Ethics Newsline®

Heavy security, drug use, and morality of building boom trouble critics

BEIJING
The Olympic Games got off to an aesthetically impressive start last week with a lavish and stunning opening ceremony, but in the run-up to the games, it remained obvious that some ethical issues remained outstanding.

TIME magazine’s Simon Elegant reports that the preparations for perfection soured some visitors and many average Chinese. “Foremost is the massive security operation that has disrupted the lives of residents and visitors, as the host city’s ubiquitous policemen and soldiers repeatedly stop vehicles and individuals for inspection. Then there are other issues, such as the ejection from the city of migrant workers, the government-ordered closure of numerous bars, restaurants and clubs, even the surprising lack of foreign visitors due to strict new visa policies put in place to lessen the threat of terrorists and outside agitators spoiling Beijing’s festive mood. And let’s not forget the air; despite restrictions on car travel, temporary factory closures and construction-site shutdowns, Beijing’s atmosphere remains murky, and pollution levels hover at a level that would be classified as ‘heavy’ in most countries.”

At the same time, the International Olympic Committee (IOC) head is unhappy — not because of anything China did, but because of China’s critics. CBS News quotes IOC president Jacques Rogge as saying, “Politics invited itself into sports. We didn’t call for politics to come.”

Rogge also told athletes that while they are free to answer reporters’ questions, the “venues of the Games are not a place for proactive political or religious expression…. Sanctions and penalties will be applied in any cases considered to be a breach of IOC policy,” according to the CBS News report.

In related stories, the London-based Independent reports that John Fahey, president of the World Anti-Doping Agency, said that sports are in danger of “withering” unless the use of performance-enhancing drugs can be stanched. IOC president Rogge went so far as to predict that there could be 30 to 40 positive drug tests during the 15 days of Olympic action.

Also, Los Angeles Times architecture critic Christopher Hawthorne, in a piece titled “Ethics’ Place in the Building Boom,” reiterated concerns over the spike in construction that has been profitable to architects but has, in the view of some, damaged the environment and leveled worthwhile traditional architecture.

Hawthorne also notes a level of discomfort about dealing with a totalitarian government: “Certainly there has been precious little coverage in the Beijing media of a subject that has captured the attention of architects and critics throughout the West in recent months — whether firms should refuse on principle to work in China, particularly on high-profile government buildings. With an increasing share of the world’s most innovative architecture being sponsored by autocratic regimes, an age-old question has gained new traction on the eve of the Beijing Olympics: To what degree are architects responsible for the political records or ethical shortcomings of their clients?”

Sources: CBS News, Aug. 9 — TIME, Aug. 8 — ESPN, Aug. 8 — Independent, Aug. 8 — Los Angeles Times, Aug. 7 — CBS, Aug. 7.

For more information, see: Related Newsline story, Aug 4 — Related Newsline story, July 14 — Related Newsline story, July 7 — Related Newsline story, June 30 — Related Newsline story, June 23.

Edwards affair, controversial novel, FBI snooping into reporters’ phone records, and gruesome PETA ad highlight ethics dilemmas in media

VARIOUS DATELINES
Several issues in media ethics were featured in news reports last week. Among the coverage:

• Former Democratic presidential contender John Edwards admitted that he had an extramarital affair, a story that made headlines, but also gave rise to ethical controversy over the story behind the story: Why the mainstream media seemingly ignored the issue despite extensive coverage via tabloids, cable talk shows, and various political blogs. The New York Times reports that in some cases it appeared that major media were reluctant to follow the lead of the National Enquirer, while in other instances they appeared to shrug off a story involving the private life of an also-ran. According to the Times, most major news organizations held off on the story until ABC announced it was airing an interview with Edwards in which he admitted the affair.
• Random House unexpectedly pulled from publication a novel, The Jewel of Medina, because it contained material that the publishing house was told could enrage some Muslims. Trade journal Publishers Weekly reports that Random House deputy publisher Thomas Perry said the company received “cautionary advice not only that the publication of this book might be offensive to some in the Muslim community, but also that it could incite acts of violence by a small, radical segment. In this instance we decided, after much deliberation, to postpone publication for the safety of the author, employees of Random House, booksellers, and anyone else who would be involved in distribution and sale of the novel.”
• The U.S. Federal Bureau of Investigation (FBI) last week apologized for improperly obtaining the phone records of U.S. reporters working in Indonesia. Federal officials say the agency did not follow proper procedures when it obtained records from New York Times and Washington Post reporters who were working on stories about Islamic terrorism. UPI reports that the FBI admitted it obtained the records under a controversial tool called “exigent circumstance” letters, which are only supposed to be used in an emergency to prevent terrorist actions. No investigative use was made of the phone records, according to the UPI report.
• People for the Ethical Treatment of Animals (PETA) tried and failed to run a newspaper ad that compared the gruesome beheading of a passenger on a Canadian Greyhound bus to the treatment of animals slaughtered for food. The Canadian Press reports that the ad was rejected by a Manitoba paper. The PETA ad, which remains on the organization’s website, reads: “His struggles and cries are ignored … the man with the knife shows no emotion … the victim is slaughtered and his head cut off … his flesh is eaten.” The alleged perpetrator in the bus attack was charged with second-degree murder and ordered to undergo a psychiatric evaluation, according to the report.

