Different Cases of Environmental, Ethical &

Regulatory Constraints

An Assignment For

FIN – 546: International Financial Management

Presented To: Mr. Nayeem Abdullah

Prepared By: Syed Mahmudul Quader

ID: 1025075

Date of Submission: 25th Jan, 11

Independent University Bangladesh, Chittagong (IUB )

Environmental Constraints

Case 1: Environmental Constraint of Pascua Lama

The mining project is organized by the Barrick Gold corporation, which plans to invest US$1.5 billion over

20 years in it and projects an annual output of 750,000 ounces of gold and 30 million ounces of silver in

the first five years.

Barrick has been planning the project for several years. It performed its first studies of the glaciers in

1991, purchased the Chañarcillo estate at the location via an affiliate (Empresa Nevada) in 1997, and

published an environmental impact report in 2000, which was approved by COREMA, the regional

environment authority, in 2001.

Barrick's plans for the project have changed over time. In June 2005, Barrick intended to commence

building in January 2006, after responding to a questionnaire put to it by CONAMA, Chile's National

Environmental Commission. In November 2005, however, the company published a report stating that it

had scrapped its original plans, presented in December 2004, for "transplanting" three glaciers in order to

gain access to the deposits beneath them, moving them to another glacier with which they were to bond.[2] This change was publicly supported by Fernando González, the chairman of the council of Huasco

Valley farmers.

As of September 2008, the construction hasn't begun yet.

Controversies

Those protesting the project contend that it will involve the removal of 20 hectares of ice, a volume of

300,000 to 800,000 cubic metres, and that this will cause serious environmental harm. Nevertheless, the

EIA and IIA approvals in both Chile and Argentina specifically preclude this from happening, and Barrick

has confirmed it has no plans to move any ice or glaciers. To do so would be a violation of the permits

granted by the relevant authorities.[9] Opponents also contend that the project will affect the water supply

of the 70,000 farmers in the Huasco valley, releasing cyanide, sulfuric acid (vitriol) and mercury into the

valley's rivers,[4] that the company has bought the support of the farmers with "social assistance" and

promises of US$60 million for infrastructure work, and that the Mining Integration and Complementation

Treaty was adopted under pressure from Barrick. In November 2005, a petition of 18,000 signatures was

presented to the Chilean government by the Anti Pascua Lama Front, a coalition of environmentalist

groups.

The original scope of the ore body lay partially under two small glaciers which eventually feed into the

rivers of the Huasco Province. Environmental reviews took place over more than two years and

government authorities imposed 400 conditions on the company in order to mine. As a consequence,

more than one million ounces of gold at the site will not be mined. However controversy is still rampant as

to the real environmental impact, as mine exploration has already been linked to a 56 to 70 % depletion in

the three glaciers nearest to the mine site.

Extensive water management infrastructure is incorporated into the mine design to mitigate the effects of

surface and sub-surface water migration across the operation.

The historical record of these types of projects in Chile and the companies' real-world ability to meet legal

environmental constraints makes the processing of residual-waste a point of contention. The inability or

unwillingness of local authorities to stand up to spills and breaches of environmental requirements is well

known and another key point of disagreement with opponents to the project.

The recent approval (as of 2000-2009, during the Lagos and Bachelet presidencies ) of many

controversial projects such as large mines, dams for power generation, huge salmon farms, forestry, etc.

in spite of many legal and environmental concerns, again question the ability or willingness of the Chilean

Government to address local communities concerns' when clashing with large corporations and perceived

economic benefits 

These issues have recently even been criticized by the OECD as major impediments for Chile being able

to join the 'elite club' of developed countries

Barrick Gold contends that the project is environmentally friendly in terms of water treatment, and that the

project will create 5,500 direct jobs during the mine's construction phase.[2] It contends that underground

mining methods are not economically feasible for the mine, only open pit methods.[4] It states that its

US$1.5 billion investment "would be directly invested in the Huasco province in Chile and San Juan

province in Argentina", that it has "identified more than 600 potential suppliers from Chile’s Region III" in

pursuance of its policy of sourcing local goods and services, and that "sustainable development projects

have been and will continue to be a priority for funding to the tune of millions of dollars focused in the

areas of education, health, infrastructure and agricultural improvement".

