Archive for the ‘Lessons Learned’ Category

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Organizational Corruption is Rarely Isolated; It’s Systemic.

April 14, 2010

In one of the largest criminal fraud cases to be brought by the US Government in recent years a Kuwaiti owned logistics firm, Agility, was indicted last February for multiple instances of fraud and other crimes totaling (what has been reported to be) as much as two billion dollars.  Yes, that’s billion—with a “B”—dollars.

The criminal indictment issued by the US District Court in Atlanta is public domain and is available on many web sites.  It includes two conspiracy counts alleging (in simple terms) fraudulent large-scale over-billing, fraudulent large-scale concealment of distribution fees into item pricing, fraudulent retention of rebates from vendors, and fraudulent  large-scale repackaging of items. The indictment counts detail a time-line of fraudulent behavior from June of 2003 to December of 2008 and lists dozens of instances, meetings, communiques, and transactions covering contracts totaling about 8.5 billion dollars (whew, now it’s easy to see how the fraud could be a much as two billion). It’s a pretty damning document.

This week the indictment was amended to include the major US subsidiary, Agility Defense and Government Services (DGS) headquartered in Alexandria, Virginia, that seems to have been the contracted and operational entity. Lawyers for Agility DGS have pleaded ‘not guilty’ even though recent news reports suggest there are negotiations underway between the US District Attorney’s office and Agility that would have Agility pay 750 million to avoid a trial (now—in my understanding of the world—no organization pays three-quarters of a billion dollars if its’ innocent).  Also see Article in Atlanta Journal-Constitution.

Agility is a competitor in my industry so I have been closely watching the events unfold from a couple of viewpoints. First, as one of the largest competitors in my industry their demise would certainly be a boon to not only my company but other logistics companies as well; so I can’t say I’d be sad to see them crippled by their own folly.

Secondly, I’m keenly interested from an international corruption standpoint how the USG resolves the matter—I certainly hope it’s with greater impact than the 2008 Siemens corruption scandal.

In the Siemens matter no one went to jail and—incredibly—Siemens was not barred from doing business with the US Government.  ((I wrote a Letter to the Editor about the Siemens incident that was published in the Wall Street Journal on December 24, 2008:  If You Do the Crime, You Should Do the Time.)

Roughly half of Agility’s revenues come from business with the US Government and if any non-trial resolution of the indictment allows Agility to continue to do billions of dollars of business with the USG–well, there are very important reasons why that would be an incredibly bad outcome. To begin with (like the Siemens case), it would present no deterrent. If Agility is only “fined” 750 million dollars then, and from any knowledgeable cost assessment, they are way ahead—no question they probably profited much more than that penalty amount. Most importantly, if one looks back over large corruption scandals like Siemens as well as the great UN Oil for Food incident—the most notorious in recent memory—the similarity that cannot be ignored is the corruption was not isolated within those organizations; like a metastasized cancer it was systemic.

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About “Face”—Ottoman Style

March 5, 2010

If anyone has any doubt about the extent of the “face” issue and how it is playing out in today’s world (both political and business), they  merely have to read the latest news about the vote by the House Foreign Affairs on the 100-year old Turkish-Armenian controversy.

The House committee has voted to pass a resolution that states that in the early 1900’s the Turks committed genocide by killing approximately 1.5 million Armenians. The Turks are so upset (even though the atrocities occurred during the Ottoman era) they’ve threatened to recall their US Ambassador. The Turkish pressure to stop the resolution from passing was so intense that President Obama even reneged on one of his campaign promises that stood on the side of Armenia. Apparently, getting Turkey to agree to sanctions against Iran is enough justification to break a campaign pledge.

Secretary of State Clinton weighed in last week warning the committee chairman that the resolution could harm reconciliation talks between Turkey and Armenia. Maybe the secretary has a new found respect for the issue of “face” after her Pakistan and China forays that created tension and controversy. In Pakistan she accused the government there of not wanting to catch the Taliban and the China/Google hacking issue is still making news.  This is not to say Secretary Clinton isn’t a good and capable chief diplomat; she definitely is, but her American-style bluntness—or disregard for  “face”—has had its shortcomings.  

The Armenian lobby in the U.S. Congress is very powerful and is part of a larger global effort to have the Ottoman era killings labeled by governments worldwide as genocide.  A similar resolution, pushed  by the influential Armenian lobby efforts was passed in 2007, but was prevented from getting a full House vote by the Bush White House (during that time there was a fear that the Turks would prohibit use of a certain military base that was key  to the U.S. Iraq war effort).