Sources: New York Times, Aug. 8 — Publishers Weekly, Aug. 8 — UPI, Aug. 7 — Canadian Press, Aug. 7.

For more information, see: Related Newsline story, July 21 — Related Newsline story, Feb. 25 — Related Newsline story, Feb. 4 — Related Newsline story, Oct. 29, 2007 — Related Newsline story, Mar. 6, 2006.

In related news, Yahoo reacts to privacy concerns; Google criticized over possible conflict of interest in creating content and directing searchers to it

SAN FRANCISCO
Internet security and the obligations of various experts to guarantee the safety of users were two of the issues featured in a variety of press reports last week. Among the top stories:

• Secretary of Homeland Security Michael Chertoff, speaking before a group of Silicon Valley businesspeople about the need for better network security, announced indictments against 11 individuals in what is believed to be the nation’s largest-ever hacking and identity-theft case, reports the San Francisco Chronicle. About 40 million customer account numbers were stolen from credit and debit card databases maintained by nine major U.S. retailers. According to the Chronicle, several security experts blamed lax security on the part of the retailers, saying they were the obvious weak links in the data chain. done as a stunt to show how easily security can be compromised.
• Yahoo, reacting to concerns about consumer privacy, is planning to stop targeted advertising on its websites, the Washington Post reports. Yahoo’s decision comes as Congress continues to probe concerns about tracking Internet user behavior in order to serve up relevant ads. Privacy groups note that the move does not prevent Yahoo from continuing to collect data.
• The Christian Science Monitor reports that Google’s online encyclopedia Knol has raised ethics concerns — namely, that the firm’s giant search engine might be disposed to point to Google content. Critics charge that there’s really no need for another Internet encyclopedia, and with each foray into developing content, Google increases the potential for a conflict of interest. “This is a step too far,” Danny Sullivan, editor in chief of Search Engine Land, told the Monitor. “Google’s job started out being a service that points people to other information, and that remains their primary job — not to be providing the information themselves.” The report notes that because Google keeps its methods for ranking search results secret, users are left to trust the company not to rank its own content higher than others.
• A gaping hole has been exposed in the system that directs traffic through the Internet, according to a report from the MIT Technology Review. Speaking at a convention of computer security professionals, expert Dan Kaminsky said the flaw could be used to redirect users to phony sites and possibly even to intercept their email. Another development at the same conference: Three French journalists were thrown out after they hacked into the press room computer, according to the technology network CNET. The hack was apparently

Sources: MIT Technology Review, Aug. 8 — San Francisco Chronicle, Aug. 7 — CNET, Aug. 7 — Washington Post, Aug. 7 — Christian Science Monitor, Aug. 7.

For more information, see: Related Newsline story, Aug. 4 — Related Newsline story, July 14 — Related Newsline story, June 30 — Related Newsline story, May 5 — Related Newsline story, Apr. 21.

Senior senator says credit card companies are deceptive; Massachusetts questions ethics practices of brokerage; EPA is caught in dilemma of balancing economic impact of fuel shortages and food

WASHINGTON
The ethical equations of the financial and economic balance sheet drew the attention of the press last week. Stories included:

• The chairman of the Senate Permanent Subcommittee on Investigations, Michigan Democrat Carl Levin, last week said the Federal Reserve needs to tighten regulations to protect consumers from credit card abuses such as hidden fees and unexpected hikes in interest rates, reports BusinessWeek. Banking officials say their practices are permitted by existing law and Levin’s changes would cause billions in losses.
• Massachusetts has filed a complaint against Merrill Lynch and Co., saying the firm misled the public about some complex investment vehicles known as auction rate securities. State officials contend that the brokerage co-opted ostensibly independent analysts to help in the effort to dump the collapsing securities on consumers, reports the Wall Street Journal. State officials also allege that Merrill’s offer to buy back the securities is misleading and implies that the state backs Merrill’s actions. The brokerage did not comment when contacted by the Journal.
• CNN reports that the U.S. Environmental Protection Agency (EPA) last week refused to end a rule that ethanol be added to gasoline supplies. Critics say that while the EPA’s regulation was well intentioned, it carries the unintended consequence of diverting grain from the food supply and raising food prices. The EPA says it determined that the mandate is not causing significant economic harm and can strengthen energy security.