Case 2: Environmental Constraint of Walmart:

When Wal-Mart plans new store locations, activists sometimes oppose the new store and attempt to block

its construction. Opponents to the new Wal-Mart cite concerns such as traffic congestion, environment

problems, public safety, absentee landlordism, bad public relations, low wages and benefits,

and predatory pricing. Opposition sometimes includes protest marches by competitors, informed citizens,

activists, labor unions, and religious groups. In some instances, activists demonstrated opposition by

causing property damage to store buildings or by creating bomb scares.[11][12] Some city councils have

denied permits to developers if they plan to include a Wal-Mart in their project. Those who defend Wal-

Mart cite consumer choice and supposed overall benefits to the economy, and object to bringing the issue

into the political arena.

A Wal-Mart Superstore opened in 2004 in Mexico, 1.9 miles away from the

historic Teotihuacan archaeological site and Pyramid of the Moon. Although Wal-Mart's proposal received

protest and media attention, the location was supported by Mexico's National Anthropology Institute,

the United Nations, and the Paris-based International Council on Monuments and Sites. Local merchants,

helped by environmental groups and anti-globalization groups opposed the construction, and

poet Homero Aridjisjoined the protest characterizing the opening as "supremely symbolic" and "...like

planting the staff of globalization in the heart ofancient Mexico."

Archaeologists oversaw construction and discovered a small clay and stone altar along with some other

artifacts where the store's parking lot is now located.

In 1998, Wal-Mart proposed construction of a store off Charlotte Pike near Nashville, Tennessee. The

building site was home to both Native American burial grounds and a Civil War battle site. Protests were

mounted by Native Americans and Civil War interest groups, but the Wal-Mart store was eventually

constructed after moving graves and some modifications of the site so as not to interfere with the

battlefield. Civil War relics were also discovered at the site. The project developers donated land to permit

access to the Civil War historic site.[19] The Indian burials were removed and re-buried.

In 2005, developers tore down the long-closed Dixmont State Hospital in Kilbuck

Township, Pennsylvania near Pittsburgh, with plans to build a shopping complex anchored by a Wal-Mart

on the site. While there were initially no general objections to Wal-Mart itself, many residents didn't want

to see Dixmont torn down, despite the fact that the Dixmont complex—having been abandoned in 1984—

was beyond maintainable condition and teenagers were dangerously trespassing onto the property on a

regular basis.[20] However, while the land was being excavated after the complex was torn down in order

to create a plateau for the Wal-Mart to sit on, a landslide covered Pennsylvania Route 65 and

the railroad tracks in between PA 65 and the Ohio River, shutting down both routes for weeks. While Wal-

Mart did "stabilize" the landslide, many residents argued that Wal-Mart merely stabilized the hillside so

that it could continue with work to build a Wal-Mart. Ultimately, in 2007 Wal-Mart decided against

developing the site, allowing the land to return to nature. PA 65 remains restricted to one lane northbound

near the site for safety concerns, though the entire roadway has since been cleared of debris. Despite

this, Wal-Mart is the largest retail chain in the Pittsburgh metropolitan area, and is the second-

largest grocery store to locally-based Giant Eagle.

Case 3: Citgo and subsidiary

Citgo Petroleum Corp. and its refining subsidiary were convicted Wednesday of breaking federal

environmental laws by operating two open-air storage tanks without proper emission controls at a refinery

in Corpus Christi.

But Citgo was acquitted by a federal jury on charges that it knowingly allowed wastewater in the tanks to

expose the atmosphere to illegal levels of benzene, which research has linked to cancer.

Citgo, the Houston-based arm of Venezuela's state-owned oil company, will face fines up to $1 million or

twice the economic gain of the violations, whichever is greater, for the felony violations of the Clean Air

Act, the Department of Justice said. It also could be put on probation for five years.

U.S. District Court Judge John Rainey set sentencing for Oct. 18.

The company continued to maintain its innocence, saying the huge tanks, known as 116 and 117, were

not required to be equipped with roofs or other emission controls.

Citgo attorney Dick DeGuerin said he was disappointed by the verdict, and that the company will appeal.

In the case, Citgo argued that the tanks were not used as oil-water separators, which demand pollution

controls under Environmental Protection Agency regulations, but as "equalization" tanks.

"It is unfortunate that the Justice Department has chosen to take the unprecedented step of pursuing

criminal charges on matters that are purely regulatory in nature and that are inconsistent with applicable

EPA regulations," Citgo said in a statement late Wednesday.

The verdict comes after a monthlong trial in a federal courtroom in Corpus Christi and is the first verdict

arising from a 10-count indictment against Citgo last August. The other counts will be taken up in a

separate trial scheduled to begin July 9.

