Category Archives: TRACE

Combatting Extortion, Bribery and Cheating in Schools Reply

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ImageWhile it is no secret that corruption in academic institutions exists in many countries around the world, just how big of a problem it is remains unknown.  Several recent scandals seem to indicate that it continues to be a formidable challenge in many parts of the world, and that large-scale efforts will be required to reverse the trend.

In the United States, just this past March, over thirty school administrators, teachers, principals and other educators were indicted by a Federal grand jury in a wide-scale test-cheating scandal that rocked the Atlanta school district.  And as we’ve previously explored on TRACE Blog, corruption continues to be a big problem in Russia’s higher education system as well, including teachers who are intentionally failing good students in an effort to extort more money from them.  Similar incidents of corrupt school teachers have been reported in high schools in Vietnam, elementary schools in South Korea, and universities in Italy.

Anti-bribery activists are afraid that school corruption is beginning to have long-term consequences that are bigger than just inflating a few grades.  One is that corruption dilutes the quality of learning for all students.  In a study of corruption in schools in Moldova, the Partnership for Transparency Fund found that students who knew that money could buy them better grades tended to exert less effort in studying.  Nguyen Quoc Binh, a principal of the Vietnam-German High School in Hanoi, recently echoed this sentiment in an interview with the Business Recorder newspaper: “bribery in exams makes students lazy.”

There is also a more serious concern that students who experience corruption at such a young age may develop a tolerance for corruption that will stay with them later in life.  In a recent study of 1,000 youths published this month by Transparency International-Korea, 40% thought that being rich was more important than being honest, and 51% agreed that people who cheat have more success in life than those who don’t.  That problem is already beginning to emerge in Russia.  In what’s been dubbed “plagiarism-gate”, a series of scandals has recently exposed plagiarism in the dissertations of politicians and officials, including, most embarrassingly, by Vladimir Burmatov, a head of the education committee of Russia’s ruling party who has recently had to step down from his post.  More…

U.S. Dept. of Commerce Conversation Reply

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In celebration of World Trade Week, which runs from May 19 to May 25, TRACE International caught up with representatives from the U.S. Department of Commerce to discuss the many ways in which the Department is helping companies face the challenges posed by bribery in international trade. We learned, for example, that the Department’s Trade Compliance Center offers counsel to those facing bribery concerns overseas and also assists with related problems such as suspected bribery by a competitor. The conversation also covered what the U.S. Government is doing more broadly to advance anti-corruption and good governance initiatives globally. Visit http://www.TRACEinternational.org to download the full interview.

Battle Over Political Spending Heats Up At SEC Reply

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Last week, in one of her first appearances before lawmakers since being sworn-in as Chair of the Securities and Exchange Commission (SEC), Mary Jo White took the defensive regarding a proposal currently being debated at the SEC to require public companies to disclose their political spending.

SEClogoThe proposal has been a lightning rod for controversy since first being introduced almost two years ago by a group of ten corporate and securities law professors organized under the name The Committee on Disclosure of Corporate Political Spending.  At that time, the group petitioned the SEC to develop rules to require all public companies listed with the SEC to disclose to shareholders the use of corporate resources for political activities.  Under SEC rules, any person may request that the Commission issue, amend or repeal a rule of general application.

Noting “a growing demand for transparency in this area,” the petition argues disclosure of political spending falls in line with other disclosure requirements developed by the SEC over time.  Under the Securities Exchange Act of 1934, the SEC is empowered to require public companies to disclose any information that is material to shareholder interests.  “Absent disclosure, shareholders are unable to hold directors and executives accountable when they spend corporate funds on politics in a way that departs from shareholder interests,” write the petitioners.

Many are in favor of the rule, and since August 2011 the SEC has received approximately 500,000 comment letters regarding the petition, most in support.  One such letter by NYU’s Brennan Center for Justice criticizes the weighty expectations placed by politicians on business executives who feel obligated to donate to political campaigns, describing the practice as a “campaign finance arms race.”

But others are infuriated by the idea of increased disclosure requirements, including business groups who see it as both over-reaching by the SEC and unconstitutional.  On January 4, 2013, the U.S. Chamber of Commerce, along with 28 other business groups, filed a strongly-worded letter with the SEC in opposition to the petition.  The letter describes the proposal as irrational, unfair and discriminatory against corporations, stating that “the inevitable result of such a rule would be to hobble corporations’ ability to engage effectively in public policy arenas by subjecting them to a disclosure regime that does not apply to those who typically advocate opposing policy views.”

“[E]ngaging in political activity is an essential element of good stewardship,” continues the letter, emphasizing further that such spending is already protected by the business judgment rule.  The letter also argues that the rule would violate corporations’ First Amendment rights, similar to the argument made in Citizens United v. FEC, 558 U.S. 310, (2010) which also related to regulating corporate expenditures in connection with elections. More…

TRACE Profile: Stories from the Front Lines of Due Diligence Reply

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Over the last decade, TRACE’s team of due diligence associates has performed over 300,000 due diligence reviews in over 135 countries.  Headquartered in Annapolis, Maryland, we never outsource our due diligence to independent contractors. We conduct all reviews using in-house research capabilities and the  twenty different languages we have represented here.  With all of that background expertise, we like to showcase our due diligence analysts on TRACE Blog and allow them to share their personal stories from the front lines of anti-bribery due diligence.

Today we interview Patricia “Patty” Orndorff, a TRACE due diligence associate with over four years of experience conducting due diligence of third party intermediaries.   Patty is usually the one asking the questions,  but we caught up with her and turned the tables for this interview.

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Patty

Patricia “Patty” Orndorff

TRACE Blog [TB]:  Patty, I know you started out in education.  Can you explain for our readers how you began working at TRACE?

Patricia Orndorff [PO]: Right, well prior to joining TRACE, I worked in the education sector for 31 years in Anne Arundel County, Maryland.  I started out as a high school French teacher and then later worked in various resource positions—first as a resource person for strategic planning and school development for the entire county school system, then as the coordinator of a team of nearly 60 teachers who taught English to the county’s English Language Learners and finally I became the Director of Curriculum.

Then, in 2007, I was offered a job as Curriculum Director for the City of Baltimore, MD, but due to the downturn in the economy, the position was not funded.  About this time, I was offered a teaching position in the Johns Hopkins Graduate School of Education, teaching curriculum courses and I did that for two years.  One day, I saw an ad in the newspaper for TRACE and read that they were seeking people with language capabilities, especially in French and Spanish.  I thought, “why not?”  The interview process began and a few weeks later I ended up joining TRACE.

TB:  Has your background in education helped your work at TRACE?

PO:  Well I really enjoyed working with teachers and I still consider myself a teacher at heart.  I once was reviewing a company and the whole process was moving really slowly.  I was sending reminder e-mails all the time.  At last, the point of contact told me, “You are really keeping me on track.  You are like my teacher when I was in high school.” I laughed and told him that there was a reason he felt that way!  I guess that in both jobs you end up having to chase people down.  And ultimately both are rewarding in the sense that I enjoy helping wonderful people most of the time.

TB: So does TRACE assign all third party intermediaries from French speaking nations to you then?

PO:  I don’t think I have all of the French speaking companies.  I know that there are a few other analysts who also speak French.  But I do have many small companies that don’t have any employees who speak English – mostly from West Africa and a few from France.

Once, I went to one of the employee training conferences in Paris with the TRACE team to help translate.  At the time I was just finishing the file of a company that was located outside of Paris.  I told the company that I was going to be in Paris and my point of contact ended up being a really nice gentleman and we met for coffee in a small café in Paris.  It was really nice to put a face to the contact. More…