Sources: Wall Street Journal, Aug. 7 — BusinessWeek, Aug. 5 — CNN, Aug. 7.

For more information, see: Related Newsline Commentary, July 14 — Related Newsline story, Mar. 24 — Related Newsline story, Feb. 25 — Related Newsline story, Oct. 8, 2007 — Related Newsline story, Nov. 8, 2004.

Guantánamo, Burma also featured in related news

VARIOUS DATELINES
Human-rights issues figured in several stories from the world press last week. Among them:

• Several human rights organizations last week warned Russia and Georgia that actions against civilians in the uprising in the South Ossetia region may constitute war crimes. Russia sent troops into Ossetia after Georgia moved in troops in an attempt to reclaim the region, the Reuters news agency reports. About 2,000 people have been killed in the conflict, reports Sky News. As this issue of Newsline went to press, conflict had spread westward to another separatist enclave, Abkhazia.
• A verdict in the case of a man held at Guantánamo Bay has raised more questions about the legal and ethical issues surrounding detainees there, reports the BBC. Salim Hamdan, Osama bin Laden’s driver, was sentenced to 66 months, a surprisingly light sentence that some view as a rebuff to the administration’s detention policies. The BBC notes that it is still unclear what will happen to Hamdan, as even the judge in the case admitted he had no idea what the next step will be.
• The United States intends to keep up the pressure on Myanmar’s military regime. President Bush, meeting with Burmese human rights activists in Thailand, praised Thailand for offering sanctuary for refugees, according to a report from the Bangkok Post.

Sources: Sky News, Aug. 10 — Reuters, Aug. 8 — BBC, Aug. 7 — Bangkok Post, Aug. 7.

For more information, see: Related Newsline story, June 30 — Related Newsline story, June 23 — Related Newsline story, May 12 — Related Newsline story, Dec. 10, 2007 — Related Newsline story, Aug. 6, 2007.

For $50,000, California woman gets five puppies generated from ear tissue of her beloved late pit bull

SEOUL
A U.S. woman spent $50,000 to clone her beloved, deceased pit bull.

Bernann McKinney, a Hollywood screenwriter, told MSNBC that she couldn’t bear the thought of living without her late dog, which had saved her life when she was attacked by another dog, and also helped her as an assistance dog when she was confined to a wheelchair.

McKinney provided some tissue from the dog’s ear to South Korean scientists, who carried out what is believed to be the first commercial cloning of a pet, reports the Agence France-Presse, which notes that the company, called RNL Bio, could clone up to 300 dogs for wealthy pet owners next year.

The owner of the company, Lee Byeong-chun, says an affiliated university will provide ethical oversight into the process.

According to the Seoul-based Korea Times, the birth of the five cloned puppies “invites an endless list of scientific and ethical questions that won’t be answered quickly, if at all.”

Lee Byeong-chun was a member of the research team headed by Hwang Woo-Suk, the disgraced stem-cell scientist whose work was partially discredited because of research fraud, according to a report from Wired.

Sources: AFP, Aug. 7 — MSNBC, Aug. 7 — Wired, Aug. 7 — Korea Times, Aug. 6.

For more information, see: Related Newsline story, July 28 — Related Newsline story, May 27 — Related Newsline story, Jan. 22 — Related Newsline story, Jan. 7 — Related Newsline story, Nov. 19, 2007.

Chinese officials allow some holes in firewall blocking Internet access for Olympic journalists; FCC slams Comcast for secretly throttling Internet traffic; presidential candidates’ supporters claim media bias; and Los Angeles considers tightening the reins on paparazzi

VARIOUS DATELINES
Several angles on media ethics were featured in world press reports last week. Among the stories:

