David Jacobson's External Insights

Kickback: inside the Australian Wheat Board scandal

Caroline Overington, the reporter who covered the AWB Inquiry for The Australian, has written a book on the story.

I have not yet read Kickback but based on her 2006 Walkley Award for Investigative Journalism and her interview on Radio National (about the first 10 minutes of Philip Adams Late Night Live program) I look forward to it.

Keeping information secure

Stories appear everyday about the loss of information by businesses or government agencies.

Such stories usually fall into 3 categories:

• loss of a computer or hard drive (eg this story on the Transportation Security Administration loss of a computer hard drive containing Social Security numbers, bank data and payroll information for about 100,000 employee records.)
• unlawful access to a network (eg this story on a breach of TJX's wireless network with access given to 45.7m credit and debit card numbers and personal information relating to almost 500,000 people.)
• concern about employees downloading data (eg this story aboutconcern about security risks of "thumb drives".)

How secure is your business?

Qantas private equity bid over: Chair announces retirement

The Qantas Chair has announced her intention not to seek re-election at this year's AGM.

Even though she fully disclosed the private equity bid to the market, she endorsed the bid for the company without reservation and when large shareholders rejected the offer her judgment was called into question. The bid failed.

It is the duty of the Board to act in the best interests of shareholders including, it appears, trying to always get the maximum possible price and only endorsing an offer subject to a superior bid by a third party.

Comparing apologies: Ribena Australia v JetBlue America

I've previously discussed the art of making effective apologies.

I recently saw the TV ad broadcast by GlaxoSmithKline following its undertaking to the ACCC as part of its settlement over making misleading claims about the Vitamin C content of Ribena. (You can view the ad on Ribena's website here).

Whilst it may have been legally adequate, I did not think it was as effective as JetBlue America's  video apology by its CEO after its plane cancellations in February and March this year.

What do you think?

Creating successful business relationships with lawyers

Most lawyers today understand they need to provide value to their business clients.

Blawg Review #108 is dedicated to the theme of creating successful business relationships in the law.

Ranging from a study finding that Law Firm Clients Prefer Smiles to The 12 Rules of Client Service you're sure to find something that will help your business get better value from your lawyer!

Online case study: social lenders disrupt financial services

Since the 90's when mortgage brokers  targeted borrowers with better service and new loan products, traditional banks have been under attack from innovative competitors.

Now "social lenders" (such as Zopa, originally from the UK and soon launching in the USA, and Prosper in the USA) are looking to match lenders (who want a better rate on their deposits than banks offer) and borrowers (who want loan rates cheaper than banks offer) online without the bank infrastructure and marketing costs in the middle.

Zopa matches people according to rate, loan term and type of borrower (ie level of risk) (in a direct model called "peer-to-peer lending"). Prosper is an auction model.

What does Zopa do? See this BBC News story. Its website recently won a Webby Award.

Zopa assesses the credit of the borrower applicants but to reduce risk, splits individual loans among a number of borrowers. It also handles collections.

Zopa charges borrowers a fee (0.5% of their loan amount and   lenders a 0.5% annual service fee). According to their website, depositors get higher rates and lenders lower rates than anywhere else.

Zopa does not have the prudential supervision or depositor protection of regulated financial institutions but the Zopa CEO says the delinquency rate is only 0.2 percent in the United Kingdom. It offers lender insurance and pays interest to lenders as borrowers pay down their balances. It has no branches or other bank products such as cheque accounts or credit cards.

This Red Herring article also discusses  Kiva which allows people to lend direct online to a specific entrepreneur in the developing world and raisecapital.com which matches business startups and angel investors.

Could this model be used in your industry?

Government responds to Cole Inquiry AWB Report

The Commonwealth Government has issued its response to the Cole Inquiry Report tabled on 27 November 2006.

The Government has accepted the Cole Report’s recommendations and in response will introduce legislation:

• requiring applicants for licences to import or export under United Nations sanctions to provide information to the Government; criminal penalties will apply for giving false or misleading information;
• creating a new offence for breaching UN sanctions;
• giving Government agencies the power to obtain evidence about suspected evasion of sanctions so they can be referred to law enforcement agencies;
• strengthening laws aimed at bribery of foreign officials; and
• making tax laws consistent with foreign bribery laws.

The penalty for a breach will be up to three times the value of the offending transaction and up to 10 years’ jail for individuals.

On 30 November 2006 the Australian Government announced an inquiry by the Australian Law Reform Commission (ALRC) into legal professional privilege as it relates to the activities of Commonwealth investigatory agencies.

On 12 January 2007, the Australian Government announced the appointment of a Wheat Export Marketing Consultation Committee to undertake extensive consultation with the Australian wheat industry, particularly growers, about their wheat export marketing needs.

A Taskforce led by senior former Australian Federal Police officer Peter Donaldson is working on possible prosecutions arising from the Cole Inquiry.

UPDATE 15 June 2007: International Trade Integrity Bill introduced

Do Not Call Register opens for consumer registration

In anticipation of a 31 May 2007 start date, the Do Not Call Register has started accepting consumer registrations.

Individuals will be able to register their numbers either online at https://www.donotcall.gov.au/or by post. Telephone registrations will be available soon.

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