The Scottish drilling company, Abbot Group, has brokered the first settlement under a programme designed to encourage companies to come forward and confess wrongdoing, paying £5.6m after it made bribes to win a contract. The company, which is based in Aberdeen, will pay the equivalent of the profit it made from a contract won though corrupt payments. The payments, made in 2007, came to light after an audit by an unnamed overseas tax authority prompted an internal probe. The claims were linked to one of Abbot’s two main subsidiaries, KCA Deutag and Bentec, which have global operations. Abbot approached authorities as part of a pilot self-reporting initiative, which encourages companies to come forward to avoid criminal prosecution. All those involved with the bribery allegations have left the group, and the settlement means that there will be no criminal investigation of the company. The money paid by Abbot will go to a Scottish fund used to help fight youth unemployment and promote healthy lifestyles. (Financial Times*)
FSA fines UBS £29.7m over rogue trader
UBS has been fined £29.7m by the Financial Services Authority (FSA) for “significant control breakdowns” that allowed a rogue trader to lose $2.3bn in 2011. This is the third-largest fine that the UK watchdog has ever handed out. It criticised the bank for having ineffective computer risk controls and “poorly executed and ineffective supervision” that allowed Kweku Adoboli repeatedly to breach risk limits and book fictitious trades. Mr Adoboli was convicted of fraud last week and sentenced to seven years in jail. As the failings took place in the London branch of UBS, the FSE and the Swiss regulator Finma investigated jointly and announced the results on Monday morning. Finma, which does not have the power to fine, said it had appointed an independent investigator to make sure that UBS puts corrective measures in place and implements them fully. (Financial Times*, Guardian, Independent)
Employees
Bangladesh workers protest over fatal fire
Thousands of Bangladeshi workers protested in the streets of a Dhaka suburb on Monday, throwing stones at factories and smashing vehicles, as they demanded justice for the 112 people killed in a garment factory fire that has brought unsafe conditions in a pressurised, global industry to light. Some 200 factories were closed for the day after the protests erupted in Savar, the industrial zone near the capital, where Saturday’s fire occurred. Investigators suspect that a short circuit caused the fire, which was made so deadly by the lack of safety measures in the eight-storey building in which it occurred. The building had no emergency exits and no fire drill protocol. The factory is owned by Tazreen Fashions, a subsidiary of the Tuba Group. The Tuba Group is a major Bangladeshi garment exporter whose clients include Walmart, Carrefour and Ikea. The factory was given a “high risk” safety rating after a 2011 audit conducted by an “ethical sourcing” assessor for Walmart. Bangladesh has some 4,000 garment factories; this fire caused the most fatalities of a number of recent industrial disasters. (Financial Times*, BBC)
Consumers
Consumers lose faith in business over ethical behaviour
Fewer British people think businesses are behaving ethically, according to a survey by the Institute of Business Ethics (IBE). The survey, carried out annually, found that just 48 percent of respondents felt that British businesses act 'very' or 'fairly' ethically, compared to 58 percent last year. According to the IBE, the 10 percent decline is one percent off the all-time low of 47 percent in 2003, when the survey was first conducted. Director of the IBE, Philippa Foster Back, said: "This year's results should act as another wake-up call to business that action needs to be taken in order to restore trust with the British public.” The survey also asked consumers what issues businesses most need to address; environmental responsibility was seventh on the list after issues such as executive pay, corporate tax avoidance and discrimination. (Edie)
Responsible Investment
Insurers tell top companies to curb executive pay
The Association of British Insurers (ABI) has warned leading companies that they should avoid handing disproportionately large pay rises to their executives. This powerful body of shareholders is calling for simpler remuneration packages for senior executives, and for companies to consider ways to reward boardroom directors on measures other than financial performance. The ABI, whose members control about a fifth of the stock market in pension funds and insurance policies, is asking the committees that set boardroom pay to ensure they award just one annual bonus and one long-term incentive plan (Ltip) in contrast to the range of pay schemes currently offered to top bosses. On the back of the so-called "shareholder spring", the ABI wants companies to set executive pay against the wider context of the salaries of employees in the whole company. (Guardian)
COMMENTS