• Chinese authorities, facing a backlash from Olympic officials, journalists, and the West, partially dismantled the electronic firewalls blocking politically sensitive sites from visitors at the main press center for the Games. But the New York Times reports that certain topics, such as the banned spiritual movement Falun Gong, remain off-limits. The Times’s Andrew Jacobs, reporting from Beijing, writes: “The loosening of restrictions, however limited, came after senior I.O.C. officials spoke with China’s Olympic organizers on Thursday and urged them to reconsider their decision to ban some politically provocative sites. Critics said even a partial ban violated the host country’s pledge to provide uncensored Internet access to journalists, a promise that helped Beijing win the right to hold the Games.” A Chinese official interviewed by the Times refused to confirm whether there had been an actual change in policy, saying only that the nation is “fulfilling a promise to provide good working conditions for reporters covering the Olympic games.”
• The Federal Communications Commission (FCC) last week slammed cable titan Comcast for secretly throttling certain bandwidth-hogging activities among users, as well as for being evasive when confronted with the claims. The Washington Post reports that the FCC did not fine Comcast but ordered it to halt all “discriminatory network-management practices” by the end of the year. The issue has an ethical as well as legal angle because it is at the core of the argument over “net neutrality” — whether all Internet traffic should be treated equally and moved at the same speed. Proponents of net neutrality argue that all traffic should be moved at the same speed because allowing differential treatment would eventually result in deep-pocketed firms and individuals consistently receiving better service. Proponents also claim Internet service providers violate customers’ privacy by inspecting the type of transmission in order to determine whether it should be put on the slow track. Opponents of net neutrality say it is okay to throttle certain bandwidth-consuming applications, such as file sharing, to keep a small number of bandwidth hogs from slowing down everyone’s Internet speed.
• Republican presidential candidate John McCain and his aides last week criticized the media for what they characterize as lopsided coverage and an infatuation with his Democratic rival, Barack Obama. The Wall Street Journal reports that media executives defend their coverage, saying such attention is cyclical. “It used to be the stories were ‘everyone was in love with McCain — he’s on his bus, he schmoozes the reporters, they all give him a break,’” Paul Friedman, senior vice president for news coverage at CBS, told the Journal. “That’s the irony. These guys are now crying foul, and they’ve had the advantage of terrific relationships with the press.” The Journal report noted that Obama’s supporters are echoing a similar theme in criticism of the Fox network, claiming it is biased against Sen. Obama.
• A Los Angeles municipal task force is considering new laws to rein in paparazzi. Some, including a variety of celebrities who testified in favor of such restrictions, say the unruly packs of photographers pose a safety hazard, reports the International Herald Tribune. Opponents argue that selective restrictions on paparazzi threaten press freedoms and that the proposed “zone of privacy” would give preferential treatment to celebrities, as ordinary citizens would have no such allowance.

Sources: New York Times, Aug. 1 — Washington Post, Aug. 1 — International Herald Tribune, Aug. 1 — Wall Street Journal, July 23.

For more information, see: Related Newsline story, June 9 — Related Newsline story, Apr. 14 — Related Newsline story, Mar. 24 — Related Newsline story, June 11, 2007 — Related Newsline story, May 21, 2007.

Current board claims former executives’ negligence hurt the firm’s reputation and produced a mammoth bill for compliance costs

MUNICH
Siemens, the giant German engineering firm, last week said it will seek to recover damages from two former CEOs and other former members top management executives for ethics breaches that damaged the firm’s reputation and bottom line.

Berlin-based news service Deutsche Welle reports that Siemens will pursue 11 former officials for “breaches of their organizational and supervisory duties in view of the accusations of illegal business practices and extensive bribery.”

In the crosshairs are two former chief executives, Heinrich von Pierer and Klaus Kleinfeld, whom Siemens claims failed to halt the bribery scandal that has plagued the company since 2006.

Both men repeatedly have denied any wrongdoing but remain subject to criminal investigations, reports Deutsche Welle.

Bloomberg reports that Siemens’ suit is unprecedented in German business. “It’s the first time that the supervisory board of a company decided to sue practically the whole old management board,” Manuel Theisen, a business professor at Munich University, told Bloomberg. “That’s a paradigm change.”

In an analysis, TIME magazine reporter William Boston writes that the development is viewed widely as a sign that “the atmosphere in the clubhouse commonly known as Germany Inc. just got a lot less chummy…. In Germany’s two-tiered management system, shareholders elect the supervisory board. It has the job of appointing and supervising the executive board, which runs the company’s day-to-day business. Typically, though, a retiring CEO is appointed to chair the supervisory board, which often is a paper tiger with little incentive to scrutinize executives. Siemens’ decision to seek financial damages from former executives is a warning to the rest of German industry that such practices are under threat.”

Siemens first will offer the former executives a chance to defend themselves and make restitution before formally pressing lawsuits.

Forbes reports that compliance costs for the company are in the neighborhood of $650 million in the current financial year.

Sources: TIME, July 31 — Bloomberg, July 31 — Forbes, July 29 — Deutsche Welle, July 29.

For more information, see: Related Newsline story, June 16 — Related Newsline story, May 12 — Related Newsline story, May 5 — Related Newsline story, Jan. 28 — Related Newsline story, Nov. 13, 2007.

