Monday, July 30, 2012

Pay for the crime; not literally!

Blood money is a common practice that is endorsed by a number of Nations as an alternative to the conventional judicial system. It’s time other countries too consider this alternative for the victim’s family

The debate around blood money is very much relevant to the legal process, as it diminishes the utmost objective of law that aims to protect society from crimes. However, the practice of blood money, where out of court monetary settlements are made by the accused with the kith and kin of the victim, is omnipresent.

In July 2011, the death penalty against 17 Indian youths for killing a Pakistani in a fight over alcohol bootlegging in 2009 was waived by the Sharjah Appeals court after an Indian businessman agreed to pay Rs.40 million as blood money on their behalf. American Central Investigation Agency contractor Raymond Davis was also pardoned from the charge of killing two Pakistanis in January 2011 after the families of the victims agreed to a whopping blood money deal of around Rs.60 million.

Several countries believe that blood money is more apt rather than ‘an eye for an eye’ perspective. Countries like Saudi Arabia, Iran and Pakistan have enacted laws for Qisas and Diyat a.k.a blood money. In Japan, it is very common to give money (read: blood money) or mimaikin to the sufferer’s family or next to kin. The Korean legal system also practises blood money (hapuigeum), even for serious crimes like rape, under certain conditions. Somali people follow a customary law, Xeer (a polycentric legal system developed indigenously), which waives punishment to the offender on issue of blood money to the family of the victim for crimes like theft, rape and murder.


Posted by at
Labels: , , , , , , , , , ,

Saturday, July 28, 2012

India’s it Story so far was that of a few big players

India’s it Story so far was that of a few big players and a number of smaller ones. Now it’s time that some M&As Balance this Anomaly out

There is not much expectation of deals happening from the larger MNC players. The key rationale for these deals would be access to the Indian market. For instance, GroupOn acquired Sosasta.com for an undisclosed amount early this year. The leading deal in the first half of this year was Serco’s acquisition of BPO giant Intelenet Global Services for $634 million. The latter had access to clients in UK, US and India. Otherwise, in the software space, with global IT giants having set up shop in India, there is little they can gain in terms of price/portfolio/market advantage by acquiring smaller Indian software firms. Girish Vanvari, Executive Director, KPMG India, adds, “Many companies are sitting on idle cash. There are not too many targets to acquire, and at the same time the valuations are high.”

Globally, technology M&As are happening across the board as companies look a ways to ride the next wave in IT services, software and the internet. When it comes to outbound deals by Indian IT firms, a surprisingly large number of small deals have happened, and the focus in this case, apart from acquiring an attractive portfolio, has been easier entry to a newer geography. Wipro acquired the global oil and gas technology business of SAIC earlier this year for $150 million. Other deals in the first half of 2011 include GenPact’s acquisition of Headstrong Corporation for $550 million, Infosys’ acquisition of New Zealand-based Telecom Corporation’s Software Services Division for $3.9 million and Polaris Software Lab’s acquisition of IdenTrust Inc. for $20 million. In addition, there is plenty to gain for mid and small tier IT companies to merge since they do have complementary strengths to leverage. The first half of this year saw a major deal when iGate Corporation and Apex Partners completed their acquisition of 83% stake of Patni Computers for $1.21 billion. For iGate, this helps expand its reach beyond BFSI, which was Patni’s Achilles Heel to insurance, manufacturing, retail and distribution. HCL Technologies, which made the $658 million acquisition of Axon Group, has also looked bullish and is looking for similar deals that provide it growth opportunities. And other IT companies would find it inevitable too. M&As are going to be a key ingredient of Indian IT’s next leap forward, and there is no doubting that.


Posted by at
Labels: , , , , , , , , , , , , , ,

Friday, July 27, 2012

Is Profit as a “Direct Goal” Overrated?

The Word Profit has Provoked a Wide Range of Issues and Emotions among Respondents & Businesses around The World. It also Launched Debates, and many readers Argued for Measures of Success other than Profit, writes Prof. Jim Heskett, Baker Foundation Professor, Emeritus, at Harvard Business School.

Why do managers choose to pursue profit so directly? The word “profit” has always provoked a wide range of issues and emotions among respondents. It sets-off several debates. They ranged from definitions of “acceptable” profit, to profit’s effect on decision-making and even to the future and viability of capitalism.