A Clean Air Act first

Department of Justice and EPA lawyers said the Citgo case marks the first time that criminal violations of

the Clean Air Act have gone to trial rather than being settled out of court.

They said guilty verdicts in two of the four counts addressed by the trial should send a message to other

U.S. refiners about the goverment's commitment to enforcing air-quality laws.

"Today's convictions are a strong signal to the industry that emissions controls are not optional and those

who knowingly disregard the regulations will face the consequences," said Ronald Tenpas, acting

assistant attorney general for the Justice Department's environment and natural resources division.

But Anthony Sabino, professor of law and business at St. John's University in New York, said the biggest

message the case may send is that refiners should pause before they take the next case of this kind to

court instead of settling. Given the growing public awareness of environmental concerns, the government

is likely to keep stepping up enforcement of the Clean Air Act, rather than retreating from it, he said.

Two leading industry trade groups, the National Petrochemical and Refiners Association and the

American Petroleum Institute, declined to comment on the potential impact of the case, referring

questions to Citgo.

But community and environmental activists who have followed the case closely celebrated the verdict as

a first step in getting the companies to acknowledge responsibility for health problems they believe are

tied to refineries.

"This is a tremendous victory for so many people that have been unjustly treated by Citgo and other oil

refineries for several decades," said Suzie Canales, director of the Citizens for Environmental Justice in

Corpus Christi. "The tide is finally starting to turn."

Citgo contends no evidence links the refinery to health problems in the nearby neighborhoods.

Misdemeanor charges

In the trial scheduled for July, Citgo will face five misdemeanor charges, including allegations against the

plant's environmental manager and alleged violations of federal migratory bird laws.

Judge Rainey is still considering a separate felony charge alleging Citgo made false statements relating

to its compliance with environmental laws.

Ethical Constraint

Case 1: Canon violating journalistic Ethics

Earlier this year the National Football League (NFL) announced new

"security" rules requiring that all professional photographers wear NFL-issued

red vests or lose their stadium access. What the photographers discovered

was that these NFL-issued vests also carried the Canon logo, and that has

led to outrage and protests across the professional community. Turns out

that outrage was justified.

CNET senior staff writer Stephen Shankland covered this controversy in

a NewsBlog posting, and the National Press Photographers

Association makes it quite clear what Stephen reported: that Canon put

professional photographers into an ethical pickle, and they are furious. So

furious that the Chicago Tribune, for example, has decided that if the NFL

won't change the vests or their rules, they will "cover the NFL without

visuals."

In theory, any random Joe should be free to endorse any random product

and, if they are lucky, be paid a fair price to do so. But when a person of a

specific profession makes a specific recommendation related to that

profession, it should be completely clear what compensation, if any, is being

paid. And such compensation should be fairly negotiated between the two

parties. Would you want to know if your doctor was being paid to push a drug

on you (or that the drug's regulator has a financial interest in the companies

they regulate)? Would you want to know if your financial planner was paid by

companies whose stocks he's recommending (or that they don't even know

what they are selling)?

Sadly, fewer people and organizations are upholding high ethical standards

as companies find new ways to push people from neutral to biased territory.

That in turn makes many of us suspicious when we read a glowing review in

a magazine or on the Web. And yet, some crave-worthy products are worth

buying. And some products are of such quality that they are worth

recommending. I have bought and used Canon cameras and lenses for

nearly 30 years, and they are fantastic products in every way: mechanically,

electronically, and optically. As products go, I recommend Canon. And no, I

have never been paid a penny by Canon to endorse its gear. So what's the

beef?

As an industry leader, Canon should know that the first job of the

photojournalist is to faithfully and accurately report the news through

images, not to become an image unto themselves. Forcing photojournalists

to become props at the events they cover violates the first principle of the

job. And now Canon is using just such images to promote its gear:

Case 2: CIA Doctors Violating Medical Ethics

CIA doctors who oversaw enhanced interrogation techniques violated medical ethics, researchers say.

A report out this month in the Journal of the American Medical Association claims that physicians in the

CIA Office of Medical Services (OMS) violated medical ethical standards by approving and overseeing

enhanced interrogation techniques, including waterboarding.

"According to OMS guidelines, physicians and other health care professionals performed on-site medical

evaluations before and during interrogation, and waterboarding required the presence of a physician," say

researchers Leonard S. Rubenstein, of Johns Hopkins, and retired Brigadier General Dr. Stephen

Xenakis, of the Uniformed Services University of Health Sciences.

