Category: business ethics

How The Mubarak Family Made Its Billions ~ Marcus Baram (via PLANETIZEN POST)

On By southwerkIn business ethics

Frankly, I was curious about this myself. Amassing 5 to 10 billion dollars or more (there are estimates of up to 70 billion) while working on a government salary, be it in the United States or Egypt,  requires considerable energy.

How did they do it? My figured it was the usual means such as corruption in state-owned enterprises and government-run banks giving out loans without the expectation of being paid back. However, they did it more slowly with the appearance of legality.

This scheme appears to be based on the 51% rule. That rule says that no foreign business can be set up in Egypt without a majority stake being owned by an Egyptian. Obviously, the Mubarak family is more “Egyptian” than anyone else.

There is a warning in this. Nations requiring such partnerships may not in reality be all that friendly to business, not in the long-term. Certainly foreign interests are going to take a hit when they are in such an incestuous relationship with a corrupt government, first by shakedown and then by the inevitable revolution.

Such economic rules exist in many parts of the globe. The most prominent being China. For those businesses investing overseas I would recommend caution in these kinds of partnerships. Such an investment may pay off for the next quarter or the next year. But in theory, corporations are eternal. Having your immortal organization seized by an enraged population is an ignominious end. The situation in Egypt is a textbook example of how such investment can go wrong.

Whether the investment is shared with a corrupt Middle Eastern nation run by a single family or by a single political party (Chinese Communist), the future is hardly serene.

James Pilant

How The Mubarak Family Made Its Billions ~ Marcus Baram A tourist in Cairo spots three photographs on the wall of a restaurant: one of Nasser, another of Sadat, and the third of Hosni Mubarak. He asks the owner who the first man is, and the owner tells him it’s the man who overthrew the Egyptian monarchy and served as the country’s president. “Who’s the second man?” the tourist wants to know. “That’s Anwar Sadat, our next president,” comes the reply. “He made peace with Israel but was assassinated in … Read More

via PLANETIZEN POST

Maybe It’s Time For A Movement – A Movement That Moves Beyond Doing Good To Doing Right (via First Friday Book Synopsis)

On By southwerkIn business ethics
My reply to the gentlemen at First Friday Book Synopsis.

It is time. Absolutely time.

How long are we going to live in a nation where the great economic units occasionally remark contentedly about how they have given a few thousand dollars to charity after ignoring, breaking and lobbying against the nation’s law.

The Struggle

I know what it is like to feel despair about what business is doing right night all over the United States. You feel helpless. But it is still a struggle. Totally one sided but still a struggle.

On the one hand we have those who believe in the great philosophies of history, in Christianity, in the development of civilization and finally those who believe in simple obedience to the law.

You’re right about all this.

James Pilant

There are times when I feel something close to a sense of despair.  It has to do with a simple question – should a business take seriously the call to do right? The despair comes from what I read — in a lot of places/books/articles, but especially in the book I have recently completed, All The Devils Are Here, on the financial meltdown.  The failure to do right is absolutely pervasive throughout the narrative. Doing right is different from doing … Read More

via First Friday Book Synopsis

DYLAN RATIGAN: FORECLOSURE FRAUD; $45 TRILLION DOLLARS (via Dylan Ratigan Show)

On By southwerkIn business ethics

A family seizes their home back from the banks.

It’s pitiful that Americans have to take justice into their own hands.

James Pilant

Foreclosure Fraud – Lawyers Cannot Support Fraud

On By southwerkIn business ethics

An attorney discusses widespread fraud and attorney participation.

This is devastating to the banks.

James Pilant

Hello! (via 4closuredefenseattorney)

On By southwerkIn business ethics

Another lawyer has joined the good fight in the battle over Mortgage Foreclosures.

Please extend a warm welcome to Cynthia Starkey at her web site.

James Pilant

This is my first attempt at blogging, but I think it is the best way to keep people informed about what is happening in the world of foreclosure defense. Me? I have been a lawyer for twenty (plus) years (yikes… time flies!) I have always practiced in the commercial litigation area (civil law) – primarily businesses suing other businesses. Eleven years ago, I started an estate planning practice. I prepare wills, trusts and other estate planning … Read More

via 4closuredefenseattorney

Guest Post | Stay Calm, Remain in Your Homes (via Foreclosure Fraud – Fighting Foreclosure Fraud by Sharing the Knowledge)

On By southwerkIn business ethics

We have many crises going on all at once. Why?

A convergence point has been reached. The foreclosure crisis is one element in a series of development.s In the United States, the critical development has been the continuous conversion of the economy from manufacturing to finance. Everything else flows from that.We make and less actual products each year. Our primary source of income as a nation is financial innovation.

Manufacturing requires large capable work forces to function. Finance requires a handful of people.

