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commentary

Behind the veil – companies vs the State

Microsoft has been battling the USA over access to data for some time now. And the other big internet companies are backing it too. The USA wants to be able to access data held by Microsoft overseas. Microsoft claims that it does not have to hand it over on request – and that consumer and customer privacy concerns mean it would be a bad idea anyway.

The case has been going though the courts for some time. But it raises some profound questions about the power of companies and the power of the state in the internet age. At the moment most of the law applicable to companies is national law and most national law applies to ‘persons’ subject to the relevant nation state (although sometimes the jurisdiction of the courts is extended to crimes committed overseas). And companies are considered persons before the law.

Now while multinational companies certainly present as a monolithic presence, in fact in order to operate in a different country, it is necessary to set up a separate company registered in that country and subject to its laws. For commercial purposes this doesn’t matter much, since the country where the group is headquartered will own the overseas company and is therefore able to control it.

Companies like to play this both ways. As far as profits are concerned, they may be extracted by HQ as desired, but where a crime or environmental or human rights harm has been perpetrated, the overseas company is assigned responsibility. In this they are helped by the doctrine of the ‘corporate veil’ by which shareholders (including organisational shareholder) are not liable for the acts of their company.

So while we may now be seeing corporate acts through a glass darkly, it is possible that the Microsoft case may lift the obscuring veil. Of course, that would still leave the arguments about privacy. But those should be tackled on the basis of privacy issues, not of general corporate responsibility.

 

 

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commentary

Where does everything come from?

And for that matter, where does everything go?

We live in a world with global supply chains and apparently bottomless consumption. The demands of the market are that companies get stuff and sell it – but they do not often remember where it came from and perhaps don’t much care where it goes. So to deliver accountability – and even transparency about what has happened in this global world – traceability is essential. This is a complex and difficult thing to do and to ask of companies. While some companies, such as airline manufacturers, do traceability naturally, others, such as the automobile industry, may have it thrust upon them.

Here is a short concept note on the need for a general traceability standard.

So that we can answer the question, where does everything come from?

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announcements

Quantitative Pleasing – how many is too much

The ICAEW have published my report on the perils of quantification and what can be done about it. Using the examples social and natural capital, it sets out guidelines for when and how quantification should be attempted – and what to do when it should not be done.

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announcements

What hope for corporate accountability

Here are some musings on the – rather sad – state of corporate accountability in 2015. It is a report of a conversation I had with the folk at the SustainAbility consultancy.

Categories
commentary

The advantages of second sight

We all love a good Post Office,  I’m sure – but what happens when the Post Office goes bad?

A few days ago we learned that the continuing rumbles about the training for and the functioning of the Post Office’s key operational Horizon computer system, introduced in 2000, did have some foundation. Or at least I think so, but the Post Office will not release the report that it commissioned Second Sight to produce on the issue. That report apparently found failings with the Post Office and its handling of the affair. However while their report remains confidential, they are said to have issued a press release rebutting its findings. But at the time of writing at least one Post Office computer system did indeed seem to have failed: their website for press releases.

The issue is not mentioned on their social responsibility website. And there seems to be no mention of a whistleblower function there either. This all leaves those aggrieved by the affair in the cold. And overall it represents very poor social responsibility.

The Post Office seems to be painting itself into an ever-tighter corner from which there will be no escape without a little humility and a good dose of transparency. Failing that, having had a first look into the future, I predict there will be legal battles over cover-ups in years to come.

 

Categories
commentary

What are corporate citizens to do when there's an election?

The answer isn’t to vote – unless of course you are based in the City of London when the number of voters you can appoint for local elections is proportional to the number of your staff.

But there’s a general election coming up, so what can a corporate citizen do?

Businesses have a great interest in the way the country is run, so they care about the results. Some – like media companies – can influence the electorate directly. (This is lobbying more or less hiding in the plain light of day.) But others have two main routes to influence the democratic process: consultations and lobbying. Consultations require arguments to persuade civil servants. While a lot of this goes on behind the scenes, at least there is also an official audit trail of the process.

Lobbying is a lot murkier and includes politicians as targets. This will also be the first UK general election since the Transparency of Lobbying Act became law, almost exactly a year ago. One part of the Act sets up a register of lobbyists. The mechanics of this is very weak – and still out to consultation. The other part limits campaigning within 7 1/2 months of an election, if it could conceivably be seen as influencing an election result. That might seem sensible – but the sting in the tail is that campaigning by all organisations, including charities and unions as well as for-profit companies, is affected.

It will be interesting to see what difference the new Act makes to this year’s election.

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announcements

The social case for value

How does an organisation find out whether it is doing its part to justify its licence to operate? See my guest blog here.

 

Categories
commentary

Tesco: capitalism at the end of the road?

Tesco seems to have been cannibalizing not only its own supply chain but also itself – or at least its own accounting practices. Its accounting was designed to push up profits. And that relentless push for profits has also lead to ever-increasing pressure on supermarkets’ supply chains. As a result suppliers pay in every sense to have their products sold in big stores. The awful results of this for small suppliers in the developing world are well-known. Now we are aware of the awful results for Tesco itself.

Of course it is unlikely that Tesco is alone in this. All the big supermarkets tend to treat their suppliers badly. So should we assume that all of them are also indulging in creative accounting? It would not be very surprising if they were.

Tesco’s aggressive accounting culture expresses the hungry logic of unfettered capitalism. And how much future can there be for a capitalism that starts trying to consume itself?

Well, capitalism may not be quite at the end of the road quite yet, but it is certainly at the end of its tether. Tesco’s behaviour is an example of the sort of things companies find themselves doing when capitalism is pushed too far.

Categories
commentary

Is there no accounting for human rights?

There should be! See my blog for the ACCA.

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commentary

Accountability for Syria

Obama should just give up and admit he got it wrong. A little bit of humility is worth it to avoid a catastrophe in Syria.

It is unclear whether Obama will even ask for Congressional approval. By law he does not have to, despite many requests to do so. But international law does require UN approval for military action against Syria. And whatever Syria has done, the argument that it should be punished for chemical weapons attacks would guarantee that any resulting action was illegal.

Beyond national accountability, the arguments against military action include that it will:

  • cause more loss of innocent life as a direct consequence
  • not work as a deterrence against using such weapons – or even to stop the conflict
  • cause even greater instability and loss of life in the region more widely.

All of which seemed lost on David Cameron who is looking more and more out of his depth. But, to his credit, Cameron has decided to give up on military action against Syria. He agreed to submit to the will of parliament – and demonstrated his accountability. That is far more something to make one feel good, than dropping bombs – even though it seems only bombs could make Lord Ashdown feel good.