Friday, April 27, 2018

Hazards of Hard to Break Cheating Habit

Students learn the perils of cheating by playing a game where they all are international traders. Each student receives an envelope containing a blue card worth $20 million in merchandise and a green one worth $10 million.Both dealmakers assume they can make a great profit by reselling whatever merchandise they receive in the trade.  One or more sets of two students go out in the hall to negotiate a deal (or the whole class can discuss what kind of deal to make). They shake hands on the deal and turn their backs on each other while inserting the card or cards in the envelope they'll give to their customer. If, for example, they agree to trade both cards, but one student gives the customer only one card, what will happen, if these two try to make a deal in the future?

     Opportunities to cheat tempt young people inside and outside their families and school. If something breaks, one sibling blames another. Students cheat on tests, copy reports from material on the internet, steal clothes from retailers, get "free" food from friends who work at fast food restaurants. Young people lie about staying over at a friend's house, when they plan to do something else. They drive too fast, fail to wear seat belts, and text while driving. They drink alcohol,  experiment with drugs, and cheat on their boy/girl friends by dating others.

     Ask students if they would be willing to loan $155 million to a company mired in corruption. This is currently a real life case that provides a cautionary tale to students who would carry their cheating habits over into their careers.

    Related to a corruption enforcement decision, Odebrecht, an engineering company in Brazil, now owes a $2.7 billion fine to Brazil, Switzerland, and the United States for an extensive bribery scheme that stretched from South America to Central America to North America. On Wednesday, April 25, 2018, the company's construction unit needs loans to repay a $144 million bond within a 30-day grace period. By the end of the month, the company also owes an $11 million interest payment.

     A default on these payments could lead banks holding other Odebrecht loans to demand earlier payment, because they see bankruptcy looming. Odebrecht finds buyers for assets it is trying to sell know the company is desperate to free up cash and offer to pay lower prices over extended periods. Not knowing what future assets the company will have for collateral does not reassure potential new lenders. As it is, banks asked for new loans offer less than needed, and Brazil's government development bank is reluctant to guarantee these private loans. In few countries will government officials want anything to do with accepting a bid and letting a contract for a new Odebrecht project that could hint of a kickback or any sort of bribery.

     Corruption gives foreign investors an opportunity to gain control of key sectors in a country, when cash-strapped companies convicted of wrongdoing cannot find funds elsewhere. Corrupt Brazilian companies offer this kind of risk to their country. Already, the jointly owned China Three Gorges (CTG) and Portugal's largest company, the EDP utility, run hydroelectric power plants in Brazil. CTG holds a 23% share in EDP and aims for total control. Both companies have assets in other countries besides China and Portugal. EDP, for example, operates in 14 countries, including the United States, Spain, France, Italy, and Poland, where China is perceived as an intelligence and corporate espionage threat.
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     News that former Brazilian president, Luiz Inacio Lula da Silva, has been jailed on corruption charges for allegedly accepting bribes from Odebrecht has been noted  in Angola, one of Brazil's other former territories, as a cautionary tale.

     For an excellent overview of international efforts to eliminate corruption, consult Corruption and Misuse of Public Office, published in the UK by Oxford University Press. Cheating of any sort is risky business. There is no guarantee that governments, teachers, parents, and girlfriends/boyfriends will not find out. Trust is a terrible thing to lose.

     
   

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