Corporate misbehaviour, aggregated

The G4S Olympic fiasco got me thinking about the general question of corporate failure and wrongdoing.
I tweeted a few off the top of my head, as follows -

G4S, Barclays, BP, Enron, Lehman Bros, Trafigura, Union Carbide, Dow. Who have I left out? ‪#corporatefail‬

 - and with the help of the excellent tweeps Zahra, Mike, Joel Benjamin, Guy Lambert, Sue and Mike Parker we rapidly assembled a decent list of corporate miscreants who have cocked up or ripped off in one way or another.

It falls to me to render them in some kind of order, with a brief note of what it was they did wrong. So here goes:

Government sub-contractors

1. G4S. Currently in pole position on the grid, for its self-confessed "humiliating shambles" in failing to fulfil its contract in providing security for the London Olympics.
2. A4E fraud in Government contract
   
   Undue influence over Police and Politicians
3. News International, Rupert Murdoch's outfit
   
   Banks and financial dealers
4. Standard Chartered, currently (7Aug2012) accused of laundering $250million to break Iran sanctions.
5. HSBC again in the news at number 2, for providing only-too-efficient money laundering services to drug barons. I'm told this is continuing their corporate tradition, because the Hong Kong and Shanghai Bank was the bank of choice for the British Opium Trade.
6. Barclays lies a close third, for its rigging of the Libor inter-bank lending rate - an act that undermines trust in the banking system itself.
7. Staying with  the banks, let us put Northern Rock in next, for their excessively clever securitisation scheme which borrowed money, lent it for mortgages, sold the mortgages on until they crashed, setting off the first UK bank run in 150 years. We should not forget that while they were begging for taxpayers' money, Northern Rock also had billions in a separate Jersey account, which, naturally, they were unable to share with the despised taxpayers.
8. There is insufficient space here to recap on the various scrapes that NatWest has been through.
9. RBS crashed in the credit crunch, successfully obtaining £1.1 billion from the people. In consideration of this success in hetting this undeserved handout, the RBS executives awarded themselves a bonus of £1 billion. Trebles all round! 
   
   There now follows a list of names of other corps who need to be named and shamed. Since I am on holiday in France with shortened online time, I am just going to list the bastards, and add short details of their sins in coming days. Or indeed you can look them up on the Wikipedia.
10. Equitable Life  big cock-up in which thousands of clients lost large amounts of money.
11. Enron hid billions of debt. Shareholders lost $11bn.
12. Lehman collapsed through false accounting and the sub-prime mortgage crisis.
13. J P Morgan Chase - multiple failings
14. BCCI - mismanaged, money laundering.
15. Goldman Sachs
    
16. Jarvis - Railtrack sub-contractor responsible for 7 deaths due to substandard points maintenance
17. Farepak folded Oct 2006, leaving thousands of savers out of pocket
    
    Polluters
18. BP 
19. Shell in Nigeria - pollution, collusion with state murder of Ken Saro Wiwa
20. Trafigura
21. Exxon (Valdez)
22. Union Carbide/Dow - Bhopal
    
    Tax Avoiders
23. Vodafone
24. Amazon
    
    Miscellaneous
25. Blackwater
26. GSK
27. Bayer
28. Dupont
29. Monsanto
30. Distillers, Diageo - thalidomide
31. Nestle - selling baby milk powder to poor people
32. Anderson Consulting
33. Polly Peck
34. Southern Cross
35. Occidental Petroleum - Piper Alpha
36. CSC
37. EDS
38. McDonalds (because - see comments)
39. Starbucks
40. Rio Tinto (slave labour)
41. Asia Pulp and Paper a.k.a. Sinar Mas for chopping down the rainforest. And anyone who does business with them.
42. Koch Industries for polluting and suborning democracy
    
    People
    This list overlaps somewhat with the above, but we should remember some special individuals

1. Rupert Murdoch
2. Bob Maxwell
3. Conrad "Lord" Black
4. Sylvio Berlusconi

Feel free to ad any suggestions in comments. I will add well-chosen comments to this post. There are many other historic events. There are also other cases which have not yet reached the light of day.

The importance of all this is to demolish the simplistic meme that is running at the moment -
"Private good, Public Bad" The fact is that error exists both in the public and private spheres, and a mature democracy and economy has room for both.

Last but not least, look here for a set of proposals on how to bring the mega-corporations under control.

Reith Lectures: How Niall Ferguson and the markets diverge from reality

Niall Ferguson Protector of the City

I've been listening to the second Reith Lecture on BBC Radio 4, The Darwinian economy, by Prof Niall Ferguson, summarised here.


This is my comment:


Niall Ferguson's central thesis is that deregulation of banks did not cause the crash. However, he needs to establish this thesis in face of the work of David Moss at Harvard Business School.
His key finding is expressed in a graph here:


It relates income inequality measured as share of income held by the top 10% of the pile compared to bank failures going back to 1917. There is a very clear correlation between income inequality and bank failures. It is strong backing evidence for the position of the Equality Trust -  that greater equality is better for social cohesion. 

Of course, correlation is not causation, though causation must always be accompanied by correlation.

Naturally Niall Ferguson will wish in to deny causation, because it negates his free market assumptions. He has an easy task, because it is always impossible to "prove" causation, because it is not a matter of irrefutable positive logical deduction, but rather a matter of inference, of pattern recognition. This recognition is very much related to our basic assumptions, as well as a mounting body of evidence. Neo-liberals will be far slower to recognise causation in David Moss' observation than someone who understand the scientific truth that man is a social animal.

