In January, the Guidelines Monitoring Group (GMG), the group established to verify compliance with the code, released its first report and the results were less than impressive.

The report states “almost all of the firms” complied with many of the guidelines/requirements, though the method in which the firms “complied” varied drastically. Overall, the report claimed that fewer than 50 percent of the firms which voluntarily signed onto the Code complied with 100 percent of the guidelines.

The most common problems associated with Ortho Evra, Bloomberg notes, are:

According to the story:

J&J’s annual report cited “a significant decline” in Ortho Evra sales because of “labeling changes and negative media coverage concerning product safety.”

Worth noting, J&J has never actually gone to trial over Ortho Evra:

“Their exposure was pretty high, so they were willing to talk turkey about settling,” [one of the plaintiff's attorneys Russell] Rein said. “They have been settling out quite a few cases where the damages are significant and the causation is clear.”

Some groups, such as Public Citizen’s Health Research Group, question why the patch is still on the market and have petitioned the FDA to ban it within six months.

J&J disagrees, as Gloria Vanderham, a spokeswoman for J&J, says, “When used according to the FDA-approved label, Ortho Evra is a safe and effective method of hormonal birth control.”

The changes stem from a summer 2006 case in which Judge Lewis A. Kaplan of the U.S. District Court in Manhattan dismissed tax-shelter charges against 13 KPMG employees after determining that the government abused its influence and forced KPMG to cut off legal support to its employees. An appeals court upheld the decision today, leading to the rewriting of internal DOJ guidelines.

The reaction so far has been mixed. The New York Times quotes:

A defense lawyer, Mike Madigan, called the ruling a landmark.

“We’re all on cloud nine or a higher one if there is such a thing,” Mr. Madigan said. “It’s really just a great day for the criminal justice system in America.”

On the other hand, the Wall Street Journal quotes:

A coalition that includes the U.S. Chamber of Commerce and the American Civil Liberties Union issued a statement saying that despite improvements made by [Deputy Attorney General Mark] Filip’s revisions: “Federal legislation is still needed to ensure a permanent and lasting solution to the problem of government-enforced waivers of privilege. The Justice Department’s track record of five different policies in ten years cries out for a permanent legislative solution that cannot be revised at the whim of each new Deputy Attorney General.”

Others point out that, while this will save companies legal liability from the DOJ, it doesn’t protect them from the Securities and Exchange Commission and other departments that may come after them for similar charges.

Ethics and CSR were not quite the top priority, however. That honor was given to intellectual challenge while tried-and-true favorites money and location tied for second. The survey covered 759 graduating MBAs from 11 of the top U.S. business schools.

The insider trading allegations stemmed from the delay of the Airbus A380, a new jumbo jet. Back in 2005, several EADS executives sold massive amounts of stock just before the public announcement of the A380 delay, which caused Airbus stock to plummet.

Recently, two U.S. law firms have entered the fracas by filing suit against EADS. One case was filed by the law firm Coughlin Stoia Geller Rudman & Robbins of San Diego, and the other by the law firm Dreier of New Yorker, both on behalf of U.S. shareholders that own EADS shares on European Exchanges. The two suits are seeking class-action status.

Currently, French regulators are looking into the actions of the companies, which may pose a problem for the U.S. suits.

Bloomberg News reported the following:

“Even if U.S. rules allow them to ask for higher damages, I think we’re more likely to actually win them,” Frederik-Karel Canoy said today in a telephone interview. “Because of the on-going criminal investigation in France, the evidence will all be kept here. I don’t see how we can collaborate on it.”

The U.S. attorneys shot back:

Dreier lawyer Brian Kerr in a telephone interview today [said] that he and his clients “don’t see why we need to wait until the French judicial system comes to its conclusion to bring our claims.”

And guess what? Yesterday the company was temporarily banned from any new government contracts because of possible violations with a “bid for business with the EPA originally submitted in March 2006,” according to a report by Market Watch. Specific details as to why the company was banned from new contracts weren’t immediately available, but some are reporting that it involved bid rigging.

In addition to the temporary ban, which could last up to a year, IBM is being investigated by the U.S. Attorney’s Office for the Eastern District of Virginia, according to the article.

According to USAspending.gov, IBM acquired $1.4 billion of government contracts last year. This is compared to the company’s $98.8 billion in total revenue for 2007.

Know who wins when IBM is banned from federal contracts? The answer is: EDS. We scored EDS’s government contracting ethics program two weeks ago. Care to know their score? It was ‘Excellent’, with a score of over 90.

Good ethics = good profit. The U.S. government appears to agree with us.

