Trust Digest 59 (August 5, 2014) 


Women May Fare Worse In Negotiations Because People Lie To Them More
When my 1998 Volvo finally broke down last year, my first worry was not about being carless, but about my impending trip to a car repair shop. It’s a common stereotype that women don’t know much about cars, and while there are plenty of car-savvy women, I’m not one of them. I knew that when the shop told me about all the costly new parts I needed, I’d have no way of evaluating whether they were being straight with me or taking me for a ride. And new research supports my fear: The stereotype that women are incompetent makes people more likely to lie to them during negotiations.
Key Words: Gender in Business, Negotiation
Trust Issues: Integrity, Similarity, Alignment of Interests


'Torture Report' Delayed in CIA, Senate Fight over Redactions
The Obama administration’s attempt to redact some portions of an upcoming report on “enhanced interrogation techniques” is drawing ire from Capitol Hill and could delay the release of the detailed analysis for months. That’s likely to increase hostilities between the Senate Intelligence Committee and the CIA, which are already riding high after the spy agency admitted to snooping on some Senate staffers in the run-up to the report’s release.
Key Words: CIA, Interrogation, Senate
Trust Issues: Transparency, Communication


HSBC Wrestles with Soaring Costs of Compliance
Since Stuart Gulliver took over as chief executive of HSBC in January 2011, many areas of the bank have shrunk, including its revenues, employees and the number of countries in which it operates. Even its share price is lower. But one part of the London-listed bank has grown rapidly: It now has 24,300 staff specialising in risk and compliance, almost 10 per cent of its entire workforce, which has increased about a sixth from three years ago. While it is cutting costs elsewhere, Mr Gulliver said on Monday that the bank spends $750m-$800m a year on its compliance and risk programme, an increase of $150m-$200m from last year and a further rise is expected next year.
Key Words: Compliance, HSBC
Trust Issues: Accountability, Regulation


BofA Falls Foul of Bank Etiquette
If the key to investment banking is the trust of your client, Bank of America Merrill Lynch had a day they’d like to forget on Monday. The US bank was publicly fired as corporate broker to Weir Group because of a “new and undisclosed conflict of interest” that arose when Bank of America was appointed as corporate broker by IMI, a smaller rival in the engineering sector.
Key Words: Bank of America, Weir Group, Conflicts of Interest
Trust Issues: Integrity, Alignment of Interest, Benevolence


Lloyds Fined £218m over Libor Rigging Scandal
Lloyds Banking Group has been fined £218m for "serious misconduct" over some key interest rates set in London. The fines were issued by the UK-based Financial Conduct Authority (FCA) and a US-based trading commission. Lloyds manipulated the London interbank offered rate (Libor) for yen and sterling and attempted to manipulate the rate for yen, sterling and the US dollar, said the US legal order. Lloyds said it "condemns the actions of the individuals responsible".
Key Words: Lloyds, Libor, Rate-Fixing
Trust Issues: Integrity, Regulation


Banks Accused of Rigging Silver Price
Deutsche Bank, HSBC and Bank of Nova Scotia have been accused of attempting to rig the price of silver, in a lawsuit filed in the US. The plaintiff alleges the banks, which set the price of silver each day, abused their position in the market. Deutsche Bank and HSBC have not commented on the filing, while Bank of Nova Scotia told Bloomberg news agency it would "vigorously defend" itself. The lawsuit follows similar filings in the gold price-fixing market.
Key Words: Deutsche Bank, HSBC, Bank of Nova Scotia, Silver, Price-Fixing
Trust Issues: Integrity, Regulation, Transparency


Veterans Funding Deal To Provide $17 Billion To Ease Medical Wait Times
Leaders of the Veterans Affairs committees in Congress on Monday said they had agreed on legislation providing about $17 billion in funding to ease long waiting times for VA medical centers. Senator Bernie Sanders, an independent, and Representative Jeff Miller, a Republican, announced the deal at a news conference after negotiating during the weekend to resolve differences in bills they proposed last week.
Key Words: VA Reform
Trust Issues: Capability, Stakeholders