One debate concerned the primacy of profit as a goal. Deaver Brown (author of The Entreprenuer’s Guide) led this argument by saying, “Profit is the only legitimate goal of a corporation...,” pointing out that it serves many important functions for us as employees, citizens, and others. David Zemanek (Sales leader at Thomson Reuters) added, “Isn’t that why they call them ‘for profit’ companies?” Ann Brown (former Chairman of Consumer Product Safety Commission) said, “There’s nothing wrong with profit as a goal. What’s important is how you achieve it.” (Tony Hayward’s replacement at BP, announced on July 26, may be a timely illustration of that point; BP is very profitable, but there is official evidence that it continues to compromise safety.)

Gerald Nanninga (VP – Retail Ventures Inc.), on the other hand, argued that profit is a default measure, commenting that, “It is easier to measure and reward a goal of ‘producing a profit of x’ than it is to set goals around creating value faster than costs (his preferred goal).” Deepak Alse (a technology expert) reminded us that “the world of business... is an unbounded system! The ‘Corporation’ is in effect an acceptance of the idea that profit-seeking should happen through indirect approaches.” Mark Nadler (Partner at Oliver Wyman-Delta) commented, “Operationally, profit as a final goal is probably impossible because of principal/agent problems and lack of information and knowledge. This makes intermediate targets that affect profit important.” Steve Brogan (Managing Partner of Jones Day), meanwhile, offered an interesting analogy: “Anyone who has ever gotten involved in serious marksmanship understands that there is a difference... between the intended target and the aiming point.” In a pessimistic and somewhat lamenting tone, Tom Dolembo (Consultant, Disaster Planning Associates) ventured another reason: “I suspect profit, in the pure capitalist sense, is obsolete... we’re just not capitalists anymore. Profit is just another archival number to be doubted.”

One argument for measures other than profit as “direct” goals is the complexity of the corporation and the difficulty of drawing a direct line between any action and profit. Consultant Raymond Suarez said, “In a world characterised by increasing complexity... reconsidering profit as being the sole and superior criterion for business success, is the only rational approach to take.” On the other hand, Dan Wallace (co-founder of Hungry Fish Media) argued, “The presumption that problems are complex is a self-fulfilling prophecy... the most profitable and successful companies I know are rigorous... about driving simplicity and... driving out complexity...”


Posted by at
Labels: , , , , , , , , , , , , , ,

Thursday, July 26, 2012

Who will be Deutsche Bank’s New CEO?

Deutsche Bank’s CEO Josef Ackerman is Opposed to The Idea of The Non-German Speaking Anshu Jain becoming his Successor. Reason – he finds Jain Unsuitable and has his Own Choice for Crown Prince. For The $55 billion giant, This may Prove The First Step to Losing The Future.

For a CEO who has spent the last ten years of his life shuttling between time zones, “comfort” is never an option. Josef Ackerman, the 63 year-old CEO of Deutsche Bank (DB), in a matter of a week, on average, touches down in at least seven countries. Talk of peregrination. And for critics who classify his living out of a suitcase act – in the comforts of Presidential suites & chartered planes – a leisure-filled populist gambit, here is some delicious inside bit of a half-day-long act which proves how he is not sleepwalking towards his goal of making the $55.17 billion-worth entity bigger. The second Thursday of February this year, saw him begin his day at 7:45 am with a business breakfast with some Chinese bankers in Hong Kong. Despite having flown-in an hour past midnight, the previous night from Malaysia, there showed no wrinkle of fatigue on Ackerman’s face. The meeting was followed by a brief interview with CNN, and a couple of one-on-ones with high net-worth customers of DB. Other pre-lunch sessions included a quick interaction with the bank’s Southeast Asian head Rob Rankin (and some managers at the company’s Hong Kong office) at the International Commercial Centre, and a moderately long one with Li Ka-shing, the $26 billion-worth Asian businessman. There was one final appointment planned for the day before he had to head straight to the airport (to fly back to Frankfurt). At precisely five past twelve, he walked out of a black Mercedes at the main entrance of Hotel Conrad. The Ballroom was where he was headed. He had to address a mix of entrepreneurs, businessmen, some bankers and a few chosen Germans. 30 minutes later, he was out. To be fair, Ackerman squeezes in more events during an “ordinary” working day than an “ordinary” CEO. That he is trying hard is obvious. But is he doing enough? That bright-socked, tin whistle-blowing pony-tailed lady shareholder who disrupted proceedings at the 2011 AGM (May 26, 2011, at Frankfurt) – while reacting to Ackerman’s failure to clarify doubts over his successor – certainly would disagree.

