Month: April 2012

Leadership Edge to remould management

Posted on by Ben Debski

‘The Leadership Edge’ has been launched by the Wharton School’s Aresty Institute. The programme was specifically designed to assist executives who have to make the transition into management positions. The staff who will present the new course are all currently teaching on the MBA programme at the San Francisco campus.

Nancy Rothbard, Faculty Director of The Leadership Edge and Management Professor at Wharton, said that one of the most important moments in a career is when the transition has to be made to leadership. She continued: “Executives who have already succeeded as high-level individual contributors need new skills to move into management.”

Many of them learn “on the fly” she says, but it is of course preferable to start off with the most effective techniques and tools. Trying to undo bad practices later on takes a great deal of time and diminishes your impact as a leader.

The director of the Graduate Leadership Programme at Wharton, Jeff Klein, concurs. He says that Wharton’s new programme will assist executives to broaden their skills and improve their expertise to include running a company. Wharton will work on the key organisational and personal skills to assist students to make the transition.

The Wharton School is an initiative of the University of Pennsylvania, which was founded 131 years ago. At the time, it was the first collegiate business school in the US. It is recognised globally as a leader in the fields of ongoing innovation and intellectual leadership.

The Leadership Edge involves group discussions, lectures, assessments, projects, experiential learning and networking to ensure that students acquire and are able to apply new skills and concepts.

According to Klein, Wharton’s leadership programme stands on three pillars; entering a leadership community, becoming a student of leadership and looking for and accepting ‘stretch’ experiences. The emphasis in the programme is on the third pillar. He says it was critical for novice managers to become involved in experiences where they can test the concepts they have been learning. Only then it will become a reality to them.

The Wharton programme is presented by outstanding members of the university’s faculty; all professors who teach at their renowned MBA programme. They include experts such as Ethan Mollick, who is a cutting-edge researcher on innovation and entrepreneurship and Sigal Barsade, an authority on emotional intelligence.

Todd Henshaw, the former director of military leadership at the US West Point Military Academy and John Kanengieter, who trained space shuttle crews at NASA have also joined the programme as lecturers.

Those who become students at The Leadership Edge will acquire skills on how to lead others, use emotional intelligence, how to improve conflict management abilities, how to set up and lead high-performance teams, how to properly communicate your strategy to others and how to manage growth.

The emphasis throughout, is on ‘actionable knowledge’, that which can be applied in real life situations.

As Professor Rothbard so eloquently puts it: “We’re preparing new leaders to step back into their roles on Monday morning knowing exactly what they’re going to do different and better.”

News Limited rejects print regulation

Posted on by Ben Debski

The report, entitled, “Independent Inquiry into the Media and Media Regulation” has suggested that the government should set up a news media regulator in order to monitor all news media, including radio, online services and TV as well as the printed medium.

Commentators argue that Australia already has its own press council and there is no need for further regulation. Currently the Australian Press Council is a self-monitoring body that was set up by the newspaper industry to monitor the practices of print journalism.  The judge has also recommended that if the government doesn’t set up an independent statutory body then the Press Council should have its budget increased to $2m per year.

Fairfax Media, News Limited, APN News and Media, and Western Australian Newspapers are to join forces in a bid to format their response to the Finkelstein report. News Limited’s, CEO, Kim Williams said: “The spectre of a government funded overseer of a free press in an open and forward looking democracy like ours cannot be justified.”

Not all media commentators are against the idea of a statutory body. A recent article in the Business Spectator points out that a new government body may well mean that any complaints against the press would have to be taken more seriously than at present and that “frivolous and vexatious” complaints would have to be filtered.

The battle against the report is also raging online. Websites argue that each time they publish something on the net they adhere to the defamation laws as well as ensuring that all comments are moderated. One particular website, Vexnews, believes that the call for the inquiry into press regulation lies with a lack of accurate data and that the politician Bob Brown, allegedly, was one of the main proponents of the inquiry following some less than complimentary articles in papers published by News Limited.