This century old issue has not been this hotly debated since the tragedies occurred—it’s an issue that is certainly a resonating indicator of the omnipresent and enduring influence of the concept of “face.”

For a greater understanding of “face” and its global cultural impact, pick up a copy of my book, Lies, Bribes & Peril.

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Child Trafficking or Incredible Cultural Naivete?

February 2, 2010

The current situation involving the 10 jailed members of the Southern Baptist Convention religious organization has a number of root causes. First and foremost, what I like to believe was a well intended group, the cultural ignorance shown by the religious group was pretty astounding.

Not only did the group attempt to move roughly thirty children across an international border without any of the proper paperwork (this in a country that suffers from the blight of real human traffickers), but the most recent development about yesterday’s postponed court date highlights the fact the group embarked on their overzealous mission without possessing an ability to speak French!

Basically, the group ignored any and all cultural, legal, and communications issues. Geeze!

How the situation will evolve and what the outcomes will be is anybody’s guess–as well intended as the group may be their naiveté borders on arrogant indifference. At first blush I thought this might be a case of corrupt Haitian officials making a mountain from a molehill—but the facts are otherwise. This group, whether inadvertent or properly intended, are in real trouble—and unfortunately they should be. Any thought or preparation about what the group might need to succeed in their international endeavor would surely have served as a harbinger.  It’s way too late, but a copy of my book would have certainly kept them from this fate.

Now, I alluded to other causes and they certainly are there. This group’s fervor and zeal was most certainly stoked by the hopelessness and ‘blame oriented’ media coverage beamed out by the likes of Anderson Cooper, and others:

Instead of the coverage recognizing the insignificance and futility of man’s abilities in the face of nature’s awesome—and at times awful—power, there was the wringing of hands over what was inferred as ‘avoidable’ delay and mismanagement of the Haitian rescue effort. There have been many stories from knowledgeable media sources about this ‘blame’ phenomenon and the resultant well doers—like our Southern Baptist group, spurred to ineffectual action, that actually cause more harm while desperately intent on trying to do good.  

Let’s remember, there is no evil at work here—nothing like the needless human tragedy that continues to exist in Darfur.  In Haiti, there are thousands of trained, professional disaster relief personnel struggling to do their very best in a place that is a ‘perfect storm’ of obstacles and challenges.

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Doing Business Internationally – BNN Interview August 2009

January 29, 2010

Trading Day : August 17, 2009 : Doing Business Internationally

Business News Network (Canadian CNN) interview with me about the book “Lies, Bribes & Peril: Lessons for the Real Challenges On International Business“:  http://watch.bnn.ca/trading-day/august-2009/trading-day-august-17-2009/#clip204256

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The Future is Now–And It’s Moved. Hang on for a heck of a ride.

January 4, 2010

Entering this New Year and this new decade there are two pieces of information. One is a “factoid” and the other a researched fact and when deliberated together, they yield an undeniable conclusion about the future of the global economy. 

First of all, consider the fact that Goldman Sachs recently issued predictions that included a forecast that’s a major league world changer; Within the next two decades (note: 17 years was the precise prediction) the major emerging economies of China, Russia, India, and Brazil (or “BRIC” countries in the wisdom of the acronym makers) will eclipse the current G-7 (U.S., Japan, UK, Germany, France, Italy, Spain) in terms of Gross Domestic Production or GDP. The estimates for 2009 by the International Monetary Fund had the U.S. creating about one quarter of the world’s GDP and the G-7 comprising almost 55% of it. The IMF figures assessed the BRIC countries as producing just over 15% of the world’s GDP. Wow, if Goldman Sacks is correct then what’s ahead is sure to be one hell-ova financial switcheroo’!

Next, take into consideration reports of the highest returning money funds over the last decade. While the S&P index was losing about 3.3% annually for the last decade, the most lucrative funds were all emerging market funds and each of the top five returned over eight times their investment.

The top fund, East Capital Ryssland, returned 1524%…..double WOW. To put this in tangible terms, if you had put $10,000 into a S&P index fund in early 2000 you would now have, oh around $7,000 left in that fund to date (inflationary adjustments would just add insult to injury!). Contrast that with an equal investment in the Ryssland Fund for that very same time period: you’d be looking at about $152,400 by now. Any third grader can do the math there.

Where would you have wanted your investment?