Ackerman has parented the German bank for 15 long years. The long hours and his tireless attitude justify his commitment all right. But in discipline, he falls short. Emotions have got to him. Nine years after occupying the top spot, he is still found biting his nails when questioned about his successor – an answer which he should have had ready as early as the fall of 2009 (when he was initially scheduled to retire). But his contract was renewed till the AGM of 2013 for lack of succession planning. Expectedly, with less than 24 months to go before he finally steps down (he has to; 65 years is the mandatory retirement age at DB and he is 63), the worried shareholders have gone aflutter over who will fill his shoes. There are more guesses than one and despite claims of having put in place a “clearly structured process” to zero-in on the next CEO, the obvious fact is – the company is scrambling, with no conclusion in sight.

Bad news is – the CEO and shareholders stand divided over who should be handed over control of DB. Of those most likely to get lucky – including names like Hugo Bänziger (Chief Risk Officer of DB), Hermann-Josef Lamberti (COO), Stefan Krause (CFO), Reto Francioni (Head of Deutsche Boerse), and Paul Achleitner (CFO of Allianz, Europe’s largest insurer) – insider Anshu Jain (head of the company’s Corporate and Investment Banking division) & outsider Axel Alfred Weber (fr. President of Germany’s central bank, the Bundesbank) are the clear favourites. Trouble is – despite English being adopted as the official language of communication during all intra-management and shareholder meetings (since DB bought the Bankers Trust in 1999 for $9 billion), Ackerman is strongly opposed to the fact that the non-German speaking Jain can adapt to and take forward the Franfurtian-ideology & legacy of the bank. He is an Indian-born, British citizen by choice candidate, and his London-mannerisms are presumably not something that will please the political circles in Germany. On the other hand, Weber, a German, given his long career spanning three decades in the country, understands politics & the state of the domestic macro-economy. Given this, Weber should be the winner hands down. Actually, no.

Sometimes, even clamouring shareholders display a higher sense of intelligence. This is one such instance. Ackerman, despite wanting an experienced insider as replacement, is not convinced about Jain. To understand why he is sitting on the wrong side of logic, a little math is in order.

The German, non-German divide. Many understand that since Ackerman joined Deutsche in 1996, he has encouraged a culture of globalisation. Result – as compared to 1995 (when Jain joined the bank to head the nascent markets business), the company has grown into a global institution. In FY2010, only 25% of the company’s revenue came from German customers. Considering that this value has decreased phenomenally from 70% in 1995, this is a trend which deserves a radical change in mindset. A question. If at present, a German-speaking “global” CEO can be put in charge of a business which makes only 25% of its topline from the German market, what is so sinful about allowing an English-speaking Brit to look after the same business, which makes 75% of its topline from non-German markets (largely consisting of US, Central & Eastern Europe, UK and Asia – markets which speak English-at-large)? Perhaps Ackerman wants to avoid hurting the “sentiments” of his “German-speaking” employees. But even on that front, there appears no concrete evidence. Of the 102,602 full-time employees (FY2010) at the company, 73.33% are present in markets outside Germany. Even a majority of its shareholders (count of 640,623; institutional and private entities) – 54% to be precise – are non-Germans. Customer-wise, employee-wise, shareholder–wise, all indicators cry out to justify why the word “global” appears precisely 194 times in the company’s 2010 Annual report. And Ackerman (who himself is a Swiss-born) is still unwilling to grant a non-German a shot at the crown of being the face of this (as the company claims) “meritocratic tradition and culture”?



Posted by at
Labels: , , , , , , , , , , , , , , , , ,

Tuesday, July 24, 2012

Clear The Waterways first, Can You?

A number of Industries are Blamed for their Contribution to Global Warming, but as Statistics Reveal, The Shipping Industry beats The Rest, and Requires Special Regulations

Unfortunately, ‘long term’ is a set of words that people use in a lot of instances, but rarely do they understand their relevance or importance. Unfortunately, as far as caring for environment is concerned, a lot has to do with ‘long term’ impact, which does explain why it remains relatively low on priority for global businesses, governments & people alike. Innumerable measures have been taken; but risks remain alarmingly high. A major factor that people are ignoring is shipping, the greatest source of environmental pollution. And the dangers are visible here and now.