Understandably the news media in Australia is angry about the proposed changes but the opposition doesn’t end with the press. Some political observers believe that the judge is attacking the inalienable right for the country to have a free and independent press. The Financial Review examines in depth the reasons behind the enquiry and also questions the motivation. The judge backed up his assertions against the Sydney Morning Herald by claiming that “at least two readers” had complained against an article in the newspaper.

Australian newspaper publishers and other news outlets have responded favourably to Judge Finkelstein’s recommendation that the Press Council be granted additional funding and the Council itself is in the process of implementing further changes, maybe this will suffice to ward off the threat of government censorship.

Industry leaders utilise knowledge transfer

Posted on by Ben Debski

Developing highly knowledgeable employees is important for all service sector businesses, but it is especially so for companies who sell advice, such as strategy consultants and law firms. The effective recycling of expertise and experience into new solutions is what allows the firm to tackle problems that other companies cannot handle internally. The leading firms in these sectors owe their positions to the comparative advantage successful knowledge transferring provides.

The major law and consulting firms work to provide an encouraging environment for knowledge transfer. Employees are encouraged to move between departments and offices to develop a range of experiences and to cross-pollinate ideas. International law firm White & Case even makes it compulsory for its trainee solicitors to take a secondment abroad. The unity of the whole firm is often stressed and differences between sub-organisations played down to prevent the rivalries that can hamper knowledge transfers. The successful strategy consultants, such as the Boston Consulting Group, also pride themselves on an innovative culture and an acceptance of new ideas.

Effective knowledge transfers on their own do not necessarily mean that the firm will establish a comparative advantage. Knowledge that can be transferred within the firm can often be transferred to its competitors. Once the knowledge has spread through the industry, the original firm’s edge is eroded. This is particularly the case in manufacturing companies where knowledge is embedded in tools that can be easily replicated. Knowledge embedded in employees is more likely to remain within the firm instead of leaking out to rivals. A successful law firm like Clifford Chance or a consulting firm like McKinsey rely on the human capital of their employees. However, this is only built up at great expense with training and experience. They need a way of ensuring long-term loyalty. This is why firms in these sectors are usually structured as partnerships. The possibility of a lucrative partnership keeps the associates loyal; without this possibility they would more readily jump ship to a rival firm taking the knowledge investment with them, leaving firms to free ride on one another and be reluctant to invest in training themselves. A firm like Slaughter and May, is even able to invest heavily in the knowledge of its employees and develop lawyers with multiple and even cross-departmental specialisms. This allows the firm to tackle a range of client problems despite being much more compact than many of its rivals.

Investment banks manifest a completely different approach. When advisory work, which was reliant on embedded employee knowledge, was the dominant source of profits, many investment banks were structured as partnerships. When trading became a large source of profits, access to capital became more important than passing the knowledge of a banker’s extensive contacts or experience of past flotations. Gradually the major investment banks went public; the last major partnership, Goldman Sachs, sold out in 1999.

However, some smaller advisory only banks, such as NM Rothschild and Perella Weinberg, have managed to survive. They pride themselves on being close-knit teams and developing well-rounded bankers who can leverage the experience of the senior partners. Effective knowledge transfers allow them to sell themselves to clients based on the quality of their advice.

New generation shakes China labour landscape

Posted on by Charlotte Gill

The strange dynamics of the strike that forced Honda to suspend auto production in China for more than a week reveal a growing impatience by Chinese workers with the state-backed union, and shifting demographics that may eventually give them more leverage than their parents ever had.

“Foreign investors have been lulled into a false sense of security that China has a docile work force,” said economist Arthur Kroeber of Dragonomics.

“There’s nothing intrinsically docile about the Chinese labour force. There was a period when everything was kind of fine; now we are entering a period of more constraint.”

No reliable figures exist on the number of job walk-offs each year by Chinese workers, and many disputes are likely short and go unreported. But anecdotal evidence suggests the Honda clash reflects a larger trend, in which the balance of power may be shifting toward workers.