Well, in one way or another, you’re going to get an opportunity to face that kind of decision. Assessing these points together can lead to only one conclusion–this kind of humongous market disparity will continue (and YES, Webster says “humongous” is a definitely a word).  If the mercurial pace of growth in the BRIC occurs as forecast (the IMF, World Bank, etc. —all divine similar growth) then not only the best investment opportunities will be in found in these emerging markets, but these countries will be the proverbial ground zero of global commerce for at least the next two decades. Unimaginable opportunity and wealth will certainly be created.

The next Microsoft, Wal-Mart, or Toyota will almost certainly not be from a G-7 country.  And NOTE: If historians ever point to any single corporate event that could be considered to have presaged the decline of the importance of the U.S. in the global economy, it just may be GM losing the place as the #1 Global Auto Maker to Toyota in 2008 (a spot GM had held for over 70 years!).

The widely forecasted colossal GDP growth in emerging markets will result in U.S. companies focusing their attention to those countries in a way that is historically unprecedented. 

Lastly the top careers within most U.S. corporations will be built by specializing in and mastering all the emerging markets–regardless of industry.  Corporate hegemony will inevitably see U.S. companies acquired by foreign companies in far greater numbers than ever before.  No matter where you live in the U.S. and regardless of your endeavor, your life and its rapidly changing challenges will be significantly affected.

A new economic world-order is upon us. What should these revelations tell anyone who is in college now (or anyone under 40 for that matter) where their careers will most likely revolve and where their fortunes will most likely be found?

Two guesses (and the first one doesn’t count).

What skills will an individual need to compete in what is sure to be a wild, woolly, exciting and tumultuous commercial free-for-all?

The primary countries in play couldn’t be more different: history, religion, languages (India alone has 28 different dialects) and the geography literally stretches to the four corners of the earth! How in the heck will the entrepreneur, the thrill and fortune seekers of the next twenty years succeed in such diverse areas?

Traditional business acumen will be important of course, but there will be much, much more necessary to have in place and in play achieve success. Suffice it to say that new skills (perspectives really) that are not required now or even necessary in the current American marketplace will be critical.

A good start on what those perspectives are and how to develop an understanding of them can be found by reading my book, Lies, Bribes, and Peril: Lessons for the REAL Challenges of International Business. Read it and think about it and learn this: there are NEW skills and perspectives required in the future Marketplace of Now.   Add a dash of ambition, a peck of dedication and a bushel of perseverance and we are all off on an intercultural economic adventure of a lifetime for the next few decades.  Enjoy it people–it’s going to be  one heck of a (wild and exciting) ride!

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Brazilian Custody Fight = All Accommodation – UPDATE to 12/22/09 post

December 23, 2009

12/22 and 23/2009- CNN:  Brazil high court lifts stay, allowing boy to return to U.S. Brazil high court lifts stay, allowing boy to return to U.S

Thank goodness the latest turn of events (as of yesterday 12/22/09) has the Brazilian Chief Justice overturning the ruling last week by his counterpart and requiring the boy (Sean) be returned to his US father David Goldman. While anything can still happen, Face issues—brought by the combination of the absence of any legitimate legal basis and the very serious US political pressure—in this case have outweighed the obvious Accommodation. 

http://www.cnn.com/2009/WORLD/americas/12/22/brazil.custody.battle/index.html?eref=rss_topstories&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+rss%2Fcnn_topstories+%28RSS%3A+Top+Stories%29&utm_content=Google+Feedfetcher

Read my book Lies, Bribes & Peril to get a better understanding about the concept of “Face” and “Accommodation” and other Lessons for the REAL Challenges of International Business.

Happy Holidays!

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Improved US-Russia Cooperation—All Started with a Communication Faux Pas

December 15, 2009

Recent articles suggesting greater cooperation between the US and Russia on various issues like cyberspace security are a nice change in the frosty dialogue that has been status quo between the countries over the past decade or so Implausibly it was all started by a classic Communication blunder on the part of The State Department and Secretary Clinton. (See: http://www.breitbart.com/article.php?id=CNG.9ca28ad2530b0d0029e1304762eca18f.8c1&show_article=1).

Last March, in a Communication lesson straight from my book Lies, Bribes and Peril, Sec Clinton presented Russian Foreign Minister Lavrov with a box possessing a large red button and a Russian word thought to translate as “Restart.”  In a scene that couldn’t have been written better by one of the comedy news shows and is another real life parody off the web site www.engrish.com, Minister Lavrov pointed out the word in Russian actually said “Overcharged.” Sec Clinton attempted a weak joke about the faux pas, but then went to the real intent of the meeting. I think Minster Lavrov got a chuckle out of the mistake and no harm was done.  Why not? This situation should have been disastrous! As I point out quite simply in my book, most foreigners are usually pleased with the attempt, by anyone at any level, to communicate in their native tongue. The attempt is more important than being correct—even at a meeting this lofty.

