Dear #Gaians,
Most of you did great job in this workout, which shows that you took advantage of this unit.
Here is the feedback of the cases that we have provided:
COMPASS
Background
The problem of corruption in sports transcends FIFA and is too serious to ignore.
In 2015, U.S. federal prosecutors disclosed cases of corruption by officials and associates connected with FIFA, the governing body of associations of football, futsal and beach soccer. Since summer of 2015, US Department of Justice indicted several top executives.
These events had claimed the careers of two of the most powerful men in football, FIFA President Sepp Blatter and UEFA President Michel Platini, after they were banned for eight years from all football-related activities by FIFA’s ethics committee. A criminal investigation on both individuals is still pending in Switzerland. FIFA’s president Sepp Blatter has always denied any wrongdoing – but in September, he was made the subject of a Swiss criminal investigation, launched alongside the US inquiry.
The scandal blow up in May of 2015, with the arrest of seven FIFA executives – conducted at the US authorities at a luxury hotel in Zurich. In the same month, the US indicted 14 current and former FIFA officials and associates under the charges of “rampant, systemic, and deep-rooted” corruption following a major inquiry by the Federal Bureau of Investigation (FBI). At the same hotel in Zurich, two FIFA vice-presidents were arrested and more officials were charged in December 16. Former Brazil football federation chief Ricardo Teixeira was among those accused of being “involved in criminal schemes involving well over $200m in bribes and kickbacks”.
Analysis
In order to understand better the feedback, we have to consider that in this case the academic team matches the duties of the “directors” with the duties or the “representatives of federations or confederations” and the “Shareholders” with “sponsors”.
As an artificial person, a “Corporation” or “Federation” conduces their governance through actual people. In this context, the president is the person who is elected by the board of directors. In this case; “FIFA executive committee” has the ultimate responsibility for the corporation or “Federation” activities, and signs off on contracts and other legally binding action on behalf of the entity.
The case involves a contract Mr. Blatter is said to have signed assigning valuable World Cup television rights to the control of an indicted former FIFA official, Jack Warner, according to a news release from the office of the Swiss attorney general. The new charges accuse Mr. Blatter of violating his fiduciary duty to FIFA in his role as president by signing the contract in 2005, which is called “unfavorable to FIFA.” If all is proved in court, Mr. Blatter would have broken all his fiduciary duties as president and acted against FIFA behalf; making this the biggest case of corruption in sports.
As we reviewed on #Compass, directors owe special duties to the corporation and particularly to its shareholders.
In this case, officials and associates connected with FIFA failed in the safeguard of the federation and contributed to one of the biggest corruption scandal by breaking the following main duties:
Duty of loyalty: They apparently didn´t act in the best interest of the Federation and its sponsors. In this case, they made a self-interested illegal transactions.
Duty of Care: They apparently didn´t do their work responsibly, thoroughly, and in good faith. They just decided to go ahead and only take care of their own interest.
Duty of Disclosure: This is a typical case of lack of transparency. They apparently hid crucial information, because they believed that disclosure of its troubles would have a negative effect on its ability to do business.
Note: I use the words apparently or presumably, because under “The presumption of innocence” principle, everybody is innocent until proven guilty, and this case is still open.
This scandal has not been easy for the big multinational corporations that sponsor football’s world governing body FIFA. When Adidas, Gazprom, Hyundai-Kia, McDonald’s, Budweiser, Coca-Cola and Visa signed their deals, they would have envisioned seeing their brands beamed into millions of households around the world.
The idea of sponsorship is to transfer the goodwill that supporters feel for the sport, to the benefit of a brand’s equity. As DEC_15_JORGE SANCHEZ SEP_15_DANIEL ARCAS implied this scandal may affect the reputation and image of these sponsors, that’s why is important to emphasize that they are supporting football for the benefit of the game itself, and the pleasure and challenge of winning and playing football, rather than FIFA as an organization. “They have to differentiate themselves from FIFA’s management.”
At this point, not only the sponsors have been affected, but the same FIFA, because this situation does not help to finalize any new agreements with new sponsors, and some of the previous sponsors threatened to stop sponsoring the championships if FIFA does not act quickly to restore the reputation of the organization.
As JUL_15_Edilberto Fernández Bilbao SEP_15_Elena Fernández Amador and most of you said before, the main internal consequences of this scandal are:
a) The arrest of seven top FIFA officials, including vice presidents Jeffrey Webb and Eugenio Figueredo, as part of a United States investigation into alleged widespread corruption throughout the organization.
b) The eight-year bans from all football-related activities for Blatter and Platini.
c) Jerome Valcke, ex Secretary General, was banned from all football-related activity for 12 years.
The globalization has played an important role in sports, and not just for well-paid players. It has produced higher standards, better stadiums and great spectacles. But to cope with the concomitant risks, sports need to be run as transparent, rigorous businesses.
CORTEX
Apple – Samsung Case
Background
Apple filed a suit against Samsung on February 8, 2012, accusing it of infringing several patents. Samsung then filed counterclaims against Apple. In Apple’s original suit, the company stated that Samsung “has systematically copied Apple’s innovative technology and products, features, and designs, and has deluged markets with infringing devices in an effort to usurp market share from Apple.
Analysis
As @Pablo Del Río Pérez and @Mario Talavera Diez said, a patent is a set of exclusive rights granted by a state to an inventor or his assignee for a fixed period of time in exchange for a disclosure of an invention. As most of you mentioned, a patent infringement is the commission of a prohibited act with respect to a patented invention without permission from the patent holder. Permission may typically be granted in the form of a license. The definition of patent infringement may vary by jurisdiction, but it typically includes using or selling the patented invention. In many countries, a use is required to be commercial (or to have a commercial purpose) to constitute patent infringement.