Shipping is responsible for 3-5% of climate change emissions worldwide and contributes around 900 million tonnes of carbon annually. Total emissions are comparable to some major national economies. One big container ship can emit almost the same amount of cancer and asthma-causing chemicals as 50 million cars. The total emissions of 15 large cargo ships are equivalent to the emissions of all cars together in the world! International Maritime Organization (IMO) estimates that if things go as they are, shipping’s contribution to greenhouse emissions could reach 18% by 2050. From 1990 to 2007, emissions of basic pollutants (NOx, SO2,  PM &CO2) from shipping have nearly doubled to 1096 million tons.

About 60,000 humans die by particulate matter (PM) emissions from shipping; this costs over $330 billion annually to the world economy. In one example, it was estimated that shipping emissions cost the Danish government some £5 billion annually. Around 33% of total deaths are occurring in Europe and around 25% in each of East Asia and South Asia. For example, over 700 premature deaths take place in the Los Angeles port area annually. Low-grade ship bunker fuel has 2,000 times more sulphur content than diesel fuel used in US and European automobiles. There are over 90,000 cargo ships worldwide and they burn over 300 million tonnes of bunker fuel every year. Researches show that a passenger cruise can generate about 210,000 gallons of black water, 1,000,000 gallons of gray water, 37,000 gallons of oily bilge water and more than eight tonnes of solid waste in a week. As a consequence, over one in ten children suffer from asthma in major port cities. Unfortunately, the recent meeting of the IMO, where plans for implementing measures such as emissions trading schemes, remained deadlocked due to the very familiar debate between developed and developing countries, wherein the latter are reluctant to compromise on their growth.


Posted by at
Labels: , , , , , , , , , , , , ,

Friday, July 20, 2012

Current Surge in Global crude Oil Prices

 The Current Surge in Global crude Oil Prices puts forth two basic Questions – what are The Underlying causes and what’s The Worst we can expect. While The Most Pessimistic Projections may prove untrue, The World is Indeed staring in The Face of another crude shock that could derail Global Recovery 

In a communiqué to B&E, credit rating firm Crisil states, “In a year when the world expects its dependence on OPEC oil supply to increase, concerns over a wider disruption of supplies from OPEC countries will fuel further oil price increase.” The dependence on OPEC stems from the fact that global oil consumption will grow by an annual average of 1.5 million barrels per day through 2012, while the growth in supply from non-OPEC countries averages less than 0.1 million barrels per day each year. At this juncture, it is important to understand the fact that in the present scenario, OPEC does have substantial spare productive capacity (approximately 5.2 million barrels per day – Saudi Arabia’s contribution being pegged at 3.2 million barrels per day), which can be used to replace reduced output in Libya or any other country in the midst of the uprising. The only viable reason for the surge in crude oil price is purely based on perception that the political upheaval could eventually spread to major oil producing countries including Saudi Arabia (in fact, a Wiki Leaks covered in The Guardian recently claimed that even Saudi reserves are overestimated). Indeed, that is not entirely a remote possibility, considering that there is a simmering discontent with the monarchy there as well.

Rachel Ziemba, an analyst with Roubini Global Economics, gives another reason why the risks to price seem to be tilted to the upside in the near term. Rachel put the onus on the fact that oil companies are putting on hold their current operations and explorations in Libya, “fearing political risks, and sabotage of energy infrastructure.” Further escalation would probably lead to decades of underinvestment, which eventually will increase future supply risks. It is worth pondering over the fact that unlike in 2008, when the spike in oil prices was primarily because of booming demand and speculative frenzy, the $150+ oil price today stems from a potentially major supply shock. Analysts like Kent Moors of Money Morning feel that the Middle East crisis represents an unsettling reality and the recent oil price march is just the beginning.

But is the new magic figure going to be $220 per barrel? Although it is not clear as to how long the impasse will continue, global oil reserves and actions taken up by OPEC members have ensured that prices come down. The estimates of prices reaching $220 a barrel or more are purely based on a simplistic assumption that both Libya and Algeria would halt their production – which is an unlikely scenario so far. Yet, even this dose of optimism doesn’t discount the importance of bringing stability to the MENA region. Thanks to its underground resources, the region is just too critical to be left to fend for itself.



Posted by at
Labels: , , , , , , , ,
Subscribe to: Posts (Atom)