Britain’s highest court rules that fraud office was right to suspend probe into bribery allegations because of national-security concerns, but officials say they’ll continue to pursue the company on other fronts

LONDON
BAE, the troubled British defense contractor beset by ethics problems, was the subject of three major news stories last week:

• Top jurists in the House of Lords ruled that fraud investigators acted properly when they aborted an investigation into bribery allegations related to an arms deal between BAE and Saudi Arabia, reports the Economist. Officials closed down the inquiry, which focused on an alleged slush fund supposedly used to bribe Saudi officials to award contracts to BAE, on the basis that it threatened national security. A previous court ruling held that ending the probe was improper, but yesterday’s ruling by the Law Lords, Britain’s equivalent of the U.S. Supreme Court, overruled that finding. The decision was criticized sharply by anticorruption campaigners in Parliament, reports the U.K. Guardian.
• The Financial Times reports that despite the Law Lords’ decision, government investigators will continue their probes into allegations of BAE misconduct in other venues, including the Czech Republic, Romania, South Africa, and Tanzania. British officials also are considering a request from the U.S. Department of Justice to help with a U.S. probe into the company. BAE consistently has denied any wrongdoing.
• BAE said it will implement all 23 recommendations in a company-sponsored report into its ethics, and will do so in a three-year program to be monitored by an external auditor. The recommendations were drawn up in the wake of the Saudi bribery scandal. BAE chairman Dick Oliver said his firm “hoped to be recognized as a global leader in ethical business conduct” once the reforms are completed, Reuters reports.

Sources: Financial Times, July 31 — Economist, July 31 — Guardian, July 31 — Reuters, July 22.

For more information, see: Related Newsline story, July 21 — Related Newsline story, June 30 — Related Newsline story, May 12 — Related Newsline story, Apr. 14 — Related Newsline story, Jan. 22.

Ted Stevens pleads not guilty to charges he lied about gifts; Israeli PM, under investigation for alleged corruption, to resign; South African leader expected to continue his presidential bid despite graft trial

VARIOUS DATELINES
Corruption cases against government officials made news last week. Among the top stories:

• Alaska Sen. Ted Stevens last week pleaded not guilty to federal charges that he lied about hundreds of thousands of dollars in gifts from an oil service contractor. Stevens, the longest-serving Republican in the U.S. Senate, was indicted last week on several counts of lying on Senate disclosure forms, according to press reports. Stevens has been the focus of a corruption investigation for more than a year.
• Israeli prime minister Ehud Olmert, at the center of numerous corruption allegations, last week said he will resign. Olmert said he will not run in his party’s September 17 primary and would leave office shortly thereafter to clear the way for his successor, reports the Jerusalem Post. Olmert has denied any wrongdoing.
• Officials of South Africa’s ANC Party last week characterized corruption charges against leader Jacob Zuma as politically motivated and said they would stand behind Zuma in next year’s elections. The Agence France-Presse reports that Zuma faces 16 charges, including money laundering and racketeering. His trail begins this week. Zuma continues to maintain that he is innocent.

Sources: Washington Post, Aug. 1 — AFP, Aug. 1 — NPR, July 31 — Jerusalem Post, July 31.

For more information, see: Related Newsline story, July 21 — Related Newsline story, May 12 — Related Newsline story, Feb. 18 — Related Newsline story, Aug. 20, 2007 — Related Newsline Commentary, Aug 6, 2007.

Keeping the profiles is ‘the first step towards a totalitarian state,’ says inquiry member

LONDON
A government-sponsored panel has concluded that DNA profiles of people not convicted of a crime should be wiped from databases in England and Wales.

Javed Aslam, one of the 30 panel members, told the BBC that keeping the records would be “the first step towards a totalitarian state.”

British law enforcement has enthusiastically embraced DNA databanking, and the technology has been used to solve several high-profile crimes, including some cold-case murders, reports newspaper portal WalesOnline.com.

Britain currently has records of more than four million people in its database, with DNA collected from cheek swabs. Those swabs can be taken from anyone who comes into contact with police, either as a suspect or witness.

About a million samples from innocent people would be destroyed if the panel’s recommendations are followed, reports London’s Daily Mail.

The report also criticized “lax security measures” concerning which organizations have access to the database.

The London Telegraph last week published a series of reports claiming that millions of profiles were handed over to private companies without the consent of those involved.

Sources: BBC, July 30 — WalesOnline.com, July 30 — Telegraph, July 30 — Daily Mail, July 30.

For more information, see: Related Newsline story, May 5 — Related Newsline story, Apr. 7 — Related Newsline story, Feb. 25 — Related Newsline story, Feb. 4 — Related Newsline story, Jan. 28.

