Monthly Archives: October 2017

Kobe (3)

The adventure continues, after Kobe Steel announced earlier this month that workers at several different facilities had fudged paperwork on product quality, dating back to at least 2007.  Apparently, getting that type of paperwork accurate is important.  To someone.

“U.S. Looking Into Kobe Steel Scandal,” The Wall Street Journal, October 18, 2017 B3.  Department of Justice kicks off a request for information after company disclosures about practices in Japan. Affects product sold into manufacturers of train, planes, and cars.

More to follow.  Expect Congress to weigh in shortly.  Again, the problem occurred in more than one facility, over a period of years.  Is that a failure of compliance, or culture, or both?

An example of the intersection of governance, compliance, and information.

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Filed under Accuracy, Compliance, Controls, Corporation, Culture, Data quality, Definition, Duty, Duty of Care, Employees, Governance, Information, Internal controls, Oversight, Reliance, Use, Value

Raining, pouring

Why does it seem that when a certain type of crisis happens in one industry leader, similar crises pop up in other members of the same industry?  Does “culture” affect an entire industry?  What about a culture of “not reporting”?

“Amazon Executive Quits Amid Sex Claim,” The Wall Street Journal, October 18, 2017 A10. The head of Amazon Studios (who had close business relationships with Harvey Weinstein) “resigns” after a producer claimed he had sexually harassed her two years ago.

What does it say that there were so many unreported instances of sexual harassment in this industry (many coming out in recent weeks in various media outlets)?  Did people not complain or did people not respond?  Or was the press/media not interested, for any one of a whole host of reasons?

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Filed under Compliance, Controls, Corporation, Culture, Duty, Employees, Governance, Internal controls, Oversight, To report

Chinks in the chain

“Wi-Fi Flaw May Endanger Security,” The Wall Street Journal, October 17, 2017 B4.  A wi-fi flaw opens up systems to hackers.  Impact mostly for corporations, affecting WPA2 protocols.  But does affect older Android phones and use of Wi-Fi networks while traveling.

Is cyber-security too complex for humans to understand?

Hopefully, the corporations will install the patches on a timely basis.  What other steps should we take in the meantime?

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Filed under Access, Controls, Interconnections, IT

Equifax, cont’d

“After Equifax, a New Way Forward,” The Wall Street Journal, October 17, 2017 B4.  How to replace the Social Security Number as the common way to identify us and authenticate our transactions to lots of organizations, both public and government.

Who decided to take the risk of using the SSN for this?  Should the same people (i.e., banks) pay for the cost of their chosen course of action, or for using someone else’s information?  Or your doctor/insurance company?  Sure, it’s easy(ier) for the banks.

Who owns your SSN?  You?  The government?  Did you consent to this use of your information?  Did the government?  If you didn’t, I guess getting a mortgage would be difficult.

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Filed under Access, Controls, Information, Ownership, Third parties

Mulligan

This is a straight compliance piece, where a corporation is held liable for the misdeeds of its employees (agents).

“Wells Fargo to Pay $3.4 Million Over Advisers’ Flub,” The Wall Street Journal, October 17, 2017 B10.  Apparently, some of the bank’s financial advisers recommended volatility ETFs when they shouldn’t have.  The advisers also didn’t have adequate training.

This is straightforward.  Should some manager be fired or disciplined?  Maybe.  This would not seem the type of event that calls into question the Board’s duty to supervise, unless this is the third time this same compliance issue has arisen.  This is only the second time.  The bank paid nearly $3 million in fines and restitution in 2012 for a similar violation.

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Filed under Board, Compliance, Compliance, Compliance Verification, Controls, Corporation, Directors, Duty, Duty of Care, Employees, Governance, Internal controls, Oversight, Oversight, Requirements

Miscellany

Some recent nuggets in the news:

“Arrest Made in German VW Probe,” The Wall Street Journal, September 29, 2017 B1. German authorities arrest former engine chief in connection with emissions scandal.

