October 18, 2010 Nº 969 - Vol. 8
"Most people sell their souls and live with a good conscience on the proceeds."
Logan Pearsall Smith
Insider's view: see how local concerns shape up the global world. Read the daily press review in Migalhas International.
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The 2010 'Rule of Law Index'
Sweden and the Netherlands scored high, with the United States lagging its high-income peers in a new ranking of government effectiveness Thursday called the "Rule of Law Index."
The first report by the World Justice Project ranks governments in a variety of categories such as absence of corruption, clear and stable laws, open government and access to the justice system. The aim of the project is to advance the rule of law around the world in a manner that transcends income and cultural factors. "Establishing the rule of law is fundamental to achieving communities of opportunity and equity -- communities that offer sustainable economic development, accountable government, and respect for fundamental rights," the report said.
"Without the rule of law, medicines do not reach health facilities due to corruption; women in rural areas remain unaware of their rights; people are killed in criminal violence; and firms' costs increase because of expropriation risk. The rule of law is the cornerstone to improving public health, safeguarding participation, ensuring security, and fighting poverty."
While the report, based on a three-year study, provides no single rank for the 35 countries examined, it showed Sweden at the top in five of the nine categories -- limited government powers, clear and well-publicized laws, absence of corruption, effective regulation, and open government.
The Netherlands also scored high, ranking second in five categories and third in two others. Austria was the top country for "fundamental rights," and an effective criminal justice system while Singapore topped the list for "order and security" and access to civil justice. The United States did not top any categories but was third in open government. Most of the rankings were near the bottom of the 11 high-income nations.
According to the report, which was based on 35,000 questionnaires and numerous interviews, "the findings need to be interpreted in light of certain inherent limitations."
"While the index is helpful to tracking the 'temperature' of the rule of law situation in the countries under study, it is not powerful enough to provide a full diagnosis or to dictate concrete priorities for action. No single index can convey a full picture of a country's situation."
Among the seven upper middle-income nations studied, Poland topped the list in five categories including fundamental rights and effective criminal justice, while South Africa was best in four categories including open government and effective regulation.
The report offered a bleak picture of Latin America, saying many countries in the region "have the highest crime rates in the world."
"The high crime rates in the region may be related to the generally poor performance of the criminal investigation and adjudication systems," it said. Mexico and Bolivia were the worst countries in terms of criminal justice.
In Asia-Pacific, Japan, Australia and Singapore scored well with the Philippines and Indonesia dragged down by weak justice systems and corruption. Pakistan was near the bottom of nearly every index, and worst in fundamental rights, corruption and access to civil justice
Only two Middle East nations were in the study, Morocco and Jordan. Jordan ranked 12th of 35 nations in absence of corruption but worst in terms of government transparency. Morocco was near the bottom in terms of open government and below average most other categories.
Among the poorest countries in the study, Ghana scored well -- 12th of 35 in terms of limited government and 14th in terms of fundamental rights. Kenya was worst for limited government and clear, well-publicized laws.
How to tell when a CEO is lying
In the financial markets, a lot rides on the word of a company's top executives. If a CEO tells a lie, a lot of shareholders can get hurt. Now, after studying thousands of corporate earnings calls, two researchers from Stanford University think they've come up with a way to tell when senior executives are fibbing. "I think since the Garden of Eden we've been trying to figure this out — who's lying and who's not lying," says David Larcker, a professor of accounting at Stanford's Graduate School of Business.
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Opaque books, huge frauds: The financial crisis underscored how opaque the books are at a lot of companies, and before that came the massive corporate frauds at Enron and WorldCom. "There were some gigantic accounting frauds — big restatements and things like that — so a typical issue for us or for analysts or institutional investors is, can you actually predict those companies that are likely to have problems?" Larcker says.
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Detecting deceptive discussions in conference calls: It's a field psychologists and linguists have studied a lot over the years, and they've come up with certain indicators that signal deception. Computer Associates CEO Sanjay Kumar, who later went to prison for securities fraud, was asked about his company's auditing practices, "Can your books be trusted?" And he replied by saying, "We hire the very best auditors." Larcker says that can be a big warning sign. "You basically are not answering the question. You're basically making reference to somebody else, and those are the kinds of things in psychology you look for," he says.
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Words to watch out for: 'We' And 'Our Team': There's a reason for that: "If I'm saying 'I' or 'me' or 'mine,' I'm showing my ownership of the statement, so psychologically I'm showing I'm responsible for what I'm saying."
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Emphasizing the positive: Lying CEOs also tend to use a lot of words that express positive emotion — things are fabulous and fantastic and extraordinary .Here's what Enron CEO Kenneth Lay said when he addressed his employees at a time when the company was about to implode: "I think our core businesses are extremely strong. We have a very strong competitive advantage. Of course, we are transferring this very successful business model and approach to a lot of new, very large markets globally." Words like that can be a form of overcompensation. "If all my speech is 'fantastic,' 'superb,' 'outstanding,' 'excellent' and all my speech sounds like a big hype — it probably is," Larcker says.