SEC levels $500,000 penalty against Pax World funds

BOSTON
The U.S. Securities and Exchange Commission (SEC) last week penalized Pax World funds half a million dollars for investing in the types of companies that the firm, which was founded on the basis of socially responsible investment, is supposed to avoid.

As the Associated Press reports, socially responsible funds typically screen out the stocks of polluters, defense contractors, weapons companies, casinos, and firms that produce alcohol and tobacco products. Investors in the socially responsible funds choose to place their money in them based in large part on those promises.

According to the SEC, Pax violated some of those restrictions in the years 2001 through 2006.

Pax owned shares of a major oil and gas firm, even though it violated several of the fund’s screening criteria, according to a report from USA Today. Another fund operated by Pax owned shares issued by a company that garnered revenue from gambling and liquor.

New Hampshire-based Pax did not admit or deny the charges, reports the Union Leader of Manchester, but issued a statement saying that its major socially responsible fund, holding more than 90 percent of its assets, did not purchase any unscreened funds and was not cited by the SEC.

The firm has agreed to the civil penalty and said it will comply with a cease and desist order against future violations of securities law, according to investment adviser trade journal Investment News.

Sources: USA Today, July 31 — AP, July 31 — Investment News, July 30 — Manchester Union Leader, July 30.

For more information, see: Related Newsline story, July 28 — Related Newsline story, July 28 — Related Newsline story, July 21 — Related Newsline story, July 14 — Related Newsline story, July 7.

Critics say interest rates are too high, but microlenders note that it’s expensive to service small loans, especially in remote areas

NEW YORK
As microlending — the process of offering tiny loans to people who ordinarily might never come into contact with a bank — has demonstrated its potential for helping entrepreneurs in impoverished nations, a heated debate has begun to brew about the ethics of the practice, according to a piece published last week in TheStreet.com.

Writer Lauren Tara LaCapra notes that microloans typically come with high interest rates because such small lending is expensive to service, especially in poor, remote, and rural areas.

Some microlenders, she writes, have been accused of exploiting clients by pushing interest rates far above what it costs to grant the loans.

LaCapra put the question of ethics to Gerhard Bruckermann, a noted European banker who started AMK, a nonprofit that provides small loans to villagers in rural Cambodia.

“We’re serving more than 120,000 customers, and as is typical for a microfinance institution, something like nine out of 10 customers are women,” Bruckermann told TheStreet.com. “So far we only operate in rural areas, which is of course much more complicated than urban areas. You spend a lot of money simply getting to the village.

The average loan size is less than $100, so what we’re really talking about is buying fertilizers, buying seeds, helping thorough drought times, when there are emergencies in the family and they need medical treatment. We’re not talking about [starting up] small companies — this is micro, micro, micro.”

Bruckermann said his lending organization charges between 28 percent and 32 percent.

“And you say, ‘Wow, how the heck are they going to survive this?’” Bruckermann said. “You look at the high interest rate and say, ‘This is really exploitative.’ But this is really all absorbed by the high operating expense. The loans are really small and you need this interest rate simply to cover your costs.”

Bruckermann maintains that socially responsible investors can make a lot of money if a microlending venture makes it to the point of an initial public offering. But he notes that his firm is committed to investing its profits back into other social investments.

Source: TheStreet.com, July 28.

For more information, see: Related Newsline story, June 16 — Related Newsline story, June 2 — Related Newsline story, Feb. 25 — Related Newsline story, Feb. 18 — Related Newsline story, Jan. 28.

Opponents say it creates ‘moral hazard’ by forgiving, rewarding reckless behavior

WASHINGTON
The U.S. Senate, in a rare weekend session, approved a package of legislation designed to prevent thousands of home foreclosures.

The bill, which President Bush has pledged to sign promptly, would give hundreds of thousands of qualified borrowers a chance to refinance with government-backed mortgages. It also will throw a financial lifeline to Fannie Mae and Freddie Mac, the agencies backing almost half of the nation’s home loans, reports the Boston Globe.

But as the New York Times reports, the measure, which was passed by the House earlier in the week, has sparked controversy on a number of fronts, including an ethics dilemma entangled in the bailout.

Opponents of the measure argue that the mortgage rescue rewards unscrupulous and reckless lenders and borrowers, according to the Associated Press.

“This bill has moral hazard written all over it,” Rep. Jeff Flake (R-Ariz.) said during the debate in the House on Wednesday, according to the Times. “We are pretending to chain a monster here and we are, instead, letting that monster loose.”

Some, such as Sen. Jim DeMint (R-SC), argued that the bill represents an unprecedented and counterproductive government intrusion into the housing market, reports National Public Radio.