A huge financial sector demands several policies. 1. Free trade, in particular, the free movement of money and credit across national borders. 2. Relentless inflation control, this involves suppressing wage pressure and allowing economic growth only in a controlled manner. 3. As little taxation or no taxation on anything related to their operations. The people of the United States bear the principal burden of taxation. The financial sector has incredible profits while other parts of the economy flounder. Yet the tax burden does not shift to follow the money. 4. A intertwining of the government and the financial sector. More and more the government appears to be an arm of investment banking. The government insures the great financial houses of protection from failure. The government provide inexpensive loans for these companies. The government works with frantic intensity to control inflation. 5. Diminished public spending and the rigorous control of all social programs from education to unemployment insurance. This is to justify continuous cuts in taxes and to shift the burdens of a civilization from organizations to individuals. 6. This is a characteristic no often mentioned, but I kept finding it in report after report. A frantic, bizarre mania for numbers indicating a perception of higher form of reality, the music of the spheres. 6. Natural resources, in particular, basic human needs like water are to be divided for use by the private sector. 7. All endeavors from the military to the public schools must be converted from the public to the private, regardless of the outcomes. 8. An almost religious determination to follow the markets wherever they lead, cheaper workforces, better purchasers. 8. A visceral contempt for Americans under a certain income level. The “lower” classes are considered to be lazy, self-indulgent, burdens upon the elite producers. This is indicated by the absence of influence by the middle class on any policy decisions and the continuous development pf the doctrine of personal responsibility demonstrated by such changes policies as bankruptcy “reform” to student loan collections.

The change is focus from producing things to manipulating money might seem to be the most significant change here, but it is not. There is one overriding change that anchors and justifies all the others. The most important change over the past fifty years has been the development of a philosophy justifying profit taking over all other values.

When one part of society did something to damage the social order there were countervailing ideas. We can see this in the Progressive movement, the New Deal, the Fair Deal and the Great Society. Other ideas of how things should work. We as a society called upon a variety of intertwining values to make decisions. But these are no longer considered valid. In the past, there could have been calls to patriotism. These are irrelevant in modern business philosophy. There could have been calls to God and religion. These are irrelevant in modern business philosophy. There could have been calls to the great philosophical systems of history. These are irrelevant in modern business philosophy. There could have been a call to righteousness or ethics. There could have been a call to the rule of law. These are all irrelevant.

For a single nation, only Kafka could explain the motives and values of the financial class. But for international business, the logic is clear.

Here is a posting about these changes beginning with the foreclosure crisis.

George Mantor writes this piece. He has his own web site at Keepin’ it real.

Stay Calm, Remain in Your Homes This is standard advice in times of emergency.  The principle is simple and logical. Authorities are dealing with limited resources in a critical environment wheGuest Post | Stay Calm, Remain in Your Homesre every second counts.  The fewer events and people they need to deal with, the more effective they can be. If you know me, you know that I am upbeat and positive by temperament and challenges don’t faze me.  I’m pretty level-headed, and I do my own thinki … Read More

via Foreclosure Fraud – Fighting Foreclosure Fraud by Sharing the Knowledge

Alabama Announces Foreclosure Prevention Program for Unemployed (via Loaning4Less.com™)

On By southwerkIn business ethics

This is an interesting idea. Partly paid for the federal government, the program tries to prevent families from being hit by two financial disasters at the same time, unemployment and the loss of a home. I am curious about one thing. If the feds have allocated 2 billion dollars to such programs and Alabama is going to use 162 million, who is using the rest of the money and for what? Is there some innovative program to save the unemployed’s homes that I am unaware of? If you know something about this, please let me know.

James Pilant

Alabama Announces Foreclosure Prevention Program for Unemployed Alabama Governor Robert Bentley recently announced the creation of Hardest Hit Alabama (HHA), a new program that will provide $162 million for foreclosure prevention efforts in the state. In August 2010, the U.S. Department of Treasury announced $2 billion in federal funding to provide additional assistance targeted at unemployed homeowners in states with the highest jobless rates. The Alabama Housing Finance Authority (AHFA) has been allocated $ … Read More

via Loaning4Less.com™

Bismuth Nanoparticles

On By southwerkIn business ethics

I have been telling my students that way back in the 1960’s, there were television series and magazine articles that tried to predict the future. Their aim was not very good. What has come to be was not predictable, what was predicted has not come to be. Reading the future whether by ancient Mayan calendars or scientific speculation is not a matter of certainty. One unpredictable development is that of nanoparticles. Nanoparticles offer often bizarre science fiction like capabilities to many fields in particular medicine.

This is from Science Daily –

Now, researchers at Washington University School of Medicine in St. Louis report that they have designed nanoparticles that find clots and make them visible to a new kind of X-ray technology.

According to Gregory Lanza, MD, PhD, a Washington University cardiologist at Barnes-Jewish Hospital, these nanoparticles will take the guesswork out of deciding whether a person coming to the hospital with chest pain is actually having a heart attack.

“Every year, millions of people come to the emergency room with chest pain. For some of them, we know it’s not their heart. But for most, we’re not sure,” says Lanza, a professor of medicine. When there is any doubt, the patient must be admitted to the hospital and undergo tests to rule out or confirm a heart attack.

“Those tests cost money and they take time,” Lanza says.

Rather than an overnight stay to make sure the patient is stable, this new technology could reveal the location of a blood clot in a matter of hours.

