Kreller Forensics
As Russia–Ukraine tensions mount, de-escalation of the conflict between the two former Soviet nations seems less likely by the day. Kremlin officials have denied any intention to invade, but commentators note that, at the same time, Russian troops are undertaking what looks like "final preparations" before an incursion. Although keeping the West guessing has been part of Moscow's game plan in the past, NATO defense officials say Russia has never before reached the current level of preparedness and then drawn back troops.
According to experts, as long as Russia's next big move remains uncertain, the same will hold true for the West's response. Still, the US and NATO allies have signaled willingness to implement a package of retributions, consisting primarily of economic and financial sanctions. The White House warned Moscow that it would face "massive consequences" for any further invasion of Ukraine, stressing that potential restrictions will be much more severe than those implemented in 2014 after Russia annexed Crimea.
What do the Golden State Warriors have in common with a French parliamentary motion, a new U.S. law, and a diplomatic boycott of the 2022 Winter Olympics in Beijing? How could these seemingly unrelated things affect the global supply chains? The thread tying all of these together is the growing controversy around China’s reported abuse of the Muslim Uyghur minority in the Xinjiang Uyghur Autonomous Region (Xinjiang).
Looking to curb the products of forced labor, the United States had already banned goods from Xinjiang’s largest cotton producer Xinjiang Production and Construction Corps (XPCC) and other suppliers from the region in 2020. Some critics said a year later that the banned cotton could still be found on U.S. shelves, because its origin was masked through shipping it to other countries for the actual manufacturing. This practice will be harder to maintain, as on Thursday, December 23, 2021, United States President Joe Biden signed into law H.R. 6256, which bans imports from the Xinjiang region altogether and imposes sanctions on foreign individuals responsible for forced labor in the region. The Act creates a rebuttable presumption that any good, even partially produced in the Xinjiang region in China is the result of forced labor and places the burden of proof to the opposite on any company willing to import goods originating in Xinjiang.
Last month, the Biden administration released its plan to crack down on corrupt practices on a global scale. In a 38-page document called “United States Strategy on Countering Corruption,” the White House outlined the steps it will take to increase financial transparency and combat unlawful acts such as money laundering. The announcement came amid a slew of developments that underscore the administration’s commitment to tackling abuse of power."
The paper contains some concrete tactics for fighting corruption, as well as more general guidelines, including greater coordination between government agencies, such as the Treasury, Commerce, and State Departments. It also lays out the administration’s willingness to provide assistance to foreign governments in their effort to strengthen monitoring and regulation. The document states: “For the U.S. Government to effectively counter contemporary corruption, we must recognize the transnational dimensions of the challenge, and respond in a manner that is both systemic and tailored to local conditions.”
The US Commerce Department's Bureau of Industry and Security (BIS) released a final rule on November 3, 2021, that added four foreign companies to the Entity List for engaging in activities contrary to the United States' national security or foreign policy interests. One of the four named was NSO Group—the Israeli military-grade spyware manufacturer responsible for creating software traced to the phones of politicians, journalists, and human rights activists around the world.
Another Israeli company, Candiru, is also on the trade blacklist, as the US targets the growing surveillance threat posed by hacking-for-hire companies.
What do Honeywell, Princeton University, and Keysight Technologies have in common?
In the past year, all three entities have been found in violation of the US Export Administration Regulations (EAR). They could make it into the next edition of Don’t Let This Happen to You by the Bureau of Industry and Security (BIS).
Few fraud cases have garnered as much attention in the last decade as the Theranos scandal. The spectacular rise and fall of the biotech startup and its founder Elizabeth Holmes have already inspired a documentary and a best-selling book, while a Hollywood film starring Jennifer Lawrence is in the making. And now, as Holmes’ criminal fraud trial is underway, it looks like the Theranos saga might be drawing to an end.
So, what made the case such a headline grabber and where did it all begin? And more importantly — what lessons can we learn from it to avoid such a massive waste of resources in the future?
With the UN’s Intergovernmental Panel on Climate Change (IPCC) sounding a “code red” alarm on the future of humanity, the topic of environmental, social and corporate governance (ESG) is more current than ever.
Various surveys have demonstrated that consumers want companies to incorporate ESG practices and studies link higher ESG scores with lower cost of capital. Investors are also hopping on the train, as shareholder resolutions pushing for increased ESG efforts reached a record high in 2021. What’s more, the COVID pandemic has accelerated ESG adoption as global conglomerates, such as Carrier, start linking their ESG goals to executive compensation packages. All in all, a commitment to ESG appears to be a no-brainer for any company looking to improve its image and sales.
Data science has reshaped many industries in the last two decades. But it has notably entered the government sector too, as regulators increasingly rely on analytical tools to uncover and prosecute violators.
One agency that seems to be at the forefront of data science adoption is the US Securities and Exchange Commission (SEC). The regulator has been using analytics to combat insider trading for some years now. A recent example is a charge against three former Netflix engineers, which the SEC detected using its data analysis tools that pick out “improbably successful trading over time.”
Breaking into new markets and winning major government contracts can be a daunting task for even the largest corporations, doubly so in emerging markets that are in political transition or have gone through a recent major upheaval.
In the face of such challenges, some companies may decide that engaging in illegal activities, often taking the form of bribes to foreign government officials, is an acceptable cost of doing business. When caught, hefty fines and settlements serve as both punishment for and deterrent against corruption practices.
But even before sanctions are levied, an investigation or ongoing lawsuit will raise red flags in any thorough due diligence check. In the most egregious cases, allegations of bribery can haunt a company's reputation for decades.
In 2020, a list of over 50,000 phone numbers was leaked to Amnesty International and Forbidden Stories, a nonprofit media organization based in Paris, France. The numbers are believed to belong to individuals identified as "people of interest" by clients of the Israeli cyber defense firm NSO Group. The leak set off a worldwide investigative journalism initiative – the Pegasus Project.
