Too big to fail? A Balkan retail crisis unfolds

The collapse of Croatian retailer Agrokor Group, one of the most important employers in the Balkans, is sending shockwaves through the region. In April, the government rushed “Lex Agrokor” through parliament in a bid to save the company and prevent scores of bankruptcies among its supply chain. But creditors – including Fidelity, AXA and the Canadian Pension Plan – want their money back and the government itself might fall. Allegations of longstanding accounting fraud are also being levelled, and PwC is being lined up to investigate.

“Agrokor has transformed itself from the biggest private company into one of the biggest systemic risks to the Croatian economy,” Morgan Stanley’s economist Georgi Deyanov wrote in a note to clients. “The government’s action resulted in the implicit state guarantee of Agrokor’s short-term debt and arrears to suppliers.”

Full story & analysis from Bloomberg here: Billions Are Sinking Into a Balkan Black Hole

Romania forging further ahead in anti-corruption drive

Earlier this year we highlighted the success of Romania’s DNA anti-corruption agency, and applauded its fearlessness in going after high level politicians accused of graft; earlier this week street protests forced the country’s PM  to resign, but the catalyst was a DNA investigation begun months ago. As a piece in this week’s Guardian newspaper highlights:

“Nowadays there are 120 prosecutors working on more than 6,000 cases. The entrance to the DNA’s central Bucharest offices is permanently staked out by television news crews waiting to see who will turn up next for questioning.

Last year the agency successfully prosecuted 24 mayors, five MPs, two ex-ministers and a former prime minister, not to mention more than 1,000 other individuals, including judges and prosecutors, with a conviction rate above 90%.”

 

 

CNS RISK/ CIBG/ HBLF/ DLA PIPER – 2nd Integrity Workshop, Oct 13 2015

How prepared are you to react to today’s growing risks?

Oct 13 2015: CIBG, CNS RISK, DLA PIPER and the Hungarian Business Leaders Forum present a second interactive senior executive workshop with prominent CEE business leaders. The workshop will again explore challenges to business integrity and how they can be mitigated.

  • Interaction with peers & experts on managing whistleblowers or allegations of misconduct.
  • Learn how corporate intelligence is employed as a preventative measure and how it should be a third pillar of any due diligence exercise.
  • Consider how cultural differences across companies can render a compliance system useless.

The event is free of charge, but places are strictly limited.

For more details see here: Budapest Integrity Workshop, October 13

Contact CNS Risk for an invite:   Request an Invite

 

The long arm of the SEC – Ford, Germany and Russia

A few weeks ago the SEC joined a long running German investigation into alleged bribery and corruption of Russian customs officials by Ford Germany and DB employees.  Sources suggest that if the allegations are proven to be true, the accumulated penalties could run into several hundred million euros.

The case raises two important issues.

1. Catching up to UK and US prosecutors, the German authorities are now taking firmer interest in the conduct of German registered companies abroad.

2. If a parent company has any exposure whatsoever to FCPA regulations, the SEC’s reach is long and punitive.

Reuters has the background to the story here: SEC joins German Bribery Investigation

CIBG, CNS RISK & DLA PIPER – Integrity Academy

How prepared are you to react to today’s growing risks?

July 14 2015: CIBG, CNS RISK & DLA PIPER present an interactive senior executive workshop with prominent CEE business leaders. The workshop will explore challenges to business integrity and how they can be mitigated.

  • Interaction with peers & experts on managing whistleblowers or allegations of misconduct.
  • Learn how corporate intelligence is employed as a preventative measure and how it should be a third pillar of any due diligence exercise.
  • Consider how cultural differences across companies can render a compliance system useless.

The event is free of charge, but places are strictly limited.

Contact CNS Risk for further details:   Tell me more

Slovakia transparency reform: an unlikely champion

Until very recently Slovakia was the poster child for Central European corruption, with cronyism and clientelism the main order of the day. The 2011 Gorila scandal in particular lifted the veil on the deep and multiple connections linking the country’s political and business elites. Fast forward, and Slovakia is rapidly becoming the region’s transparency champion, driven by a radical reform that makes all public procurement documentation from all levels of government available to the public via the internet.

See the Open Society Institute/Transparency International’s take on the changes: Slovakia Corruption Reform

Graft and punishment in CEE

Bucharest

 

In 2014, Romania’s National Anti-corruption Directorate (DNA) secured convictions of 1,138 people, including 24 mayors, five members of parliament, two ex-ministers and a former prime minister, Adrian Nastase. More than 90% of its indictments led to convictions. By contrast, Hungary has jailed just one politician for graft or corruption in the last 20 years.

Read The Economist’s take on anti-corruption in Romania

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