“No matter what’s wrong with [the bill], most of the members of this Senate are going to come in and vote for it,” DeMint told NPR. “[They're going to] check the box and go home and say they did something for housing. I’m afraid they may compromise the future of America as they do it.”

Sources: New York Times, July 27 — AP, July 27 — NPR, July 27 — Boston Globe, July 26.

For more information, see: Related Newsline Commentary, July 14 — Related Newsline story, July 14 — Related Newsline story, July 7 — Related Newsline story, June 16 — Related Newsline story, June 9.

Critics don’t like government control of what people eat and restaurant group says it will hurt mom-and-pop eateries, but advocates say the stuff is a public health menace

SACRAMENTO
In what proponents say is a victory for public health — and in what detractors charge is another symptom of an encroaching nanny state — California last week banned trans fats in the state’s restaurants and bakeries.

While some cities, such as New York, Philadelphia, and Seattle, have enacted similar bans, California is the first U.S. state to pass such a law, reports the San Diego Union-Tribune.

Trans unsaturated fats, shorthanded as trans fats, once were thought to be a healthy alternative to butter, but recent research shows they are much more harmful than once thought, significantly raising the risk of heart disease, reports ABC News.

Adding to the dilemma is the fact that the substances not only are tasty to many consumers but also have a long shelf life, making them attractive to restaurants and fast-food outlets.

The California Restaurant Association opposed the ban, saying it will impose an unfair burden on mom-and-pop restaurants and bakeries, notes the San Francisco Chronicle.

The ban will take effect January 1, 2010, according to Los Angeles TV station KABC. It will not apply to packaged foods sold in stores.

Sources: San Diego Union-Tribune, July 27 — San Francisco Chronicle, July 26 — ABC News, July 26 — KABC, Los Angeles, July 16.

For more information, see: Related Newsline story, Nov. 5, 2007 — Related Newsline story, Aug. 13, 2007 — Related Newsline story, June 18, 2007 — Related Newsline story, Feb. 5, 2007 — Related Newsline story, Dec. 11, 2006.

European Commission will have to decide whether to keep the goods off shelves; one report it requested says there are doubts as to whether cloning is ‘ethically justified’

BRUSSELS
European Union science advisers say milk and meat from cloned animals is probably safe, though the panel’s lukewarm endorsement makes it unlikely that such products will reach store shelves soon.

Food safety concerns are classified as “unlikely” by the European Food Safety Authority report, but the document does say there are limited amounts of data on which to draw a conclusion, according to the EU Observer.

The International Herald Tribune notes that an earlier report from an ethics commission also will be taken into account when the European Commission eventually decides whether to approve cloned-animal products.

The European Group on Ethics in Science and New Technologies has determined that there are “doubts as to whether cloning animals for food supply is ethically justified,” according to UPI.

Among other concerns, cloning, while generally producing a superior animal, also produces a high number of animals born with deformities, notes the Toronto Star.

Sources: Toronto Star, July 25 — EU Observer, July 25 — International Herald Tribune, July 24 — UPI, July 24.

For more information, see: Related Newsline story, May 27 — Related Newsline story, Jan. 22 — Related Newsline story, Jan. 7 — Related Newsline story, Nov. 19, 2007 — Related Newsline story, Nov. 6, 2006.

New York Congressman files ethics complaint against himself; state files charges against former Spitzer aides; and selections for new Office of Congressional Ethics are announced

WASHINGTON
Several stories with ethics angles were the topics of Washington news last week:

• New York congressman Charles Rangel last week took the unusual step of filing an ethics complaint against himself. USA Today reports that the powerful Democrat is battling accusations he improperly used his office to raise money for a nonprofit public-policy center, and is confronting press reports saying he occupies four rent-stabilized apartments in a luxury Harlem complex, one of which he uses as a campaign office. Rangel wrote the committee requesting the probe and said he would accept the panel’s findings if he “inadvertently violated House rules.”
• A state ethics panel last week said it filed charges against three aides for former New York governor Eliot Spitzer, Reuters reports. The aides are accused of gathering and leaking information about one of Spitzer’s political opponents. The scandal was known as Troopergate because state police reportedly compiled the information about Senate majority leader Joseph Bruno’s travel on state aircraft.
• House speaker Nancy Pelosi (D-Calif.) and minority leader John Boehner (R-Ohio) last week announced their joint appointments to a newly constituted House ethics panel. The Hill, a publication covering Congress, lists the appointees as former CIA director Porter Goss (R-Fla.), Rep. David Skaggs (D-Colo.), former Rep. Yvonne Brathwaite Burke (D-Calif.), former Rep. Karan English (D-Ariz.), former House chief administrative officer Jay Eagen, and former congressional staffer Allison Hayward. The panel, called the Office of Congressional Ethics, will conduct initial reviews of complaints and make recommendations to the full ethics committee.