The number of Chinese between the ages of 15 and 24 has hovered around 200 million to 225 million for the last 20 years. That number is likely to fall by one-third during the next 12 years, Kroeber said, giving more bargaining power to the young people pouring into the workforce.

“Ultimately, the teeth that lies behind [labour conditions] is the workers’ notion that ‘if we strike, we’ll be thrown out of a job and there’s another 10,000 people to replace us.’ Now the teeth are removed because there aren’t another 10,000.”

For now though, the decks are still stacked against workers who try to independently press for better wages.

Impact of stimulus
Chinese workers collectively tightened their belts in 2008, when the initial shock of the global financial crisis forced some factories out of business and led many others to cut wages.

The economy has since roared back to life, and stimulus measures in smaller cities have
kept many workers closer to home, away from the export-oriented factories of the coast.

“It suggests that the stimulus packages have been incredibly successful at creating jobs,” said Glenn Maguire, Asia chief economist for Societe Generale.

Multinationals and Chinese exporters have responded by moving production and sourcing to inland regions, where wages are lower, or by hiring students and migrants from remote regions through schools or government agencies.

About 600 of Honda’s 1,900 workers at the auto parts plant in Foshan, in southern Guangdong province, dubbed the workshop to the world, were “student interns” contracted out by their schools for between six to 18 months of full-time work on the factory floor.

As its regular workers went on strike, the interns were asked to sign a pledge not “to
lead, organise or participate in” any strike.

Chinese workers are not allowed to form unions independent of the All-China Federation
of Trade Unions, an umbrella organisation run by the Communist Party to which companies pay a percentage of wages. Historically, the ACFTU tries to prevent strikes.

During the recent round of strikes, workers who refused to accept Honda’s wage offer clashed with union representatives, who tried to force them off the factory grounds.

“The trade union doesn’t represent us,” said a young woman who declined to be named. “They asked the company to negotiate with us, but they didn’t help us. They just turned our requests down.”

While China’s first generation of migrant workers may have been poorly-educated peasants used to a life of back-breaking labour on the farm, the new generation often has no land and no farming experience to fall back on.

“When their parents’ generation migrated, they knew nothing about factories,” said Lee Chang-hee, senior specialist on industrial relations for the International Labour Organisation in Beijing. “For the second generation, it’s different. Some were born in
the cities, although they are still registered as rural. Some strive to become urban citizens.”

“They have no other life outside the factory, so they have to make the factory work for them.”

Organising via social networks
Workers organised the Honda strike using social networking tools like internet-based chatrooms and China’s popular messaging service, QQ.

“The chatrooms have now been deleted, but they were clearly saying ‘the union is useless, let’s do this by ourselves’,” said Geoffrey Crothall, editor of the China Labour Bulletin, which documents labour conditions in mainland China.

That could increase Chinese leaders’ nervousness over activism by young workers, some of whom were born after the 1989 crackdown on pro-democracy protests on Tiananmen Square.

Workers involved in those protests had also tried to form independent unions.

Strong-arm tactics by bosses, official complicity and difficulties in uniting the transient migrants who staff Chinese factories still works against the labour movement in China.

“It’s difficult to do … in each factory you need leaders with a certain quality to lead the
workers. Someone with legal knowledge,” said a labour activist and factory worker in southern China who asked not to be named.

A more pressing worry is the policy dilemmas for the Chinese government, which has an official target of raising wages and household income, without deterring the investment in production capacity underpinned by three decades of cheap labour.

A rash of recent suicides at a huge factory belonging to Foxconn, a contract manufacturer for groups such as Apple, Dell and HP, put a harsh spotlight on China’s labour conditions.

The potential for other workers to take inspiration from fellow workers at Honda was revealed when workers at a Hyundai Motor auto parts plant near Beijing walked off the job in late May. They were quickly promised higher wages.

“Other countries’ experiences show that once it happens, it spreads very easily under the
current situation of labour shortage,” said Lee, a native of South Korea.