Well, according to California law, tips can’t be split between employees and managers. A California court has ruled that Starbucks shift supervisors are in fact “managers” according to state law. Because of this, Starbucks now faces a class-action case stemming from one disgruntled California employee who filed suit in 2004 for the barista/shift supervisor tip sharing. The preliminary trial found the company liable and the damages portion starts today, according to the San Diego Tribune. According to a lawyer involved in the case, the final damages could be in the eight figure range.

The blog Starbucks Gossip has a take on the story here. What’s particularly interesting are the reader’s comments, most of whom apparently work at Starbucks stores across the United States and Canada and tend to side with the shift supervisors on this issue.

Experts say that it is highly unusual for a foreign-owned company to file suit in a U.S. federal court. Although this brings down the wrath of the Justice Department on Alcoa, it also opens Alba up for further scrutiny. According to the Wall Street Journal:

The reason it’s rare for governments to accuse U.S. companies of corruption in American courts, said attorney Dan Newcomb of Shearman & Sterling, is that “once you raise a question of corruption, the sovereign runs the risk they will be embarrassed by the requests of discovery from the private party.” In this case, he added, “They have to be prepared to withstand Alcoa coming back to them and saying, ‘We want to look at every other corrupt transaction you have been involved in.’ ” Mr. Newcomb called Bahrain’s move an indication of the level of concern in the region that oil wealth will be lost to fraud and waste.

A law professor gave a similar opinion to Bloomberg media, arguing that this case will likely be settled out of court for the best interest of both parties:

“It’s unusual for another country to come into a U.S. federal court to pursue a U.S. private company,” said Carl Tobias, a law professor at the University of Richmond in Virginia. “When you subject yourself to the U.S. court system there could be discoveries that are embarrassing to the plaintiff. It’s hard to imagine this going to trial. A settlement could be worth it to both sides not to have a public dispute.”

The company has also added a ‘CO2 Calculator‘ on its website to help customers analyze their own CO2 use. According to the site:

This calculator provides accurate figures based on verifiable data and the results are based on the actual operating data recorded on each flight:

* The type of aircraft operating the route (or frequency);
* The actual fuel consumed on the route concerned;
* The number of passengers carried;
* The weight of baggage and goods carried on board.

Green biz has a link to the actual calculator in their own report of the announcement.

The allegations stem from about $33 million procurements of pyrethroid used in anti-malarial programs. The World Bank found four companies won 18 of the first 21 bidding competitions using identical or similar prices and those involved may be excluded from future tenders, the Wall Street Journal reported earlier today.

Syngenta AG – which the Wall Street Journal reports is also “suspected” of being part of the scheme – has began an investigation of its own involvement, but hasn’t been contacted yet by the World Bank, according to a company spokesman.

On top of possible discipline by the World Bank, all companies found to be involved in the cartel might also be punished by the Indian government, according to B.K. Prasad, the country’s joint secretary for health, however no official details on a possible punishment were immediately announced.

Chevron will pay the money over three years to Global Fund-supported programs in countries where the company operates. A press release from the Fund says that because Chevron is a corporate champion, the company is now “required to demonstrate a long-term commitment to fighting these global health issues,” referring to AIDS, TB and malaria.

The timing of the announcement is no-doubt intended to coincide with the looming World Economic Forum conference in Davos, Switzerland. David J. O’Reilly, CEO of Chevron, is confirmed to be attending the conference, and will now have more to brag about at the high-powered lunch meetings the conference is notorious for (Forbes magazine goes so far as to label it a “who’s who gabfest” event).

Anyway, good on you, Chevron. It will be interesting to see if the Global Fund, which already has pledges currently at $18 billion, can attract any more large corporations to donate their money.

Polyvinyl Chloride is an extremely profitable substance for the chemical industry. Although there are fears that PVC releases toxins like mercury and dioxins – far traveling chemicals that can lead to immune system disorders or cancer – PVC is still commonly used by the construction industry because of its low cost and high durability.

Several companies have already eliminated PVC from their products, or are in the process of phasing it out. Microsoft addressed the problem a couple years ago and Wal-Mart has recently eliminated PVC from its in house brand products as well.

While it is not known how much oil was spilled into the ocean, or where exactly the spill took place, it has been reported that at one point the ship’s captain turned the vessel into the wind in order to clean the sludge from the side of the ship. He justified his actions by claiming it was a “man overboard” drill. He was fired, along with the ship’s chief engineer.

The crew member who blew the whistle on the Polar Tanker crime received half of the $500,000 fine as a reward. Not a bad way to encourage more employees to speak up about corporate bad guys. Although, as a story yesterday in the New York Times reminded all would-be whistle blowers: No, you don’t get anything for reporting your own crime.

The second fine this week was a tad heftier: $373 million dollars. The U.S. Department of Justice came down with a vengeance on BP (formerly British Petroleum) for a multitude of oil-related offenses, including two spills in Alaska in 2006. These spills accounted for $20 million of the total fine. Prosecutors argued that BP neglected corroding pipelines that resulted in the spills. The National Fish and Wildlife Foundation will get $4 million from this settlement.

