Trust Digest 56 (July 9, 2014)

BNP Paribas: Capital Punishment
The American guillotine has fallen. After lengthy negotiations, prosecutors and regulators announced on June 30th the penalties they planned to impose on BNP Paribas, France’s largest bank, for evading American sanctions on doing business with Cuba, Iran and the Sudan: an almost $9 billion fine, a guilty plea to criminal charges of conspiracy and falsifying records and a suspension of its right to clear certain dollar transactions.
Key Words: BNP, Sanctions
Trust Issues: Accountability, Responsibility, Regulation

4 Ways to Build Trust Quickly
No one is going to buy from you if they don’t trust you first. That can be a challenge for entrepreneurs, because we have to build that relationship from scratch, whereas a new salesman for IBM or Mercedes-Benz can coast a bit on the reputation of his firm. Of course, trust naturally develops over time. If you’ve worked alongside someone for five years, you probably have a pretty good sense of her character. But most entrepreneurs can’t afford to wait years or decades -- we need to make sales now.
Key Words: Entrepreneurs, Trust-Building
Trust Issues: Transparency, Capability, Communication

Can L'Oréal's Cosmetic Lotion Turn Back Time? Not Yet.
A few years ago, L’Oréal introduced two new product lines that used “gene science” to “crack the code” and make your skin young again. The new products were supposed to boost the production of “youth proteins” in your skin, making it look years younger. According to L’Oreal’s ad campaign, the benefits were clinically proven. Except they weren’t. Last week, the FTC announced that L’Oréal had settled charges that the advertising for these products, Youth Code™ and Lancôme Génifique, was deceptive and misleading.
Key Words: L’Oreal, False Advertising
Trust Issues: Accountability, Integrity, Regulation

BNP: A Window Into A Systemic Compliance Breakdown
BNP Paribas’ recent settlement of nearly $9 billion for violating US Sanctions against Sudan, Iran and other countries is another important achievement for the US Attorney’s Office in the Southern District of New York and the Department of Justice. For other global financial institutions, the BNP settlement has to cause some anxiety.
Key Words: Compliance, BNP, Culture
Trust Issues: Communication, Capability, Accountability

Financial Conduct Authority Fines Fall in First Half of 2014
Total fines issued by the Financial Conduct Authority have fallen in the first half of 2014 compared with the same period of 2013. The FCA imposed £136m of fines in the first six months of this year compared with £150m a year earlier. The number of fines also fell to 18 from 21. The financial watchdog issued a record £474m in fines last year, including three totalling £330m as it clamped down on Libor rigging and JP Morgan's "London Whale" trading activity.
Key Words: FCA, Fines
Trust Issues: Accountability, Regulation

Government Watchdogs Denounce Change in Rules for Reporting Congressional Trips
A quiet alteration of the reporting requirements for congressional trips funded by outside groups drew outrage from government watchdog groups and some Democrats on Tuesday. In response, the House Ethics Committee insisted that the change would not limit transparency.
Key Words: Congress, Financial Disclosure
Trust Issues: Integrity, Transparency, Accountability

Officials Defend N.S.A. After New Privacy Details Are Reported
The Obama administration on Sunday sought to play down new disclosures that the National Security Agency has swept up innocent and often personal emails from ordinary Internet users as it targets suspected terrorists in its global surveillance for potential threats.
Key Words: N.S.A., Privacy
Trust Issues: Transparency, Accountability

China's Shadow Banking System Could Bring Down The World's Hottest Property Markets
Chinese investors are major players in the international real estate markets. The country's outbound property investment totaled $2.1 billion in Q1 2014, according to Jones Lang LaSalle. And now there are concerns about the quality of the loans that have fed into international property markets. "Will China's capital flight fuel property bubbles overseas or cause a collapse when China's liquidity dries up?" wrote Andrew Collier, managing director, Orient Capital Research. In an email titled "Will China's Shadow Banking Kill the International Property Market?" Collier writes that the $2.1 billion figure most likely understates true outbound Chinese property investment because it is hard to track shadow lending.
Key Words: Shadow Banking, Real Estate, China
Trust Issues: Transparency, Sustainability, Regulation

Mind the Gap: How One Employer Tackled Pay Equity
Should female secretaries be paid at the same rate as male landscapers? That was one of the many questions facing McGill University in Montreal as it launched a sweeping program, required by Quebec law, to ensure gender pay equity among its roughly 12,000 full-time equivalent employees. American employers might soon face similarly sticky questions about how to define equal pay. While pay differences between men and women remain a hot topic in the U.S., most U.S. companies have been unwilling to publicly address the issue.
Key Words: Gender Pay Equity, Canada
Trust Issues: Integrity, Stakeholder

Spying Case Left Obama in Dark, U.S. Officials Say
When President Obama placed a call to Chancellor Angela Merkel of Germany last Thursday, he had a busy agenda: to consult with a close ally and to mobilize wavering Europeans to put more pressure on Russia to end its covert incursions in Ukraine. What Mr. Obama did not know was that a day earlier, a young German intelligence operative had been arrested and had admitted that he had been passing secrets to the Central Intelligence Agency.
Key Words: Germany, CIA, Espionage
Trust Issues: Communication, Capability, Responsibility

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