The real point to drive home from this wacky situation (or “moment” as I say) “turn the ordinary into the bizarre”—and this kind of translation issue  is very, very common and occurs all the time. Here you have a situation where the entire State Department—I mean the whole damn thing is at Sec. Clinton’s disposal—got the word wrong!  Once more, the State Department’s sole purpose on this earth is: foreign relations –for gosh sakes!

Ok, the point here is not to embarrass, but more so to draw attention to the fact that, heck, if the State Department can get something like this wrong, a translated word involving a superpower, then the rest of us will make faux pas’ for sure.

I’ve had it happen many times all over the world–some hilarious, but some just as potentially devastating as this Restart situation.  It just flat-out happens all the time and ways how to best deal with and to realize when they  (there are a number of ways this ‘translation issue” can pop up) happen—are in my book.

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Iranian Nuclear Proliferation is World’s Biggest Issue By Far

December 15, 2009

This recent article http://www.msnbc.msn.com/id/34404196/ns/world_news/page/2/from/ET about the Iranian & North Korean threats was right on the money.  Both are substantive threats to the world but I thought I would use the lessons from Lies, Bribes & Peril to outline why the Iranian threat is so much more dangerous.

Never mind the Israeli problem with Iran having a nuclear capability, that is just the beginning of the problem. We all realize potential threat to world peace by the fact the Israelis may take unilateral action (most likely bombing of each facility) to prevent the Iranians from further enrichment strides. While this would be very perilous for the world, it most likely would not be catastrophic (The US would rein in the Israelis & the Russians would temper the Iranians).

No, the largest threat of an Iranian nuclear capability would be the certain proliferation of an Arab capability. I’m puzzled by that statement—it seems redundant? Well it’s not and there’s a significant Cultural issue most Westerners are not aware of.

Iranians are Persians (speaking primarily Farsi), not to be confused with Arabs (speaking, of course, Arabic). Both groups, Persians and Arabs see themselves as Culturally superior. The historical issues begin in the seventh century when the Arabs conquered the Persians, not only eventually wiping out the Persian alphabet, but their religion (Persians until that time practiced primarily Zoroastrianism) as well. The Persian defeat began the tidal wave of Islam  throughout the Asian sub-continent that would crest with the Turks expansion of the Ottoman Empire in the eleventh century.

The fourteen or so centuries since have not lessened the Cultural differences, prejudices, and wounds. Today, there exists an Arabic Logic that basically contends that any nuclear capability developed by Iran would need an Arabic equal. The problem with that Logic is that the Arabic countries of Saudi Arabia, Turkey, and Egypt all feel they should be the ones to have nuclear capability equal to Iran’s.  All have the ability to begin nuclear programs with the development of a weapon a quick and sure outcome.

If Iran is allowed to continue their nuclear weapons development the result will be a Middle East with no less than six countries with nuclear weapons—an increase of over fifty percent of the world’s current nuclear powers. 

Here the proliferation nightmare is obvious and, I think, the certain eventual use of nuclear weapons in the region.

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Shamelessly copying the tradition of ESPN’s PTI program, here’s a ‘Shout Out’ to Lara Logan

December 14, 2009

Colbert Report, December 10, 2009. Guest Lara Logan

Not only have I had a yearlong crush on Lara Logan, the beautiful, intelligent correspondent for CBS & 60 Minutes, but I’ve admired her desire, her apparent eager willingness, to go into the worst places on earth. The traveling I’ve done and the places, the perils, I’ve faced have nothing on Lara (the genesis of my fascination I think–this amazing broad seeks out areas and situations that, even in my bulletproof twenties, I’d have been reluctant to jump into).  I’m not sure there’s anything she could learn from my book Lies. Bribes, & Peril but I do think (ok, hope) she would wholeheartedly relate to its cultural lessons and perspectives.

Now, the suspicious naysayer in me (c’mon, admit it, our cushy existence leaves us way too much time to think like this occasionally) thought it was just about her career,–an easy way (as long as really dangerous places don’t bother you) to get ahead. How wrong that thought was.

After watching her appearance on the Colbert Report last week, my crush on Lara Logan evolved to include a very deep respect. I now understand why I was attracted her in the first place. It had nothing to do with the pretty face and sexy South African accent.