Many people, even after being helped, “could not select a climate change leader, and among those that could no winner emerged.” The study suggests this provides a unique opportunity to businesses as environmentally-minded consumers aren’t going anywhere, according to Simon Glynn, senior partner at Lippincott, which helped jointly conduct the survey.

Six categories of climate-change awareness are presented: Campaigners, Optimists, Followers, Confused, Unwilling and Rejecters.

A quick break-down of each group:

• Campaigners: Know the issue and are ready to make change but pessimistic about chances of success.
• Optimists: The same as campaigners, only optimistic about success.
• Followers: Ready to change, but their motivation is in looking good and fitting in.
• Confused: Open minded but not sure what to do.
• Unwilling: Accept the issue but are not personally prepared to make any changes.
• Rejecters: Reject the issue and are unprepared to make changes.

The study also suggests that market leaders are more often named by consumers for their climate-awareness (such as Tesco), as well as companies with a brand “halo” (such as Disney).

The regulation would have made it mandatory for corporate lawyers to report any “suspected wrongdoing” from business leaders within their company to outside government officials, according to the article.

David Bayless, former head of the SEC’s San Francisco office, had this to say:

“What is happening now is the SEC is trying to deputize general counsels. If a GC is aware of wrongdoing they are going to have to report it or else be a potential target of SEC actions. It is quite scary.”

Read the entire article here.

Commentary: This is an important trend for general counsels to be aware of. Even though GCs are not obligated to report any findings of illegal activity, it doesn’t mean that they’re in the clear from government oversight. Fortunately for corporate counsel everywhere, the Attorney-Client Privilege Protection Act of 2007 (a bill which would effectively decimate the SEC’s ability to waive attorney-client privilege) has already passed the House and is being discussed in the Senate.

According to Sonoco’s website, the company’s sustainability program focuses on six areas: economics, community, environment, customers and products, workplace and government and ethics.

Myles Cohen, division vice president and general manager of Sonoco Recycling had this to say:

“The goal of S3 is to have zero landfill wastes coming from our customers’ facilities. Most manufacturing plants, distribution centers and retailers have active recycling programs, but they still have wastes going to landfills. Because of our extensive knowledge of the industrial and consumer packaging industry and our expertise in recycling, we have been able to find alternative recycling initiatives for wastes that were previously thought to be unrecyclable, such as plastic banding, bulk plastic liners and sacks, flexible packaging and other materials.”

The American Business Ethics Awards are given to U.S. companies “who exemplify high standards of ethical behavior in their everyday business conduct and in response to specific crises or challenges,” according to SFSP’s website.

Nominees of the award are graded in four categories: executive commitment to ethics, ongoing ethics programming, demonstrated ethical business practices and commitment to stakeholders, including employees, customers and the community.

Freescale was the winner in the large company category, which consists of companies with 2,500 or more employees. Freescale has 24,000 employees worldwide.

Winners in the ‘small’ and ‘midsize’ categories were Donald Haack Diamonds, Inc. of Charlotte, NC and Freese and Nichols, Inc. of Forth Worth, TX, respectively.

Critics of the record-high cartel fines present two arguments: (1) companies will eventually raise consumer prices to compensate for their losses; and/or (2) the penalties are so high that further increases won’t make a difference.

EC Competition Commissioner Neelie Kroes countered these arguments when the EC announced its €990 million fine against various elevator manufacturers in February: “The damage caused by this cartel will last for many years . . . the memory of this fine should last just as long.”

Commentary: This is a trend that we have been predicting for some time. It’s one more reason for global corporations to beef up their European compliance and ethics programs. To add even more fuel to this growing need, German prosecutors are now lobbying for new laws embracing criminal penalties for corporations.

The Department of Justice agreed not to press charges provided Paradigm complied with its obligations in the agreement. This includes ongoing cooperation with the DOJ, adopting rigorous internal controls and other remedial steps, retention of their outside compliance counsel and paying a $1 million fine.

Assistant Attorney General Fisher had this to say:

“Paradigm’s actions in this matter, including voluntary disclosure and remedial efforts, are consistent with our view of responsible corporate conduct when FCPA violations are uncovered. Accordingly, the Department has resolved this case to permit the company to move forward on sound footing, governed by ethical business practices.”

Paradigm discovered the violations through internal audits related to its initial public offering. The company is headquartered in The Netherlands but has used Houston as its principal place of business since 2005.

The list, compiled from responses to a questionnaire CDP sent to over 2400 companies worldwide, compares FT 500 companies in each sector on how transparent they are on regarding their climate change practices.