Corporate Social Responsibility is Millennials' New Religion
If you want to understand the magnitude of opportunities available to organizations that align with charities, consider this: For millennials — who, at 86 million strong, make up the largest population group the U.S. has ever seen — social responsibility is the new religion. For the generations that came before Gen Y, as millennials are often called, their family activities and social network often revolved around the family church. Yet the Pew Research Center reports that fully 1 in 4 members of the millennial generation — those about 12 to 33 years old — are unaffiliated with any particular faith.
Key Words: CSR
Trust Issues: Sustainability, Responsibility, Benevolence


Ending the Race to the Bottom: Why Responsible Companies Should Pay Taxes
America’s a great country. That’s why people from all over the world — including, lately and tragically, thousands of poor children from Central America — clamor to get in. So why are some of America’s wealthiest companies trying to get out? It’s simple, really — they don’t want to pay US taxes.
Key Words: Tax Avoidance
Trust Issues: Responsibility, Transparency


How Accessible are Executive Orders in Each of the 50 States?
The power of the executive order is a hot topic at the U.S. federal level. In his 2014 State of the Union Address, President Obama touted the executive order as a means to achieve his policy objectives despite a perpetually intransigent Congress. The planned lawsuit by House Speaker John Boehner, R-Ohio, against the president partially concerns the use of presidential executive orders to delay the implementation of Obamacare provisions.
Key Words: State Governance, Executive Orders, Public Records
Trust Issues: Transparency, Accountability


Corporate Governance Blues
It is not often that a regulator in India delivers a no-nonsense speech that sends out a clear and blunt message to those regulated. The Chairman of Securities and Exchange Board of India (SEBI), U. K. Sinha, did that at a meeting of the Madras Chamber of Commerce and Industry last week in Chennai. Doing some plain-speaking on issues of compliance with regulations by the corporate sector, Mr. Sinha compared the state of regulation in the country with that in developed markets.
Key Words: India, Corruption, Corporate Governance
Trust Issues: Regulation, Integrity


Trillion-Dollar Boo-Boo
One trillion dollars. That may be the cost to Russian investors of Vladimir Putin’s rule. It is the equivalent of about $7,000 for every Russian citizen. The calculation stems from the fact that investors regard Russian assets with suspicion. As a result, Russian stocks trade on a huge discount to much of the rest of the world, with an average price-earnings ratio (p/e) of just 5.2. At present, the Russian market has a total value of $735 billion. If it traded on the same p/e as the average emerging market (12.5), it would be worth around $1.77 trillion.
Key Words: Russia, International Economics
Trust Issues: Predictability, Capability, Communication


China Tells Microsoft Not to Interfere With Antitrust Inquiry
In another sign that China is aiming at Microsoft, the government warned the company on Monday not to interfere with its antitrust investigation, days after officials conducted surprise raids on four of the software firm’s offices across the country. The harsh warning, using terminology rarely seen in commercial cases and normally reserved for China’s most challenging political nemeses, like Japan and the Dalai Lama, signals how seriously Beijing is taking the inquiry at a time of rising tensions between China and the United States over spying and economic issues. The State Administration for Industry and Commerce issued a statement on its website “officially warning” Microsoft to obey Chinese law and “not to interfere with or hinder the investigation in any way.”
Key Words: China, Antitrust Law, Microsoft
Trust Issues: Integrity, Regulation, Communication


Walmart's Wall of Silence Comes Tumbling Down
The veil of secrecy that the "old" Walmart drew over bribery allegations in Mexico since 2005 is falling apart. One reason is because the "new" Walmart has taken robust compliance initiatives and is more transparent. Another reason is because the Delaware Supreme Court is forcing the world's biggest retailer to open up about the past. The court's unanimous opinion last week upholding a lower court discovery order in a shareholder action is a win for transparency, with more to come. Documents that Walmart has refused to produce for two years during the litigation must now be disclosed to the plaintiffs.
Key Words: Walmart, Mexico, Bribery
Trust Issues: Transparency, Regulation, Accountability, Integrity


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