Update: U.S. Charges Former Siemens Execs

Following  Siemen’s massive $1.6bn settlement related to bribes paid to Argentine officials,the United States has now charged eight former Siemens executives for their part in the massive bribery scheme.  You can read more about this new prosecution at  BBC Report.

Editors Note:  Our 2012 3rd Annual Symposium will deal with this very topic. Navigating Anti-Bribery Legislation: Remaining Compliant and Competitive in the Global Marketplace will take place on Friday, March 30, 2012 in the Law School’s Moot Court Room from 1:30- 4:30 p.m. 2.5 Free CLEs (pending approval) are available. The event will be open to the public.  More information can be found on our homepage.

Would a Big Bad Bank Blow the Real Estate Problems of Spain Down?

By: Christopher J. Stuart, Associate, The Global Business Law Review

On November 20, 2011 Spain elected Mariano Rajoy, of the conservative People’s Party, as prime minister.[1]  During his campaign he claimed that “cleanup and restructuring” of the banking system in Spain was his primary concern.[2]  Rajoy pledged to adopt a program to fund Spain’s recovery by increasing the amount of available credit.[3]  With the current financial troubles in the Eurozone, reviving Spain’s banks could be a daunting task for the newly elected prime minister.  The BBC reports that “Spain is[a] much more indebted or leveraged country than Italy” when aggregating all debts including government, corporate, financial, and institution debts.[4]

To fix the financial issues of Spain, Rajoy must conquer the seemingly insurmountable amount of troubled real estate loans held by the country’s lenders.[5]  The Bank of Spain stated that half of the 308 billion euros of real estate loans are classified as troubled.[6]  These problems seem to stem from the decreasing values of Spanish homes, which have decreased by 28 percent on average since April 2007.[7]  Pablo Cantos, a managing partner of MaC Group who advises Spanish banks on risk, claims that about 30 billion euros of real estate held by Spanish banks are “unsellable.”[8]  The future for Spanish real estate assets remains bleak as Taurus Iberica Asset management–a Spanish mortgage servicer–reports that financial institutions have foreclosed on 200,000 homes and the foreclosures will rise to 600,000 homes due to the increase in unemployment.[9]  Fernando Acuan Ruiz, managing partner of Tauras Iberica, stated that Spain has 1 million new homes that will not be consumed until 2017.[10]

A solution to Spain’s bank problems may lie in facilitating a “bad bank” according to some analysts.[11]  Creating a “bad bank” would relieve banks of their toxic real estate assets and the bad bank would attempt to sell the assets as prices improve.[12]  Fernando Fernandez, IE professor and former International Monetary Fund economist, believes that a bad bank is the only cure to clean up bank balance sheets and revive the flow of credit.[13]  A bad bank worked well in Ireland because it restored confidence to investors.[14]  However, creating a bad bank in Spain with the current financial troubles of the euro zone could be a disaster according to analysts.[15]  One London-based analyst believes that the additional debt that will encumber Spain will be more than it can afford.[16]  Prior to the election, Rajoy did not support a bad bank program, but sources have stated that Rajoy “has asked for at least two papers from academics on how to create” a bad bank.[17]  While which solution Rajoy will ultimately employ to resolve the Spain’s financial issues is uncertain, the current financial outlook remains very grim.

Human Trafficking Right Before Your Eyes: Children Forced Into Panhandling to Appeal to Tourists

By: Lodema M’Poko, Associate, The Global Business Law Review

You’ve just completed a satisfying shopping trip at Sandton City Mall in Johannesburg, South Africa.  After throwing your numerous bags in the car, you begin the trek back to your hotel.  “What an amazing vacation this is,” you think to yourself, as you approach a traffic light.  However, your warm fuzzy feelings dissipate as a young woman, dressed in tattered and dirty clothing, stands tapping at your window at just the appropriate angle to display the small, peaked-looking child strapped to her back.  She smiles, waves, and puts her hand to her mouth, signaling that she is hungry.  Feeling guilty about all of the money you just spent shopping, your heartstrings are officially tugged. You reach into you bag, and hand her a crisp bill.  She thanks you and moves on to the next car.  Your fuzzy feelings return, since you made it possible for a mother and child to finance their next meal.  You feel good about your deed.  The question is, should you?

Probably not.  It’s likely that you’ve been scammed.  Most people think child human trafficking is done for sexual purposes.  However, using children to panhandle unsuspecting tourists is becoming increasingly popular.  Panhandlers know that using children garners sympathy and can be very lucrative.  So much so that children are often rented out, kidnapped, or lured away from their homes.

In South Africa, police investigated a crime syndicate that involved panhandlers renting babies and small children from crèches for about $3 per day.[1]  A crèche is a public daycare for the poor that cares for the children while the mothers are at work.[2] Children are also rented directly from the mothers.  In these cases, older children’s legs are sometimes broken so that the children appear smaller than what they are when tied to the “mother’s” back. Smaller children garner more sympathy. Children may also be drugged so that they appear sickly.[3]  This practice can net up to nearly $70 per day.[4]

Child trafficking for pan handling purposes is not limited to South Africa.  It is increasingly popular in other third-world countries as well.  For instance, in India, gangs are known to kidnap children from their homes, and force them into a life of panhandling.  These children are starved and beaten for several days, and are then maimed or blinded to garner more sympathy.[5]

In Senegal, parents send their young boys to daraas, Quranic schools run by religious leaders to educate the boys in religion and academics.[6]  However, these boys receive a rude awakening when they arrive.  Instead of being taught and nurtured, they are forced onto the streets for long hours to beg for money.[7]  These schools collect up to $60,000 per year from the children.  One would question why parents would be willing to send their children off to these schools if tragic results are inevitable, but in Muslim societies, such as Senegal, sending your children away to daraas is not out of the ordinary.

Knowing these facts puts the compassionate tourist in a tough position.  He is left to decide whether or not he should give money to these poor, begging children.  There is always the chance that the child’s plight may be legitimate, and not forced on him by a con artist.  As difficult as it may be, the answer is no.[8]  To give to these children perpetuates the problem.  The “bleeding” must be stopped at its source.  If tourists continue to “feed” the child trafficking industry by donating to child beggars, kidnappers, scammers and con artists will continue to funnel these poor children into that life.