Posted by Paul Della Vecchia.
The recent Bloomberg article “Wal-Mart Balks at Paying $600-Million-Plus in Bribery Case” written by Tom Schoenberg and Matt Robinson, depicts a long standing bribery case Wal-Mart participated in. The article is dated October 6th, 2016. Wal-Mart is said to have been paying foreign officials in Mexico, India, and China. They did this to take a fast track into getting into those countries. A fast track is speeding up the process to start a business in a country, and it allows them to get their business permits. Wal-Mart reported sales of $482 billion, and $14 billion in profits. In this case alone, “Wal-Mart has already spent $791 million on legal fees and an internal investigation into the alleged payments and to revamp its compliance systems around the world, it said” (Schoenberg and Robinson). These legal fees are starting to add up as the investigation goes longer, but Wal-Mart is not looking to settle. To settle the case, it would be $600 million.
Bribing foreign officials is illegal under the 1977’s Foreign Corrupt Practices Act. Wal-Mart tried to outsmart the system by “Calculating a fine based only on the amount of the alleged bribes, as the department has done in some cases, would yield a lower penalty, they said” (Schoenberg and Robinson). Companies are in the business of making money, and Wal-Mart looked at the pros and cons of this bribery. They believed that they would be able to actually make a profit off breaking the law, and to do that they ran calculations to see whether the fine would outweigh the benefit. Clearly it did not, because they were able to bribe their way to the top, and open more foreign companies. The case is so long standing, because the evidence the officials have is outdated. To work around this, the investigators are trying to look to more recent allocations of bribery from Wal-Mart in Brazil. As each day goes by, evidence becomes more outdated and less reliable. In 2011, “Wal-Mart disclosed possible violations in Mexico to the justice Department and SEC” (Schoenberg and Robinson). There wasn’t much done at the time, and now we fast forward to 2016 and that 5 year old evidence is not looking as clear. So the investigators are beginning to look elsewhere to try and solve this problem. The article also makes reference to attempts to find bribes in China, but to no avail.
Wal-Mart is looking to fight this case, because they are unsure what the criminal charges against them would be. If they decide to settle, the settlement “would rank among the highest levied under 1977’s Foreign Corrupt Practices Act” (Schoenberg and Robinson). The article relates the Wal-Mart case to the similar VimpelCom Ltd. and Siemens AG case. Both cases deal with bribing foreign officers to win business, and both settlements were higher than Wal-Mart. Judging the case off precedent and the increasing costs of legal fees, settlement should be a viable option for Wal-Mart. A company making $14 billion in profits should be able to sponge any damages done by their illegal acts. Wal-Mart does not want to settle, because they are unaware how it would affect their company. The timing is just not right at the moment to be spending the settlement costs, the article alludes to. “Wal-Mart said Thursday that net income for the year through January 2018 will be “relatively flat” as the company invests in its website and mobile app” (Schoenberg and Robinson). So if they have the option to clear their name and spend a little extra money or settle and have their brand slightly tarnished, they are going to fight for now. This way they are able to compete with Amazon in their work on their mobile app and website for online shopping.
Paul is an graduate accounting student with a concentration in forensic accounting at the Feliciano School of Business, Montclair State University, Class of 2017.
Posted by Enerd Pani.
During the beginning of October, there was a vast change where control of the internet source code was transported from the United States, to what most likely will be the United Nations. The result is that countries not only in Europe, but all over the world can vie for control of the internet. Arguably unscrupulous countries such as Russia, China and Iran can cause issues with human rights violations and can censor areas of the internet in other countries, not only within their own home country. The second issue is that the President did not ask Congress for approval to give a piece of U.S property to overseas forces. The following action has been criticized as going against US interests, and mitigating any form of American supremacy.
Still, some people see this as a necessary step. The National Telecommunications and Information Administration believes the chance of government intrusion to be “extremely remote” (BBC). The issue arises when multiple shareholders with many different ideas on how the internet should be maintained all vie for control of singular entity. These “stakeholders include countries, businesses and groups offering technological expertise” (BBC). One might wonder how such a important function can be put within the control of so many groups with different interests. There has even been calls by Russia and China for the Domain Naming Server to be put under the control “by the United Nations’ International Telecommunication Union” (BBC). The request put forward shows the desires countries with very shady human rights have towards getting control of such a important tool for free speech.
Many groups had argued that a delay on the acquisition should have been placed. The critics of the movement “argue that once the transition takes place it is irreversible, and that it would be prudent to temporarily maintain existing U.S. government authority” (fas 18). It would seem very controversial to transfer over such a valuable asset when there may not be any chance to change a decision. Also questions arise on how the “.mil” and “.gov” domains should be handled. These domains are sole property of the U.S Government, and cannot be used in any other way.
To conclude, the “giveaway” of ICANN is one shrouded in uncertainty. No one can be sure if the new stakeholders of the internet will continue to monitor it ethically. There has been major concern about some countries abusing the power of internet control, but many companies like the NTIA assure that they are looking to “protect U.S consumers, companies, and intellectual properties” (fas 12). It can be argued that ICANN was transferred unethically, though now the deed is done. The future will tell if this move will either effect, or mitigate personal freedoms on the internet.
