-on-one sport (at least in singles tennis) allows one player a great deal of power to alter the outcome of the game, presents extra opportunities for corruption because the game is simpler to fix.

RKN Global’s founder Ronald Noble draws attention to the fact that while not all sports share the small player-count of tennis, some nevertheless put a great deal of power over the course of the game into the hands of one person with a different role: the referee.

While there have certainly been more recent examples, a case of referee corruption from a few years ago still illustrates so well how the combination of a referee’s opportunity and base human instincts can combine to bring about corruption.  In 2013, a Singaporean match-fixer named Ding Si Yang reached out to a Lebanese referee named Ali Sabbagh, who, along with two colleagues, was in Singapore to officiate at an April 3rd Asian Football Confederation soccer game.  Ding reached out to Sabbagh and his friends, setting them up with prostitutes as a bribe to incentivize them to fix the April 3rd game.

A famous basketball case also shows the power of a referee and how that power provides a tantalizing bait for those who might succumb to corruption.  Tim Donaghy was a successful basketball referee, having moved up the chain from refereeing college games to the NBA, where he officiated at almost 800 games over the course of thirteen years. 

In Donaghy’s case, gambling and its addictive properties provided the impetus for him to corruptly abuse the power he held over the sport. For two seasons, Donaghy placed bets on games at which he officiated.  While he denied to authorities that such betting—which is a clear conflict of interest—affected the objectivity of his performance as a referee, any outside observer would have trouble believing this to be true:  Donaghy’s successful bets attracted the attention of professional gamblers, who shadowed his bets and made an unusually large windfall.

Those inclined to believe Donaghy’s claim that he did not fall victim to corruption might claim that the inside information with which he was armed, including information about the starting lineups of the games, player injuries, and team morale, was sufficient to enable him to bet correctly without actually corrupting the outcome of the game himself.   Needless to say, this is hard to believe.  But even if it were true, making bets based on inside information is itself corrupt.

Ronald K. Noble, founder of RKN Global, qualifies that structural weaknesses such as a referee’s tremendous power over the outcome of a game do not necessarily constitute the motivation that drives a referee to become corrupt and fix a match. Instead, it provides the opportunity for corruption when the motivation—be it bribery with sexual favors, a gambling addiction, or some other incentive—manifests itself.

The awareness of structural weaknesses as a magnetic opportunity for corruption in sports—and indeed, in all areas—provides law enforcement as well as private organizations with a guide to where to focus their limited resources and attention when it comes to anti-corruption prevention and enforcement efforts.

Ronald Noble, Founder of RKN Global, on Corruption in Sports and Why Some Sports are More Susceptible than Others

Spanish authorities’ recent arrest of thirty-four people for match-fixing in connection with tennis matches in Spain and Portugal illustrates one of the qualities that makes sports so ripe for corruption in certain sports:  The ease with which it can be done.

RKN Global’s founder, Ronald K. Noble, explains that tennis is especially attractive to corruption by match-fixers because often, only one person needs to be corrupted in order to successfully fix a match.  While it is true that match-fixing is rife in many team sports, it is more difficult to pull off, as results cannot be guaranteed without involving a number of participants in the fix.

Those arrested were accused of fixing games in at least 17 different competitions, earning over €500,000 in total.  The price offered to players to throw a match was between €500 and €1000, though the players were often not paid what they were promised. 

The recent arrests include six players, none of whom were among the top-ranked players of the sport.  In fact, all of the players ranked below the top 800 players in the world.

Ronald Noble, RKN Global’s founder, points out that this case illustrates how corruptors need not target high-level matches and players in order for it to be profitable to fix matches.  While high-level players are not immune to corruption, it is difficult to bribe them so inexpensively.  Additionally, high-level matches are often the object of intense attention by millions of fans, and scrutiny by critics, officials and law-enforcement.   Suspicious activity, both in the betting markets and on the court, is easier to spot with so many observers, and therefore must be pulled off with much more finesse.

By contrast, lower level matches that do not draw any significant public interest are still profitable for match-fixers, as gamblers bet on matches at all levels, yet they do not present the high-stakes drawbacks and dangers that come with the highest levels of the sport.

These recent arrests, including of six relatively unknown players, in a match-fixing ring thus sheds light on two important facets of corruption in sports:  The attractiveness of sports like tennis, where one person controls a great deal of the play in the game, and the benefits of staying off the radar and targeting lower-level teams and competitions.

These arrests also show that authorities are becoming aware of these phenomenon and are turning increased attention to the range of players, participants and matches susceptible to the corruption of match-fixing.