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This Week in Markets and Democracy: Embraer Corruption Case, UK Anti-Slavery Law Neglected, Rule of Law Index


by
Shannon K. O’Neil
October 28, 2016

Brazilian aircraft maker Embraer's CEO Frederico Curado (R) salutes workers next to an new Embraer E190-E2 during its unveil in Sao Jose dos Campos, Brazil, February 25, 2016. Brazilian planemaker Embraer SA is in early talks with Iran, with a focus on commercial aviation, following the end of international sanctions, Chief Executive Curado told journalists on Thursday (Reuters/Nacho Doce).
Brazilian aircraft maker Embraer’s CEO Frederico Curado (R) salutes workers next to an new Embraer E190-E2 during its unveil in Sao Jose dos Campos, Brazil, February 25, 2016. Brazilian planemaker Embraer SA is in early talks with Iran, with a focus on commercial aviation, following the end of international sanctions, Chief Executive Curado told journalists on Thursday (Reuters/Nacho Doce).

Brazil’s Plane Maker Fined in Bribery Case Spanning Five Continents
Brazilian aircraft manufacturer Embraer will pay $205 million to U.S. authorities, including $20 million for Brazil, for bribing officials in Saudi Arabia, Mozambique, and the Dominican Republic. U.S. prosecutors worked with their law enforcement counterparts around the world—including Brazil, Switzerland, Uruguay, France, and Spain—to bring the Foreign Corrupt Practices Act case (Embraer is a U.S.-listed company). The legal cooperation has gone both ways, as U.S.-gathered evidence has spurred additional investigations by Brazilian and Saudi authorities; thirteen employees were charged with bribery. Now India is looking into kickbacks from Embraer’s air force contracts. Expect more cross-border cooperation in global corruption cases.

British Firms Neglect Anti-Slavery Law
One year in, the UK Modern Slavery Act, which requires firms to publicly show what they are doing to eradicate slavery and human trafficking in their supply chains, has not done much. Of the UK’s one hundred largest companies, only twenty-seven reported on their antislavery efforts to date. Nearly half of those did not meet the law’s basic requirements, including informing their boards and putting the results on their websites. And abuses continue—reports this week show Syrian refugee children are making clothes for prominent UK brands, including Marks and Spencer and ASOS, in Turkish factories—working for less than $1.50 per hour up to twelve hours a day. To see real progress, governments must go further by compelling companies to actually address abuse, and back up laws with sanctions.

On Rule of Law Denmark Leads, Venezuela Lags
The World Justice Project released its sixth annual Rule of Law Index, ranking 113 countries on perceptions of the fairness and effectiveness of their legal systems. They surveyed experts and average citizens on eight measures, including absence of corruption, basic human rights protections, and constraints on government power. Nordic countries Denmark, Norway, and Finland topped the list; Venezuela came in last. Regionally, South Asia lags behind the rest, pulled down by Afghanistan, Bangladesh, and Pakistan—all among the bottom ten. Iran, Argentina, and Nigeria improved the most, in large part owing to efforts to increase accountability, while President Buhari’s tough anticorruption campaign also helped boost the latter.

 

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