During Logan’s appearance on Colbert she very eloquently argued why Afghanistan is no Vietnam (those on the very political left will feel horribly betrayed by one they would normally embrace as their own) and explained her personal sense of motivations– heartfelt thoughts I think would be a benefit not only to most Americans but Westerners in general. Teased by Colbert about how her danger-seeking was self-indulgent, she spoke about how being in areas like Afghanistan, seeing and actually living the line that defines the essence of existence, made her so much more appreciative of the everyday things in her life, a good meal, relative security, a warm place to sleep–that not a day or event goes by that she is not thankful. 

Well, here’s the shout out Lara…extremely well said. If more people could only experience, witness, or at the very least gain an appreciation for, this struggle for existence; where the day is spent totally consumed with obtaining the barest necessities of life, and understand the happiness and pride that those that live life in this way derive from it, well, it just flat engenders a humility and gratefulness that is not only profoundly moving, but life altering–as it obviously has been for Lara. 

A notable outlook engendering the very best of the human spirit for the Holiday Season.

Happy Holidays 2009 Everyone!

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Bailout for Main Street Instead of Wall Street

December 14, 2009

Reacting to the ever-widening cultural chasm that the economic meltdown and its aftermath has caused between Main Street and Wall Street, the current Administration is finally trying to do something for Main Street. Taking Cultural, Face and Logic Lessons from my book, Lies, Bribes, & Peril and demonstrating how they are applicable right here in the US should help to show their universal application…and, I hope, offer an interesting perspective.

What caused the cultural chasm to widen and who is to blame?  Well none other than the US Government.  Now, every Administration going back to Clinton shares plenty of blame, but the current Administration is responsible for the circumstances, the jack hammer if you will,  severely aggravating this domestic intra-cultural chasm.

How did we get here?

The ever loosening policies of the USG across the economic spectrum led to the environment causing the meltdown. Wall Street took too many risks and created risky financial instruments that no one understood by grabbing onto the Logic made famous by Gordon Gekko, one of the top fifty movie villains of all time; “Greed is good”.  Not to be outdone, Main Street also internalized that Logic and overleveraged, overspent, and overindulged on a scale to match Wall Street. Never mind the ethical abyss that is so evident everywhere, that’s a generational issue and way above my pay grade, schools and parents have their hands full for the next few decades at the least! So both Main Street and Wall Street are culprits in the meltdown–maybe not equally but, hey, let’s not split hairs.

So, we have the meltdown and both Wall Street and Main Street should have been equally hammered—oops not even close to correct. Here Logic begins to frame the cause of the Cultural rift. Most of Wall Street gets anointed “too big to fail” leading to companies and jobs that, from a Darwinian perspective, should not have survived, but did. Moreover, the Administration not only gives huge sums of TARP money to these “should-have-failed” businesses, but grants many of them new status as full-fledged “banks,” hence allowing access to huge sums of Federal Reserve monies at practically zero interest.  OK now that’s like giving the fox not only the keys to the hen-house, but the deed as well!  If Bernanke and Geithner did not realize these new “banks” would channel all their money and efforts to lucrative trading activities (whose huge profits yield no worthwhile product or service benefitting the overall economic system), while putting zero effort into lending activities to Main Street (widely reported in the media and by the USG), then we are in really in big trouble. What did Main Street get? Cash for Clunkers?

This past fall the huge trading profits begin to roll in to Wall Street while Main Street continued to reel, realizing no tangible benefit from the Bailout. To say that Main Street has been having trouble following the Logic of the Bailout would be an understatement. Then Wall Street, oblivious to Main Street’s ongoing agony, starts crowing about their profits and making plans for huge bonuses. C’mon, the Administration can’t be surprised that a cultural divide has occurred, heck, the real story is that it hasn’t evolved to something much nastier (The UK has seen attacks on bankers such that many dress for work in jeans instead of suits!).

The incredible inequity of the Administration’s Logic underpinning the Bailout has unleashed a wave of outrage across Main Street that remains unsurpassed in my lifetime. The outrage actually derives from the “Face Issue”—intrinsically linked as it always is—of immeasurable proportions. The disrespect, the subliminal unimportance and inconsequential-ness, exhibited by both Wall Street’s actions and the Administration’s Logic, clearly attached to Main Street’s role in the US economic recovery has been the main reason for the huge cultural tear in our societal fabric.

 It’s about time the Administration did something. Let’s hope it works!