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.

     
   

What Makes A City Perfect?

In his recent book about Leonardo Da Vinci, Walter Isaacson listed what, to Benedetto Dei in 1472, made Florence, Italy, perfect. See if you would apply these criteria to judge what cities have to have to be perfect today. What would you add to or subtract from Benedetto's list?

A Perfect City Would Have

1. Complete liberty

2. A large, rich, and elegantly dressed population

3. A river with clear, pure water and mills within its walls

4. Jurisdiction over castles, towns, lands and people

5. A university that teaches both Greek and accounting

6. Masters in every art: architecture, art, weaving, wood carving, literature, philosophy

7. Banks and business agents all over the world

In what order would you list the qualities that Benedetto used? And what order would you use for your list?

China's Corruption Crackdown, New Bank Backing, and Release of PR Activists

In case there was any doubt about China's determination to stamp out corruption, the April 2015 arrest of Zhou Yongkang, former head of the domestic secret police and the most senior member of the Chinese Communist Party to face corruption charges, should dispel that notion. Assets from Zhou's family members and associates totaling $14.5 billion were seized, and 300 of his relatives and allies have been  taken into custody or questioned. Zhou, and earlier Bo Xilai, were believed to have been investigated by the special investigation team composed of cross-agency law enforcement officials that can only be authorized by Beijing's senior leadership to investigate high ranking Communist Party members.

     In the book, The Little Red Guard, mentioned in the earlier blog post, "See the World," model workers of older Chinese generations felt betrayed by a new corrupt system that rewarded friends and relatives of Communist Party officials with promotions and raises. Although President Xi Jinping was said to be worried that the extent of corruption revealed at a trial of Zhou would undermine public faith in China's Communist Party and alienate other high level party members who fear their own corruption charges, Zhou was sentenced to life in prison in June, 2015. China also has added Wang Tianpu, president of Sinopec, China's state-owned Petroleum & Chemical Corporation, to its list of corruption suspects. In October, 2015, Sam Pa, who heads the Queensway group in Hong Kong and who has ties to China's intelligence service, was detained in Beijing. Queensway is an active deal maker in Africa and North Korea. In March, 2016, HSBC froze $87 million of Sam Pa's assets.

     Following the explosion of the Rui Hai International Logistics's chemical warehouse that killed over 100 and damaged 17,000 homes in Tianjin, ten Chinese officials were detained on suspicion of safety violations. Two Rui Hai executives admitted using political connections to get waivers that allowed the warehouse to be build closer to a residential area than allowed by law, and the warehouse had been cited for safety violations in the past.

     China's corruption crackdown already has put politician and powerful Chongqing party boss, Bo Xilai, in prison for life and given his wife, Gu Kailai, a suspended death sentence for poisoning British businessman, Neil Heywood, who may have been murdered for wanting too big a cut for helping get the family funds of Bo and Gu out of China. On July 28, 2015, when Man Mingan, the Chinese prosecutor in Gu's murder trial, was found hanged in his Anhui province apartment, police launched an investigation into the circumstances. In another strange development, China uncovered a fake anti-corruption unit that had its own interrogation room.

     The anti-corruption campaign has caused China's big rollers to flee Macau's casinos for Cambodia, where, as described in the earlier post, "Let's Visit China," they hope to do their gambling under the radar of investigators. Consequently, Macau's investors, who have seen their revenue drop, have decided to follow the Las Vegas model and give the island a more family-friendly image by adding a $2.3 billion theme park to a new casino.

     Meanwhile, a new Chinese-backed Asian Infrastructure Investment Bank (AIIB), which has won the approval of the World Bank, has been founded. The bank's president, Jin Liqun, was among the world's 100 Most Influential People selected by TIME magazine in 2016.  AIIB attracted 57 prospective founding members, including Singapore, India, Thailand, and even the UK (but not Japan, Australia, South Korea and the US, the more developed countries that control the rival Asian Development Bank.) Hoping the UK can cash in on billions of trade deals with China, British Prime Minister Cameron gave Chinese President Xi the royal treatment, including a ride in a horse-driven carriage, when he visited the UK in October, 2015. Although President Obama cautioned the UK about developing close ties with China and initially opposed Britain's participation in the AIIB, he eventually suggested the bank may have a positive impact on emerging markets. By 2017, the AIIB had 80 member nations including Britain ad Australia. The Asian Development Bank now works with AIIB to fund energy, transport, and infrastructure projects.

     The July, 2015 purchase of the former Milan headquarters of Italian bank, UniCredit, by the Chinese Fosun group headed by Guo Guangchang was just the latest in a series of recent Chinese investments in Italy, including Italian banks and companies, such as tire maker Pirelli and luxury goods manufacturer, Caruso.

     After being held for a month, China released five women's rights advocates who have a flair for gaining public attention. They were arrested in March when they prepared to distribute posters and stickers protesting domestic violence. Earlier, they had gained attention for the same cause by parading through the streets in bloody wedding gowns. The women who were charged with creating a disturbance could still be sentenced up to three years in prison, if they fail to report their movements to police and to make themselves available for questioning at any time.