Institutional investors worth over $41 trillion, known as “signatory investors”, including Goldman Sachs, Morgan Stanley and HSBC put their name on CDP’s questionnaire. The 315 signatory investors will use the resulting information to “assess the potential risks and opportunities relating to climate change” from participants in order to better advise clients on how to invest.

Participation in the questionnaire was voluntary, and the results are “self-reported, largely non-verified responses,” according to today’s published report.

Companies that made the list include Hewlett-Packard, Citigroup and Coca-Cola.

The Carbon Disclosure Project was founded in 2000 by CEO Paul Dickinson. The CDP began publishing its Climate Disclosure Leadership Index in 2003.

Commentary: Seven of the 68 companies on the CDLI were also listed in Ethisphere’s 2007 World’s Most Ethical Companies Ranking:

• Baxter International
• Marks & Spencer
• Unilever
• Alcoa
• HSBC
• Suncor Energy
• Sun Microsystems

Fifteen signatory investors were on the list as well. Since they obviously weren’t excluded from participating, and taking into consideration the fact they helped develop the questionnaire, it’s worth asking: why didn’t ALL the signatory investors make the cut?

Now the emails are posted on various sites around the web.

One key strategy that MediaDefender employs to combat illegal downloads is flooding various BitTorrent applications with phony material. However, the stolen emails also exposed some of MediaDefender’s less-scrupulous endeavors.

One such strategy was a fake pirate site called WiiVii.com that offered copyrighted files ready to download. As someone downloaded from that site, their IP address was saved in MediaDefender’s databases. Additionally, software was unknowingly installed on the user’s computer effectively turning it into a “zombie machine” helping to send fake files across file-sharing networks.

Commentary: There’s no real “good guy” in this situation. Yes, the emails were stolen, but they showed off some of the dirtier tactics employed by MediaDefender. Companies have started using progressive methods of fighting piracy and it’s inevitable that they’re going to have to do the same thing with online file sharing. All that money and effort fighting Napster early this century didn’t put a dent in peer-to-peer networks, or the new and improved methods of downloading files through BitTorrent.

For those that haven’t been paying attention, in 2004 the European Commission handed Microsoft a $613 million fine for antitrust violations, particularly in regard to the bundling of Windows Media Player with Microsoft’s Windows Operating System. Microsoft appealed and, three years later, the EC’s decision became final.

M. J. Moltenbrey, a Washington based antitrust lawyer, had this to say:

“It is inevitable that global companies that want to have a consistent policy around the world will adapt to the regime that is the most restrictive as the relevant standard. Companies will worry about the agency that is the most interventionist, and at the moment, it is the European Commission that seems more willing to intervene in markets.”

Other opponents of the decision say that the decision will turn Europe into the “litigation capital of the world” and will create more lawsuits against other major companies such as Intel and Apple. However, European Commission officials claim the only company that will be affected by this ruling is Microsoft.

Read more on the story here.

As report author Bob Gordon puts it:

“Corporate responsibility continues to evolve from what was a mainly philanthropic activity to a more mainstream approach where it is integrated into core business activities.”

The study compares businesses from different countries and ranks them in categories such as independence of directors, human rights issues and environmental responsibility.

Read the story from The Independent.

Commentary: A notable example of U.S. companies lagging behind their European counterparts is in environmental policy rankings (in terms of the percentage of businesses by country that have basic or advanced environmental policies in place). The United States ranks 17th overall. Japan and Canada are the only two non-European countries ahead of the U.S. on the list. Perhaps high-profile activists like Al Gore will help make improvements in this category, but documentaries about other subjects such as “Separation of Chairmen From CEOs” might not catch on quite as easily (a category where the United States ranks dead last).

Peter Liria, Director of Global Ethics and Compliance for Avaya, will take part in the discussion to speak to Avaya’s response to receiving the award as well as what the rankings mean to an organization.

To register for the event, click here. Participation is free for anyone interested.

In addition, the Ethisphere Council has announced the opening of nominations for its World’s Most Ethical Companies 2008 Rankings. To nominate a company, visit http://ethisphere.com/nominations.

The agreement also gives Mueller and his family permission to use the jet for “reasonable” personal trips. Company spokesman Bob Toevs said the new perks show Qwest’s appreciation for Mueller’s family situation.

According to a report released by Corporate Library, an organization that studies governance issues, only 28 of 215 companies studied allow for a CEO’s family and friends use of a corporate jet.

Read the full story from the Rocky Mountain News here.

Commentary: Why would it be worth it to the new CEO of a company which just had its former CEO convicted of illegal insider trading to negotiate a contract that allows his stepdaughter to use the corporate jet to get to school? There must be 50 commercial flights a day from Denver to the SF Bay area. Maybe it’s a minor issue, but as you can see by visiting the Rocky Mountain News website, it plays perfectly to the media that wants to make a big deal out of it. And it sets a poor tone for other employees at the company.