SA water faces tough future

Posted on by Ben Debski

South Africa’s water management strategy is currently on a knife edge, with
senior Sasol and Eskom managers warning that just one major drought over the next eight years in the catchment area of the Vaal River will pose a serious threat to the stability of the region’s agricultural and industrial output.

Ensuring adequate water supply to the Vaal catchment area is currently high on the agenda for water management teams in South Africa. Although long term plans to ease the situation are already in place, Phase II of the Lesotho Highlands Water Project (LHWP) is not scheduled to start delivering water to the Vaal until 2020. With deadlines on projects of this magnitude habitually over running, it is a distinct possibility that additional water may not reach the region until around 2021.

Although the region has not suffered a significant drought in recent years, enjoying good rainfall of late, long term rainfall patterns are notoriously difficult to predict, meaning a severe drought in the next decade is a distinct possibility.

Coal and oil giants Sasol believe that increased water use efficiency alone will not be enough to divert a crisis, should a drought occur. Andries Meyer, Sasol’s sustainable water manager, believes that increased liaison between national, provincial and local government is also essential, as is close co-operation between the public and private sectors. Meyer believes that government incentive schemes are the best method of promoting such public/private sector partnerships.

Electricity provider Eskom shares Sasol’s concerns, adding that competition for available water between large industrial and domestic users will become a political issue in the region, should a drought occur.

The area’s problems are exacerbated by massive water loss through leaks, thought to be in the region of 25-33 percent, and illegal abstraction of water from the Vaal by local farmers.

At the sixth World Water Forum, which took place in Marseilles from in March, Water and Environmental Affairs Minister Edna Molewa lead a delegation from South Africa that voiced grave concerns over the future of water management in her country.

While endorsing the significant contribution that South Africa has made to raising public awareness, the World Water Forum also recommends the implementation of ongoing legal and institutional reforms in the country, to ensure maximum accountability and sustainability are achieved in the long term.

Rico Rustombi on corporate governance | Indika Energy

Posted on by The New Economy

Energy companies come under hard scrutiny for corporate citizenship because of the significant damage they can cause if they don’t take their responsibilities seriously. Rico Rustombi talks about Indika Energy’s commitment to professional excellence and environmental stewardship, and how good corporate governance means creating a balance between economic and social goals.

The New Economy: What does good corporate citizenship mean to you at Indika Energy?

Rico Rustombi: Well, good corporate citizenship is about commitment, and commitment is what makes the difference. It is as simple as that: commitment to professional excellence and responsible stewardship in all its endeavour is the key.

Indika Energy believes that no company can sustain operation in the long term without effective corporate governance. It will ensure consistently solid operational performance, providing added value to its stakeholders.

The New Economy: What is Indika’s place within Indonesia’s energy sector?

Rico Rustombi: Well, Indika energy is a leading integrated energy company, providing its customers with total energy solutions in the areas of energy resources, energy services, and energy infrastructures. Which covers coal production, oil and gas epc, contract mining, coal transport and logistics, as well as power generation projects.

Our portfolio businesses combine with our local knowledge expertise and strong industry reputation enable us to provide complementary products and services to domestic and international customers; thereby positioning us to capture growth opportunities across the Indonesian energy sectors.

With this strong integration along the whole energy supply chains has been the main driver of Indika Energy. We believe that with more diversified investor base, Indika Energy is about to realise its vision to become a world-class integrated energy company, and become the pride of Indonesia.

The New Economy: You’ve been expanding primarily through acquisitions, and you recently brought PT Petrosea into the company. What’s the story there?

Rico Rustombi: Petrosea’s stellar performance has further affirmed the value and synergy brought by the group’s acquisition. Through this acquisition we expanded our energy service segment, mainly in mining contracting activities, and also harnessing the expertise in our construction and engineering capabilities, which can be channelled in support of the core business.