"Exercising these functions violated the ethical standard that physicians may never use their medical

skills to facilitate torture or be present when torture is taking place."

Rubenstein and Xenakis based their commentary on documents released by the Obama administration in

2009.

OMS physicians who advised the agency and the Justice Department approved most techniques for use

as long as certain limitations were observed, such as decibel levels for noise exposure, weight loss or

malnutrition from starvation techniques, and time limits for cold exposure and confinement.

These limits, the authors claim, allowed OMS doctors to certify that no one practice would lead to "severe

mental of physical pain or suffering," but say the doctors failed to take into account the effect these

methods in aggregate could have on detainees.

Rubenstein and Xenakis also claim the physicians did not follow standard protocols in making their

recommendations.

"The OMS failed to take account of pertinent medical and nonmedical literature about the severe adverse

effects of enhanced methods," including waterboarding.

They claim such oversights were made deliberately, in order to encourage the use of enhanced

interrogation.

"[I]t is possible that the DOJ might have been more constrained in approving techniques that amounted to

torture," had doctors at the highest levels been responsible in their research and recommendations,

Rubenstein and Xenakis write.

According to a U.S. intelligence official, who spoke on condition of anonymity given the multiple

investigations currently underway into past detention practices, says the government stands by decisions

made during the Bush Administration to employ enhanced methods, and supports the role CIA physicians

played.

"The authors of the commentary in the Journal of the American Medical Association appear to believe the

terrorist detention program should never have gone forward. They're entitled to their opinion, but that's not

what the U.S. Government decided in the wake of 9/11," the official told Fox.

"The White House approved the concept, and the Justice Department endorsed the methods. If someone

wants to re-argue history, they can, but they don't have the right to distort the role played by the CIA's

medical personnel. Their job was to give key terrorists-who were being held legally-the best possible

medical care and to ensure that interrogation techniques, which the Justice Department had ruled to be

lawful, were applied safely. For that they deserve thanks, not criticism."

The Obama Administration has held that CIA officials involved in the enhanced interrogation program

would not face repercussions.

"It would be unfair to prosecute dedicated men and women working to protect America for conduct that

was sanctioned in advance by the Justice Department," Attorney General Eric Holder said in an April

2009 statement.

Rubenstein and Xenakis call for further investigation into the CIA physicians' role, but the administration is

unlikely to retroactively punish anyone who lawfully carried out their directives under the program, and it

doesn't appear the doctors will face repercussions from the medical community.

The CIA's treatment of detainees came under scrutiny in 2005 during the Bush Administration, when

reports surfaced of the use of waterboarding and other enhanced methods came to light.

President Obama has publicly decried the method as torture and later banned its use in interrogations.

"I believe that waterboarding was torture. And I think that the-whatever legal rationales were used, it was

a mistake," Obama said at a primetime news conference in April 2009.

Interrogation methods have since been pared back to those that are specifically outlined in the Army Field

Manual, but the U.S. has yet to officially declare any of the enhanced methods torture.

Still, the intelligence official said, despite the fact that the enhanced interrogation program ended early in

Obama's term, it will still garner criticism.

Regulatory Constraint

Case 1: VOIP business of Grameenphone

Criticism and Penalty

Although Grameenphone is the leading Mobile Company in Bangladesh, it has sometimes been

criticized for establishing a monopoly market in the country, especially before Banglalink came into

operation. It also charges more for its service compared to other operators. But it claims that it can

charge higher as it gives the best value for money because only GP has the widest and uninterrupted

network coverage. It also is an advocate of a mobile carrier oligopoly/monopoly citing apparent

"consumer benefits" from a few companies controlling the entire market.Illegal VoIP operations

October, 2007 fines : In October, 2007 the Government of Bangladesh fined Grameenphone USD

24.5 million for illegally depriving the government of revenue by ignoring laws requiring private operators

to use the state-owned BTTB land phone network for international calls by its subscribers, when they

used Voice Over Internet Protocal (VoIP) to receive such calls.

December, 2007 office raids: It soon emerged that GP was making a bigger business out of VoIP

operations than initially stated. They were providing a host of ISPs and operators services that enabled

VoIP. In December 2007, Grameenphone's corporate office was raided by government agencies and

documents were confiscated. This was in connection to Grameenphone providing VoIP equipment and

services to an ISP, AccessTel. This fact was not disclosed by Grameenphone when it was fined just two

months ago. Grameenphone representatives commented “some additional irregularities were found”

regarding Grameenphone providing special services to illegal VoIP operators.