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A speech detector that issues red flags: Larcker has put its data into a computer model — one that can issue red flags when signs of deception occur. And he has already heard from a lot of people in the markets wanting to use it. Larcker says he received at least one critical comment that basically said: "Thanks a lot for telling the CEOs and CFOs how to lie."
Independent regulatory agencies and judicial review
The independent regulatory agencies were created by law and are qualified as special autonomous government entity. They are submitted to several different means of control: social, political, economic and financial, throughmanagement contracts, resulting fromdue legal process, by the Public Ministry (Prosecution) and judicial review. Alexandre Wagner Nester, of Justen, Pereira, Oliveira & Talamini - Advogados Associados, wrote an article, available to Migalhas International readers, on the creation and the correct use of appropriate control mechanisms of those agencies. (Click here)
Law Firm Directory
The law firm Setti, Canton & Albini S.R.L., which headquarter is located in Buenos Aires, Argentina, became part of Migalhas' Law Firm Directory. (Click here)
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China's leaders meet to plan economic future
China's ruling Communist Party is meeting in Beijing to draw up its next five-year plan for the economy. The agenda is secret but analysts say that instead of seeking a high rate of economic growth, China's leaders want to close the gap between rich and poor and between coastal and inland areas. Analysts will also be watching for signs of who will be China's next leader - due to take office in 2012. The meeting comes amid renewed scrutiny of human rights in China.
US delays China 'currency manipulator' report
The US government has delayed a report - which was expected on Friday - that could officially brand China a "currency manipulator". The US Treasury releases two reports a year on the currency practices of its major trading partners. It has so far held back from naming China. The report is not now expected until after an upcoming G20 summit. China said the US should not use the weak yuan as a "scapegoat" for its own economic problems.
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Judge approves settlement of health claims from 9/11 cleanup
Judge Alvin Hellerstein of the US District Court for the Southern District of New York on Thursday approved a $47.5 million settlement between the Port Authority of New York and New Jersey, which owns the World Trade Center site, and over 9,000 people who claim they became ill from helping with 9/11 rescue and cleanup efforts. The settlement calls for four tiers of claims based on severity of related illnesses with those in the lowest tier receiving $2,000 and those in the highest tier receiving funds "according to their injury classification with adjustment factors." The Port Authority Board of Commissioners and a certain weighted percentage of plaintiffs still must approve the settlement. Lawyers for the Port Authority do not expect the settlement to be finalized this month.
Obama signs 'plain writing' law
Finally, something both parties in Washington agree on: The need for Uncle Sam to write clearly. With little fanfare, President Obama this week signed The Plain Writing Act of 2010. The new law requires that government documents be written in "plain language," defined as "writing that is clear, concise, well-organized, and follows other best practices appropriate to the subject or field and intended audience." Put simply, you have to be able to understand it. The measure moved through the bitterly divided Congress with relative ease, although close to three dozen Republican House members voted against it. Advocates for clear writing hailed its passage. "A government by the people and for the people should also be understood by the people." The movement to bring clarity to complex government documents began decades ago, when a Bureau of Land Management employee named John O'Hayre wrote a book after World War II called "Gobbledygook Has Gotta Go."
(Click here)
Pentagon braces for new Iraq war Wikileaks publication
The US military has assembled a 120-member team to prepare for the expected publication of some 400,000 Iraq war documents on the Wikileaks website. The documents are thought to concern battle activity, Iraqi security forces and civilian casualties. The Pentagon said it wants the documents back to avoid potentially damaging information being released.
Mining giants scrap iron ore deal
Mining companies BHP Billiton and Rio Tinto have dropped plans to combine their iron ore operations in Western Australia. The $116bn joint venture would have led to the firms sharing each other's mines and transportation facilities. But it has faced heavy opposition from national regulators concerned about the effect on iron ore prices. The firms said they were "reluctantly" ending the deal.
German multicultural society has failed
Attempts to build a multicultural society in Germany have "utterly failed", Chancellor Angela Merkel says. She said the so-called "multikulti" concept - where people would "live side-by-side" happily - did not work, and immigrants needed to do more to integrate - including learning German. The comments come amid rising anti-immigration feeling in Germany. She added: "We kidded ourselves a while, we said: 'They won't stay, sometime they will be gone', but this isn't reality." A recent survey suggested more than 30% of people believed the country was "overrun by foreigners".
Germany may tighten takeover law - government source
Germany is considering tightening its takeover laws as protest grows against the looming takeover of German builder Hochtief by Spanish peer ACS. Merkel weighed in, saying Hochtief should remain based in Germany. ACS is aiming for about 50 percent of Hochtief in a move designed to give it access to the German firm's cash, allowing it to cut its own 10.4 billion euro ($14.5 billion) debt pile. The German government will check if and to what extent further obligations should be introduced in the light of current events in takeover law and achieve a level playing field in terms of European regulation.