Enerd is a finance major at the Stillman School of Business, Seton Hall University, Class of 2019.
Sources:
https://www.fas.org/sgp/crs/misc/R44022.pdf
http://www.bbc.com/news/technology-37114313
Posted by Melissa Nomani.
Lawsuits filed against Lumber Liquidators claim that homeowners who put certain laminate flooring into their home are being exposed to high levels of formaldehyde. This puts them at risk and also lowers the value of their property. As of this July, the number of lawsuits filed against the company has gone up from only a mere ten in June. Many lawsuits began being filed after a 60 Minutes episode that aired on March 1, 2015, exposing the high levels of formaldehyde in laminated flooring made in China. Formaldehyde is a known carcinogen and has been linked to cancer and respiratory problems. A study done by 60 Minutes showed that 30 out of 31 of the tested flooring samples (all of the sample were Lumber Liquidators products).
According to a study conducted by 60 Minutes, 30 of 31 flooring samples from Lumber Liquidators did not meet formaldehyde emissions standards. It is estimated that thousands of people have Lumber Liquidators flooring in their homes. Some lawsuits claim that homeowners have suffered from respiratory problems after installing the laminate flooring.
Another issue that has risen is that Lumber Liquidators is being accused of false advertising and selling products comprised of particles that come from endangered habitats and trees. The US Department of Justice is investigating the company for their alleged use of wood. The wood was illegally cut down from Russia–this directly violates the Lacey Act. The Lacey Act does not allow for the importation of products made from woods that are illegally logged.
Furthermore, this past May, Lumber Liquidators CEO, Robert Lynch, resigned. During this month the company also announced that it would be suspending the sale of flooring from China. The company offered homeowners free indoor air quality screening, if they had purchased laminate flooring from China.
The number of lawsuits against Lumber Liquidators continues to grow.
Melissa is a finance major at the Stillman School of Business, Seton Hall University, Class of 2018.
Posted by Melissa Nomani.
Farmers across the United States are filing suits against Syngenta. As stated in the article, “The lawsuits allege the biotechnology company’s genetically modified Agrisure Viptera and Duracade seeds contaminated US corn shipments, making them unacceptable for export to China.” China does not allow the importation of GMO products that it has not tested. In February of 2014, China learned that the corn shipments from the U.S. contained Viptera. Agrisure Viptera is a seed that is genetically modified (known as MIR162) to prevent damage to crops by earworms and cutworms. As a result, China has rejected corn imports from the U.S.
Over 1,800 suits have been filed. Lawsuits filed against Syngenta state that the company put seeds on the market even though there was no approval from foreign markets. This has led to some farms having great financial losses. Even farmers who do not use GMO seeds could be affected due to accidental contamination from other fields. Syngenta has tried to refute the lawsuits by stating that they are not responsible for protecting farmers from GMO seeds. This arguments were rejected in September by Judge Lungstrum, who refused to dismiss the suits.
It has been estimated by The National Grain and Feed Association that as of April 2014 almost $3.0 billion worth of losses were caused by Syngenta’s Agrisure Viptera MIT162 corn seed.
The first of the lawsuits are expected to go to trial in June 2017.
Melissa is a finance major at the Stillman School of Business, Seton Hall University, Class of 2018.
Posted by Philip D Lacki.
‘The lid popped off”? How does a lid pop off without someone doing something to cause it to pop off? Just like the Liebeck v McDonald’s case, I find this case involving someone suing Starbucks for a faulty lid to be morally wrong in the sense of business law. “The stress activated [the plaintiff’s] Crohn’s disease, and as a result, he lost part of his intestine. He claims damages of $50,000. His wife also sued for loss of companionship.”
The eggshell skull rule is a well-established legal doctrine used in some tort law systems. It means that saying the injured person is frail is not a defense in a tort case.
In class, we discussed the McDonalds case and looked into the case. When do ends justify the means? In my discussion post about the video, we watched the video about the case and talked about how one may use bad or immoral methods as long as you accomplish something good by using them. (Not everyone agrees with this idea). The man suing Starbucks for $50,000 used immoral methods to accomplish something bad.
In class, we also discussed the Gucci case where a person in China was selling counterfeit Gucci products and selling them online. Gucci, who realized what was happening, notified the person in China without getting a response. The man in China was using immoral methods to accomplish something bad, and though it might be a bit extreme to compare, you can see how these two cases have similarities in both business and legal aspects.
Philip is a public relations major with a minor is business administration at Seton Hall University, Class of 2017.
Posted by Yuanda Xu.
In 2003, Lucent Technologies decided to fire the CEO, COO, Financial Executive and marketing manager in China. Lucent did this because company in China bribed the Chinese officials to get more benefits. As expected, Lucent fired these four people, and paid $2.5 million to settle charges. The company paid a $1 million fine to the Justice Department and $1.5 million to the Securities and Exchange Commission.
In 1977, America enacted the “Foreign Corrupt Practices Act” to prohibit companies from bribing officials in other countries to get more benefits. What Lucent Technologies did violate the Act, because Lucent Technologies bribed the Chinese officials to get more benefits and reduced business opportunities for other companies. That violates the FCPA.
Yuanda is a business management major at Montclair State University, Class of 2017.