January, 2008 case filed : In January 2008, Bangladesh Telecommunication Regulatory Commission

has filed a case against GP's two former CEO's and other officials for involvement in illegal VoIP

business.

Case 2: RanksTel’s VOIP

The Bangladesh Telecommunication Regulatory Commission (BTRC) on Friday shut down all operations

of the country’s largest alternative fixed line telco RanksTel for alleged involvement in illegal VoIP

telephony provision, local paper The Daily Star reports, although the company denies the charges.

Following raids by the BTRC and the Rapid Action Battalion on RanksTel’s premises, the regulator’s

chairman Zia Ahmed told the Star: ‘We have shut down all activities of RanksTel since early Friday after

we found huge quantity of VoIP equipment.’ Officials also claimed that they found ‘huge’ anomalies in

RanksTel's call records. RanksTel director Aman Ullah Chowdhury in a written statement denied the

allegation of involvement in illegal international call termination through VoIP technology. ‘We do not yet

know why the BTRC switched off our network ... If it found illegal business being conducted, it could have

fined the company as it had done in cases of some mobile phone and PSTN companies,’ he said. He also

urged the government to allow the resumption of services for RanksTel’s 288,000 subscribers. ‘The

BTRC investigation team and law enforcers did not find any VoIP equipment, yet they sealed our switch

room, which is only preventing the development of the local telecom industry,’ the statement continued. 

The Financial Express Bangladesh reported on Sunday that the country’s High Court has issued a ruling

asking the government to explain its actions in shutting down RanksTel’s operations.

In two other raids on 14 March and 16 March, the BTRC seized VoIP equipment from Dhaka Phone and

WorldTel. In August 2009 the regulator claimed it was finally issuing long-overdue IP telephony operating

licences to legitimise the country’s ‘grey’ VoIP sector, but no further reports have followed regarding

actual concession awards or service launches. 

Case 3: Google

Danger of influencing the society through page rank manipulation: A group of Austrian

researchers claim that they observe a tendency to misuse the Google engine as a "reality interface". Not

just ordinary users, but even journalists tend to rely on the first pages of Google search, assuming that

everything not listed there is either not important or merely does not exist. The referenced source says

that "Google has become the main interface for our whole reality. To be precise: With the Google

interface the user gets the impression that the search results imply a kind of totality. In fact, one only sees

a small part of what one could see if one also integrates other research tools". The mentioned group

warns that page rank can be influenced by individual views of the Google staff: "it became clear that not

only mathematical algorithms and software, but also human brains in the Google headquarter will edit

information processed by Google and decide what will go online and in which form."

The New York Times reported on an online business whose owner had discovered poor customer service

would generate higher Page Rank due to online criticism at consumer watchdog sites. He subsequently

sought a bad reputation as his search engine optimization strategy.

Page ranking related lawsuits: In 2006, the parental advice Internet site Kinderstart.com sued Google

for setting its Page rank to zero, claiming that the reset caused the site to lose 70 percent of its audience.[4] In this lawsuit, it was stated, that "Google does not generally inform Web sites that they have been

penalized nor does it explain in detail why the Web site was penalized". Kinderstart claimed that they

were penalized for being a Google competitor (setting up the search engine). Kinderstart has formally lost

the process (while their rank seems no longer zero). Google claims that allowing one to win such process

would set a dangerous precedent, encouraging other penalized sites to protest as well.

Google bombing: The page ranking algorithm of Google can and has been manipulated for political and

humorous reasons. To illustrate the view that Google's search engine could be subjected to manipulation,

Google Watch implemented a Google bomb by linking the phrase "out-of-touch executives" to Google's

own page on its corporate management. The attempt was mistakenly attributed to disgruntled Google

employees by The New York Times, which later printed a correction.

Tax avoidance: Google has been criticized for using legal, but aggressive tax avoidance strategies to

minimize its corporate tax bill. Google cut its taxes by $3.1 billion in the period of 2007 to 2009 using a

technique that moves most of its foreign profits through Ireland and the Netherlands to Bermuda.

Google’s income shifting—involving strategies known to lawyers as the “Double Irish” and the “Dutch

Sandwich” -- helped reduce its overseas tax rate to 2.4 percent, the lowest of the top five U.S. technology

companies by market capitalization, according to regulatory filings in six countries.