Record fine for US ex-bank boss
The former boss of US lender Countrywide Financial has agreed to pay record fines to the financial watchdog to settle fraud charges. Angelo Mozilo will pay the Securities and Exchange Commission $22.5m and repay $45m of profits. He is the highest profile executive to face charges relating to the US sub-prime mortgage crisis in 2007. The SEC alleged he, with two colleagues, had failed to disclose risks that Countrywide was taking.
Microsoft moves to help nonprofits avoid piracy-linked crackdowns
Microsoft is vastly expanding its efforts to prevent governments from using software piracy inquiries as a pretext to suppress dissent. It plans to provide free software licenses to more than 500,000 advocacy groups, independent media outlets and other nonprofit organizations in 12 countries with tightly controlled governments, including Russia and China. With the new program in place, authorities in these countries would have no legal basis for accusing these groups of installing pirated Microsoft software.
Moldova ratifies Rome Statute
The Republic of Moldova on Tuesday ratified the Rome Statute of the International Criminal Court (ICC). The treaty will become effective in Moldova on January 1, 2011. EU High Representative Catherine Ashton commended the move, noting the positive effects that ratification will have on relations between the EU and Moldova. Amnesty International (AI) offered similar praise, though Christopher Keith Hall of the International Justice Project cautioned that, "national law reform is vital to ensure that Moldova can cooperate fully with the Court and that its national courts can fulfil their obligations to investigate and prosecute cases of genocide, crimes against humanity and war crimes." Moldova becomes the 114th signatory to the treaty since 1998. The ICC, while praised by many observers, is not without controversy.
Prosecutors launch tax inquiry against Italy PM Berlusconi
Italian prosecutors on Friday launched a tax inquiry against Prime Minister Silvio Berlusconi for tax declarations he made in 2003 and 2004 relating to the commercial broadcast company Mediaset, which Berlusconi founded. Berlusconi is accused of artificially inflating the price of film rights sold to companies that belonged to him, and then selling them back to Mediaset for less money, allowing the company to reduce its revenues and pay less in taxes. Mediaset has denied the allegations.
(Click here)
Egypt cancels private permits to broadcast live television
Egypt issued new media restrictions Wednesday that critics say effectively put all live television media, including talk shows and news shows, under government control. The telecommunications regulator cancelled the broadcast permits of all private media companies forcing them to apply for new licenses through the state television agency. The measure is part of a series of events that critics argue are meant to stifle the media in the run-up to the November parliamentary and the 2011 presidential elections. State media officials said the restrictions are meant as part of a broader reform on independent media and not meant to stop free speech.
Time
Alzheimer's Unlocked. After years of disappointing vaccine and drug trials, researchers are finding new ways to interrupt the memory-robbing disease, just in time for an anticipated explosion in cases.
Newsweek
America's Holy Writ. Tea Party evangelists claim the Constitution as their sacred text. Why that's wrong.
Business Week
Bad for business. Why Business Doesn't Trust the Tea Party. The Tea Party's small-government slogans may be appealing, but its policies could throw the U.S. economy into chaos.
The Economist
Currency wars. Keep calm, don't expect quick fixes and above all don't unleash a trade fight with China.
Der Spiegel
Die fabelhaften Guttenbergs - Paarlauf ins Kanzleramt
Student insists in court he never assaulted teen
Gulf News, Independent daily, Dubai, United Arab Emirates
Etihad Airways gets first Emirati flight attendant
Khaleej Times, English-language daily, Dubai, United Arab Emirates
New date sought for Paris peace summit - Israel
The Daily Star, Independent daily, Beirut, Lebanon
Cyber-crime 'a top threat to UK'
BBC News, Centrist newscaster, London, England
Cities battle to keep mine rescue capsule
BreakingNews.ie, Online news portal, Cork, Ireland
Multiculturalism in Germany has 'utterly failed', claims Chancellor Angela Merkel
Daily Mail, Conservative daily, London, England
Sony Ericsson posts profit on stable sales in Q3
DMeurope, Online news portal, Amsterdam, Netherlands
FRANCE: Govt vows to end blockade amid fears of fuel shortages
France 24, Issy-les-Moulineaux, France
Mayor Sobyanin to Court Investors
The Moscow Times, Independent daily, Moscow, Russia
President attends gathering with state institution chiefs
Antara News, News agency, Jakarta, Indonesia
France seeks to calm fuel fears as strikes bite
China Post, English-language daily, Taipei, Taiwan
SC adjourns hearing in judges' reinstatement case
Dawn, English-language daily, Karachi, Pakistan
Super typhoon lashes Philippines
New Zealand Herald, Conservative daily, Auckland, New Zealand
Government solar power purchases on target
Taiwan Today, Government Information Office, Taipei, Taiwan
Gilani urges Pak judiciary to work in tandem with govt
Thaindian News, Bangkok, Thailand
Dominican President orders US$70mn potable water project, roadworks
Dominican Today, Independent daily, Santo Domingo, Dominican Republic
Royal Bank of Canada to buy London-based BlueBay fund manager
The Globe and Mail, Centrist daily, Toronto, Canada
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