The acquisition of Petrosea marked the highlight of our pursuit to strengthen the business position, create synergy for growth, and completed the company’s energy value chains.

We have emerged as one of the few Indonesian companies capable of providing a complete mining solution: from pit to port using in-house resources.

The New Economy: And how vital is good corporate governance for a large company with diversified assets like Indika?

Rico Rustombi: We believe that no company can sustain operation in the long-term without effective corporate governance.

Eventually, it’s a part of a much larger picture that differentiates the performance level of companies within their respective industries.

For that reason, Indika Energy consistently strives to surpass existing standards; not only in the energy sector, but also in the environmental concerns and corporate social responsibility.

Once again, commitment is what makes the difference: here, good corporate governance is to create a balance between economic and sociological goals, as well as between individual and communal objectives.

The New Economy: You’ve touched on social responsibilities; what is Indika’s approach to this area?

Rico Rustombi: At Indika energy, corporate social responsibility is an important core value, which forms an integral part of the company’s cultures. Through synergistic strategy, our presence is not solely to enhance Indonesia’s energy sectors, but also to give back to the people of Indonesia.

Indika’s CSR programmes are focused in health, education, community development, and environmental issues. One of these programmes, to teach of Indonesia movement, what we call Indonesia manager, was initiated in 2010. It immediately mobilised 120 best scholars newly graduated from the top university in Indonesia to teach in elementary schools in more than 100 villages from east to west in Indonesia. Where quality educational facilities and educators are lacking, this programme’s goals are to empower them through better education.

Indika Energy last but not least is a corporation with a strong commitment to stewardship; not only within our business sectors, but beyond – into the community and natural environment in which we all exist together.

The New Economy: Rico Rustombi, thank you very much.

India’s infrastructure requires “urgent” funding

Posted on by Ben Debski

India’s infrastructure funding has been in critical need of attention for years. As far back as 2007, Deutsche Bank Research identified the need based on increasing population and economic vitality. That same report, however, also identified enough political instability within the country to make potential investors nervous, slowing forward progress on private infrastructure investment.

Countries like the UK have developed a unified infrastructure plan that lays out not only an overall design plan, but funding proposals. Socialist countries like China depend on infrastructure projects as an economic driver, and so make those the focus for their future. The US has partnerships between the state and federal government if the project crosses state lines. If not, the state or local government facilitates the project.

India has traditionally provided less funding than needed for infrastructure projects. The most recent budget proposal (the 12th five-year plan) increases funding options for items like agricultural market terminals and oil and gas pipelines. It also authorises the funding of tax-free bonds to support some public sector undertakings. For example, a new irrigation and water resource finance company will be created to help with the funding of big-ticket investments such as flood control, irrigation and drought mitigation.

Still, many experts say the budget proposal doesn’t go far enough. The survey pointed out that “there is a need for introducing more innovative schemes to attract large-scale investment into infrastructure.” Changes such as allowing pension and insurance funds to invest in infrastructure debt have been proposed, but so far not acted on, even in the new budget. In almost all other free market economies, these investment options are open to pension plans and large investment schemes.

Additionally, outside investors will need assurance that the government will support their admittedly large investments and not pass future laws derailing their moves. Future budgets will also have to fund later portions of an overall investment, as no company is going to invest in the first 5,000km of a new motorway without knowing that the final section of the road will be built.

For India to continue its growth, a more unified plan will need to be put forth by the government so that both public and private sectors have reason to look to the future, and there will have to be assurances that the government will fund these projects forward to completion.

Renewables struggling to perform

Posted on by Ben Debski

Australia, the land of sun and wind, would seem a natural fit for renewable energy companies. Yet even in this land of richness, as far as eco-power is concerned, companies find it difficult to remain in the black. Biomass, hydropower and wind and solar only supply five percent of Australia’s energy needs, whereas the majority of Australia’s electricity is still created by burning coal. Part of the reason is that the infrastructure needs of coal are well established and renewable energy resources are often located far from the markets they serve, requiring higher transformation and transmission costs.