One of the elements necessary for recognising causation is finding a plausible mechanism to relate cause and effect. So the question is, how could income inequality cause bank crashes?

There is a possible mechanism in the capacity of humans to suffer from biolar illness - manic depression as was. If we look at the financial markets through the lens of a psychiatrist, it is very easy to see the parity between the individual mood swings of the bipolar sufferer, and the boom-bust mood swings of the society of market traders.

This idea is developed on this blog here:

The root problem with Niall Ferguson's reasoning is trying to isolate the banking sector from the real economy, which is, or rather, ought to be, founded on ecology. He, as a free market fundamentalist, has come unstuck from reality, just as a bipolar sufferer comes unstuck from reality.

What is wrong with the Spanish economy?

This is a simple precis of the Wikipedia entry on the Spanish economy, provided here as a service to those who want such a precis, and know that they will not get it from the official papers and broadcasters.

Spain is the 5th largest European economy and 12th largest world economy.
Ingrained weaknesses of the Spanish economy are

• inflation (especially house price inflation, see below)
• Poor education system
• Large underground (black) economy
• trade deficit at 10% of GDP
• Falling (reversing) income flows from the EU

Spain's economy was booming 1997-2007 on the back of a huge construction effort, which ground to a halt in 2008.

Mortgages caused household debt to triple, so the median household debt/income ratio was 125%. Many find themselves in negative equity.

Note that this is a private, not a public debt problem. In fact, in 2008, the Spanish Government had a surplus. That is why it is right that Spanish banks should get EU support without the Spanish state having to do further self chastisement.

Hope this helps.

Democracy, Equality, Sustainability

The UK, Europe, and the world is in a major economic, political and ecological crisis.

Free market capitalism is failing.

The people reject austerity.

There is an alternative to austerity:

Democracy means that the will of the people is the ultimate authority.
    We reject Plutocracy, Oligarchy, Technocracy and Fascism.
    Democracy recognises the social aspect of humanity
    Democracy encompasses fair electoral systems and elections.
    Democracy requires a free, pluralistic and balanced press and media.
    Democracy entails high regard for human rights by all states.
    Democracy implies maximum level of individual freedom, freedom of speech, and fair libel laws
     
Equality means a tendency towards greater equality in economic and social matters.

    We reject free market fundamentalist capitalism because it increases the rich-poor gap, and this divergence leads to all manner of social problems.
    We require equality within nations, between nations and between generations.
    Equality requires Tax Justice:
        Closure of tax loopholes
        Corporate Tax Transparency
        Financial Transaction Tax
        Closure of Tax Havens worldwide
Equality requires that the privilege of creating money should be shared more evenly between the private and public sector.

Sustainability means the ability of the current generation to meet its needs without impairing the ability of succeeding generations to meet their needs.
We reject the notion that sustainability must be put on hold until the recession is over. On the contrary, we know that ecological healing will also cause economic healing.

The current ecological crisis is severe, and requires such a vast amount of work to remedy the situation that unemployment must fall to minimum levels in the future.

Sustainability requires an expanded Green New Deal, (GND+), which does everything suggested in the GND, but with an added ingredient. GND+ will use that element of Citizen's Income that allows benefits to follow the citizen into work. The Green Wage Subsidy will enable people to take up work in the green sector of the economy.  It converts unemployment benefits from being a dead dole into a vibrant stimulus for the green sector, so that the recovery will green the economy at the same time.

[update 14 Aug 2012]
Under this simple three point banner, we can build up a co-operative programme of policies that are inclusive and positive. We need to put co-operation and tolerance right at the front, so that greens, labour, lib dems, and even some tories can subscribe to the programme. More to the point, the majority of people who are alienated from party politics can be included. Dogma and doctrine go on the back burner.

Web technology means that we can build up the programme on a linked, wiki-discussion basis, so that the details can be argued out in the background, and the agreed points be put in the foreground.

Cameron's U-turns may be a good thing

There's a useful review in today's G2 of the U-turns so far skilfully executed by CallMeDave.

They are:

1. Irreversible Tory commitment to sex equality > free vote.
2. All knife carriers will go to prison; Not now (presumably after lobbying from cooks).
3. School sport may not now be abolished.
4. Cap on Housing benefit delayed by 9 months
5. Dave's personal photographer and videographer whooshed off his Civil Service pay list.
6. Free school milk to under 5's to be cut, no it's not.
7. NHS Direct to be scrapped, no it's not.
8. 1922 Committee to be packed c Dave loyalists, oh no it's not. 
9. Cast iron guarantee for referendum on Lisbon treaty melts away
10. Inheritance tax threshold to rise to £1m - oh no its not
11. Then there was the thing with Michael Gove not knowing which schools would have their funds cut.
12. [update 17.2.2011] Forests are not to be sold off.

That's a lot of U turns in a short few months. If Dave had been Labour, the Tory press would have christened him "Dave the U-turn", but as he is a Tory they have done the decent thing and turned a blind eye.

Overall, this is good, because it means that Dave may change his mind on anything. He may cancel the tuition fees rise, he may even decide that Osborne is in fact a certifiably insane chainsaw maniac and switch to rational solutions to the economic problems that we face.