“Volkswagen Adds to Diesel Costs,” The Wall Street Journal, September 30, 2017 B2.  Costs of scandal approach $30 billion.

“Boeing Disputes Battery Testing,” The Wall Street Journal, September 30, 2017 B4.  Does the government know more about how to test batteries that aircraft manufacturers?  Who decides?

“HSBC Is Slapped With Big Fine by Fed,” The Wall Street Journal, September 30, 2017 B9.  Bank fined $175 million for failing to adequately supervise foreign exchange traders.

“Google Probes Russian Activity On Sites,’ The Wall Street Journal, September 30, 2017 B1. Did Russians manipulate voters through ads on Google?

“Did You Watch the NFL?” The Wall Street Journal, October 2, 2017 A16.  Do employees have the right to voice their individual views in the workplace?  Can the business owners restrict political (or other) speech in the workplace?

“Twitter Faces Scrutiny Over Bots,” The Wall Street Journal, October 3, 2017 B5. Did Russians (or others) use bots to pump up the dialog leading up to the election (or anything esle)?  Does this undercut the Twitter brand?

“Yahoo’s Hack Hit Swells to 3 Billion Accounts,” The Wall Street Journal, October 4, 2017 A1.  Four years later, company discovers it’s initial estimates were off by 300%.  Could there be a more massive privacy breach?

“Extreme Facebook Ads Persisted,” The Wall Street Journal, October 4, 2017 B1.  Message manipulation continued until at least August 2017.

“Europe’s Top Court to Review Privacy,” The Wall Street Journal, October 4, 2017 B4. Can US companies store data on European citizens on computers in the US?

“Boards Wake Up to Company Culture,” The Wall Street Journal, October 4, 2017 B9.  Does this go beyond the culture of compliance and ethics?

“Wells Chief Defends Bank Amid Grilling,” The Wall Street Journal, October 4, 2017 B14.  Post-scandal CEO still fighting back over management’s role in the scandal.

“Fringe Clips Rank High on YouTube,” The Wall Street Journal, October 6, 2017 B1.  Algorithms fail to exclude posts from unverifiable sources.

“Dow Jones Publishes Errant Headlines in Systems Snafu,” The Wall Street Journal, October 11, 2017 B3.  Oops.  There were humans involved.

“Indonesia Scrutinizes U.K. Bank’s Clients,” The Wall Street Journal, October 11, 2017 B16.  Bank self-reports the transfers to Singapore, which happened just before new rules required banks in Guernsey to share information.  Privacy rules only protect you so far.

“NFL Eyes Rules During National Anthem,” The Wall Street Journal, October 11, 2017 A3.  Apparently, the employer can impose rules on the behavior of their employees.

“Trump Takes Aim at Sports Tax Breaks,” The Wall Street Journal, October 11, 2017 A3.  Is it governance to “influence” the behavior of owners?

“Qualcomm Draws Fine in Taiwan,” The Wall Street Journal, October 12, 2017 B5.  Patent licensing  business draws $773 million fine.  IP has value, but it also has risks.

“Jury Finds Kansas City Executive Guilty in Loan Scheme,” The Wall Street Journal, October 14, 2017 A3.  Executive and his lawyer (who was also convicted) used a scheme through Indian tribes to offer payday loans.

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Kobe (2)

“Kobe Steel Discloses More Reporting,” The Wall Street Journal, October 14, 2017 B3. Falsification of quality documents is much more prevalent than first reported at Kobe Steel.  Twice the number of customers now involved.  500.

Once you find a rotten apple, one can make certain assumptions about the rest of that barrel.  It’s a culture issue, at its core.

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Filed under Accuracy, Board, Compliance, Compliance, Compliance Verification, Controls, Corporation, Culture, Culture, Data quality, Definition, Directors, Duty, Duty of Care, Employees, Governance, Information, Internal controls, Oversight, Oversight, Policy, Protect assets, Protect information assets, Third parties