According to the article, both companies were found guilty of infringing some of each other’s patents and ordered to pay damages. So it’s clear that Samsung has committed a patent infringement. Apple says that Samsung willfully stole their ideas and copied their products and that they are sick and tired of Samsung ripping off the iPad and iPhone.
Now, moving to the next issue, the iBook shows that trademarks and service marks are words, names, symbols, or devices used by manufacturers of goods and providers of services to identify their goods and services, and to distinguish their goods and services from goods manufactured and sold by others. A trademark infringement may occur when one party, the “infringer”, uses a trademark which is identical or confusingly similar to a trademark owned by another party, in relation to products or services which are identical or similar to the products or services which the registration covers.
As JUL_15_CARMEN GALVEZ RIOBOO & NOV_15_ALEJANDRA GUTIERREZ MIGUEL and the majority of you said; even if Apple alleged trademark infringement showing side-by-side comparisons of its iPhone and Ipad with Samsung products, I don’t consider that Samsung´s intent is to cause confusion with Apple trademark. They are clearly a competence.
In the second part of the case where a personal opinion has been asked, most of you said that in the hypothetical case if Google acquires Samsung, Apple will refuse to accept the merger between them and will try to block it. @Sergio Barreda Orjeda and @Paula González Vidal as many of you believe that in order to block this merger, Apple as a defense strategy, could allege unfair competition and a tendency to monopoly.
Intellectual property protection is critical to foster innovation. Without protection of ideas, businesses and individuals would not reap the full benefits of their inventions and would focus less on research and development. Similarly, artists would not be fully compensated for their creations and cultural vitality would suffer as a result.
BULB
As JUL_15_Sara Díaz Díaz-JAN_16_Jorge Abel Plaza Pradas said a Chief Compliance Officer (CCO) is a corporate official in charge of overseeing and managing compliance issues within an organization, ensuring, for example, that a company is complying with regulatory requirements and that the company and its employees are complying with internal policies and procedures.
As we saw on the IBook, the responsibilities of the CCO often includes; Overseeing audits and investigating regulatory and compliance issues. In addition, they are responsible for creating and carrying out policies and procedures to ensure the company´s compliance with laws and regulations including but not limited to employment, labor, the environment trade, import/export securities.
The responsibility of any executive in any firm is to act in the best interest of the firm that they represent obeying business, regulatory, moral and ethical standards. Many companies have a Code of Ethics or a Firm Statement that clarify the values that they stand for. A CCO acts as a staff to the CEO and ensures that compliance and ethical matters are resolved accordingly while also implementing new rules and policies to meet changing needs. They also monitor conducts to prevent illegal, unethical or improper actions as an independent and unbiased representative of the management team. The role is challenging and serves to govern many issues that are often not spelled explicitly but an organization may encounter at various different stages of its operation. As MAR_16_BRUNO_TULIO & OCT_15_ERIC_POLVOROSA said; a good Compliance Officer must align the compliance program with the business of the company in order to improve its overall performance.
There are multiple responsibilities that were missed. First and foremost, all companies have an obligation to uphold a high-standard of good ethics and social responsibility. Regardless of the tax laws that follow, they need to be good global citizens and represent the interests of the people who support them by using their products and services. This is not easy to enforce and many of us can make a choice if we support them with the buying choices that we make. Putting this aside, the moral dilemma of enforcing sufficient taxation is also dependent on the existing rules that governments create and enforce. While a specific action may not be criminal when it comes to domiciling operations or tax regime, it often has significant consequences from a moral or financial point of view. The broader risk is also undermining the reputation of an organization that is held in a high standard and impacted by the choices of its management teams.
In the cases cited by the article, the CCOs have ensured compliance with existing tax laws but missed the need to evaluate their decision from a social and ethical perspective. The two are not always explicitly connected. There are vast resources – from expert accounting teams and advisors to lenient tax jurisdictions- that make the process of applying the rule of law challenging.
In my personal opinion I think that the scandal will raise awareness of the issues that many organizations face every day. It will show a link on how large complex companies employ sophisticated and limited rules to derive and retain profits on a massive scale. The net benefit is hopefully going to be a greater emphasis on what the right strategy should be for global and socially responsible citizens. This will lead to changes that limit the various loopholes and create greater value and transparency for everyone – not just the immediate shareholders.
The European Tax system is a “Territorial” tax system – where taxes are paid to the country for the economic activity happening in that country regardless of citizenship. This type of system minimizes significantly foreign income. It also leads to lower net taxation revenues but also to limits profit shifting employed by today’s global companies. In order to have a lasting and change, there are many components that have to be put in place. First, all participants have to agree to amend and apply a common set of objectives – minimize tax loopholes and ensure proper regulation. This is a very difficult task driven by governments and existing laws. We have seen a recent shift to common adoption of this type of system but large companies from selected countries like the US. International rules and bilateral agreements have to be examined. This process is already under way and time will show its effectiveness.
The CCO is one of new roles emerging from the business world where companies are trying to implement measures to act as ethical global citizens. They are responsible for broad compliance issues that seek to harmonize policies and provide timely and effective changes on how rules are implemented and followed. This goes beyond explicitly stated laws but rather allows for a conscious effort to adopt and change as the world around us changes rapidly. Recent regulations in the face of BASEL and others further enhances global policies and develops cleared common standards that can be easily implemented for a lasting change.