Sources: Hill, July 26 — Reuters, July 26 — USA Today, July 26.

For more information, see: Related Newsline story, June 23 — Related Newsline story, Mar. 17 — Related Newsline story, Feb. 18 — Related Newsline story, Feb. 18.

Bush says Mugabe’s government is illegitimate and seized power through violence

WASHINGTON
The White House last week imposed additional sanctions against Zimbabwe, protesting the disputed reelection of Robert Mugabe, who was criticized widely for using violence to intimidate backers of his opponent.

Saying that the Mugabe government is “illegitimate” and sponsors violence, President Bush signed an executive order imposing restrictions on individuals and corporations linked to the Mugabe regime, the BBC reports.

U.S. companies and citizens are barred from doing business with the targeted Zimbabwe firms and individuals, reports MarketWatch.com, and all assets of the Zimbabwe firms in the United States are frozen.

Similar sanctions have been imposed by the European Union.

The U.S. restrictions were proposed after broad international sanctions were derailed early in July by Russia and China, which vetoed a U.N. Security Council resolution backed by Britain, France, and the United States, reports CNN.

In related news, Mugabe and opposition leader Morgan Tsvangirai agreed to begin talks aimed at solving Zimbabwe’s economic and political meltdown. According to the Washington Post, the pact is seen widely as a victory for Tsvangirai, who dropped out of the presidential runoff in June, saying his candidacy endangered the lives of his supporters.

Sources: Washington Post, July 25 — CNN, July 25 — BBC, July 25 — MarketWatch.com, July 25.

For more information, see: Related Newsline story, July 21 — Related Newsline story, July 7 — Related Newsline Commentary, June 20 — Related Newsline story, June 30 — Related Newsline story, Apr. 28.

Opposition leaders, who tried unsuccessfully to overturn current parliamentary government, go on TV to brandish wads of cash they say were offered to rig vote

NEW DELHI
A dramatic corruption scandal is roiling politics in India.

After failing to dislodge the current government in last week’s parliamentary confidence vote, members of an opposition party accused the ruling coalition of offering more than $2 million in bribes, according to the Wall Street Journal.

While corruption is hardly a new factor in Indian politics, the charges electrified media there because of the spectacular way they were leveled: Opposition lawmakers took to the floor of Parliament during a debate and brandished wads of cash they say had been offered to them to throw the vote, reports Voice of America.

In response, a member of the ruling party filed a defamation suit against the cash-waving legislators, reports the New Delhi Television Network.

Sources: NDTV, July 25 — Voice of America, July 24 — Wall Street Journal, July 24 — Bloomberg, July 22.

For more information, see: Related Newsline story, July 21 — Related Newsline story, June 30 — Related Newsline story, June 23 — Related Newsline story, Apr. 28 — Related Newsline story, Nov. 5, 2007.

Silvio Berlusconi long has claimed that the judiciary is mounting a political vendetta against him

ROME
Italian prime minister Silvio Berlusconi, embroiled in a corruption scandal, last week won a significant battle outside of the courtroom by convincing the Senate to pass a law that could grant him immunity from prosecution.

India’s lower house of parliament, the Chamber of Deputies, approved the measure earlier in July.

The Financial Times reports that Berlusconi’s lawyer has yet to determine whether the measure actually will be employed in his client’s defense.

Berlusconi said the new law would put an end to the “unacceptable persecution” he has endured since entering politics in 1994, according to the Agenzia Nazionale Stampa Associata, Italy’s largest news agency.

For years, Berlusconi has accused the judiciary of waging a politically motivated vendetta against him. His critics say Berlusconi has abused power, engaged in corrupt activities, and abused his ownership of the state media to suppress criticism.

”In Italy there is a section of the magistrature that is dedicated to undermining the election results and wishes of the Italian people,” Berlusconi told the ANSA.

The new law grants sweeping political immunity to the prime minister, the president, and the speakers of the two parliamentary chambers — the four most powerful positions in Italian government, reports Forbes.

Sources: AFP, July 26 — Agenzia Nazionale Stampa Associata, July 24 — Financial Times, July 24 — Forbes, July 23.

For more information, see: Related Newsline story, Dec. 22, 2003 — Related Newsline story, June 30, 2003 — Related Newsline story, Oct. 28, 2002 — Related Newsline story, May 20, 2002 — Related Newsline story, Apr. 8, 2002.