This is a positive development. But there should be caution in these developments as well.

From ANSES, French Agency for Food, Environment and Occupational Health and Safety:

At present, there is no routine method for measuring nanoparticles in a soil or water sample. Accordingly, few data are available on the presence of nanoparticles in these two matrices, and knowledge on the fate of nanoparticles in the environment is therefore limited. For the same reasons, it is also difficult to study the effectiveness of current drinking and waste water treatments to eliminate nanoparticles, and it is subsequently hard to estimate population exposure to such particles through water.

One of the prerequisites to the improvement of knowledge needed to assess the risks of nanoparticle presence in water is therefore the development of data acquisition tools.

More bluntly, if nanoparticles get in the water or soil, we can’t detect them and we don’t have any idea what to do if we do detect them.

That’s a substantial downside.

The French Agency recommends tough regulation –

Given this context, the Agency stresses the need to set up a system for listing and controlling the marketing of all products containing nanoparticles.

There is always going to be the question whether or not we are rushing into a technology that has the potential for enormous destruction.

I can point out based on my experience in the field of business ethics, that when confronted by the opportunity to make billions of dollars, safety concerns shrink in importance.

There is a great deal of opposition based on ideological grounds. But is it wish to allow private companies with financial stakes in positive outcomes to determine acceptable risks? There are not only many accounts of businesses that developed products without proper testing. There are accounts of businesses that when informed of serious problems closed their eyes to the danger. And lastly, there are literally thousands of cases where dangerous substances were casually dumped in the water, soil or air.

I believe regulation is necessary.

James Pilant

A Department of Defense Purchase that Makes Sense

On By southwerkIn business ethics2 Comments

Grand Strategy: The View From Oregon has this from an article entitled – Precisification of Small Arms Fire –

Too many weapons systems are enormous projects that are driven by the employment that they create in a congressman’s district. When a prototype is received as enthusiastically as the XM25 by the soldiers who would actually use the weapons system in theater, this is a powerful vote of confidence. One wonders why this weapons system is not being moved into production when the initial reports on the prototype are so favorable. I’m sure there’s story behind it. There always is.

Many precision weapons systems have not only been expensive boondoggles, but have also had long and troubled histories of development. The reception of the XM25 prototype, however, shows how powerful precision technologies can be when designers and producers get it right. There will always be a question of killing badly designed weapons systems before good money is thrown after bad, and this is sometimes a difficult call to make. The M247 Sergeant York was eventually axed after a long and troubled history, but US and allied troops put up with the sub-par performance of the M-16 for decades before the design was refined to a robust and reliable iteration.

XM-25

 

One of the more troubling areas in business law are the persistant cost overruns, improper influence and illegality in defense procurement.

J.N. Nielson has found a weapon system that works and is a credit to its manufacturer. May we see many more.

James Pilant

P.S. I am still unimpresed by the M-16 (or M-4).

Finance Industry Laments New Curbs on Securitization (via The Fiscal Times)

On By southwerkIn business ethics1 Comment

Yesterday, I was explaining to my students that the word, securities, had become an oxymoron. (I am a reality based instructor.) Ironically, within 24 hours, I run into this article which says that the problem of securities being a highly speculative investment has abated somewhat. If the numbers are accurate, things have improved.

From The Fiscal Times (from an article by Zachary A Goldfarb) –

For nearly two decades before the financial crisis erupted in 2007, the securitization market allowed Wall Street to manufacture all manner of financial products. The most basic of these were bundles of home, auto and credit card loans that were turned into single investments that firms and countries worldwide could buy.

But then things got more complicated. Wall Street found ways to allow investors to speculate on Hollywood films, patents, lawsuits, airplane sales, and fast food revenues. The most infamous financial engineering, of course, involved the creation of seemingly high-quality investments that were in fact backed by high-risk home loans, extended to people with weak finances.

These subprime mortgage-backed securities helped doom the financial system starting in 2007, and the securitization market has been working to make its way back ever since. Although it has had some success, particularly in auto and student loans, participants at the ASF conference here said that they expect financial engineering to play a far smaller role in the markets for years to come.

“Banks will be utilizing securitization less in the future than they have in the past,” said Bianca Russo, managing director at J.P. Morgan Chase.

In total, there was $145.3 billion in securitizations in 2010, compared with $875.5 billion in 2005, and far below the number even a decade ago, according to industry newsletter Asset-Backed Alert.

Every time I explain what a security based on home loans looks like broken down into its parts, my students are amazed that anyone would buy them. But then I show them what the paperwork looked like to an investor. If you can divide the home loans between, prime and sub-prime, only then can you see how much trouble you are in. But the poor investor can only see a list of smaller investments perhaps of thousands of mortgages which for accurate knowledge need to be researched individually. The investor would have felt that they needed no such investigation because the security was  rated as triple A by an international ratings corporation like Moody’s. Investment firms like Goldman Sachs are not required by law to disclose risks with an investment they are selling. So, the investor was swathed in assurances that he was making a good investment when for all intents and purposes he was driving blind in a snowstorm. And in 2007, they hit the wall.

James Pilant