Since coming to a standstill after the Three Mile Island crisis in 1979, no new nuclear power plants have been built in the US, and some have actually been shuttered. The first new reactor in the US is scheduled for 2017, but the energy needs of the country simply aren’t waiting for new nuclear plants to come online. The average American household now has 26 plug-in devices, and with only 1-2 percent of the country’s energy needs coming from renewables at this time, a power shortage is a distinct possibility.

Europe’s three largest renewable energy companies said that the lack of sufficient government incentives and fall in energy prices has hit them hard. Slower demand from customers has also had an effect, as increasing prices for home solar panels has begun to have a trickle down effect. The future profits of companies such as Germany’s SolarWorld have been downgraded by many investment firms.

Additionally, renewable energy profits are being squeezed by economic factors. The prices of solar cells, for example, have dropped over 40 percent, but the cost to manufacture those same cells has not dropped by the same degree. The European debt crisis has affected almost every company, and renewable suppliers are not immune. The worldwide economic downturn has resulted in a softening of demand for renewable energy products, particularly in the residential market, as many home-owners view individual investment in renewable energy as a luxury item.

Stock prices have been hit because of all this uncertainty. The PowerShares Wilderhill Clean Energy Portfolio (PBW) fell by over 10 percent in February. The global economic downturn may have affected this, though, as some experts predict a doubling of renewable energy production in the US by 2035, even accounting for the expiration of tax credits and subsidies. The country’s Energy Information Agency (EIA) also predicts that coal burning will drop from 49 percent to 39 percent by 2035 as a means of power generation. Some of this will be in response to new environmental regulations, but much of it will be due to the availability of cleaner energy options at nearly the same price as “dirty” energy.

Governments may need to carry forward some subsidies and tax breaks longer than planned, but as more and more laws are passed regarding power generation and environmental damage, the long-term pay-off may well be worth it.

Mammoth bailouts across Europe

Posted on by Ben Debski

Ireland
The main problem behind Ireland’s debt problems stems from an overinflated property market and the lack of banking resources to meet bad debt resulting from this crisis. The Irish received a €67.5bn bailout fund from the EU, Denmark, Sweden, the UK, and the IMF in 2010. Approximately €34bn of these funds were directly pumped into Ireland’s banks in a bid to provide fiscal security. Meanwhile, unemployment is rising in the country though financial commentators believe that Ireland’s long-term outlook remains optimistic.

Portugal
Portugal received a €75bn bailout in a bid to stabilise its economy. These measures were put in place as a direct result of governmental overspending and an over bureaucratised civil service. To date, the Portuguese government has managed to implement measures to improve its situation and the country is seen to be moving on the right track. However, the country has an unemployment level of 14.8 percent, taxes have been increased, and pay has been frozen, on top of the government’s draconian spending cuts.

Spain
Spain is economically at risk and might have to raise funds in terms of a bailout. Spain’s public debt was $820bn in 2010. To date the country has succeeded in avoiding having to ask for external financial aid, but recent reports suggest that the country’s debt levels are still rising and that its borrowing costs are heading towards dangerously high levels. Some financial experts are concerned that the Spanish government is not implementing the necessary spending cuts. Spain has an unemployment level of 23 percent and currently appears to be heading for recession.

Italy
Political changes and a lack of belief in the Berlusconi government have led many observers to fear that Italy might be the next EU country to have to apply for a bailout.  New Italian president, Mario Monti, has declared that Italy is fiscally sound but the IMF remains unconvinced and predicts that Italy may soon have to join the eurozone bailout club. The Italian government recently held a bond sale, which underperformed by €4bn. The government has been able to implement certain austerity measure including a rise in the age of retirement to 67 by 2026.

Cyprus
The island of Cyprus, though partly inhabited by a large Greek population and affected by problems concerning the Greek banks, runs its economic affairs totally separately. The country has had to ask Russia for financial help, and in January received a €2.5bn loan. Cyprus was also recently downgraded by the international credit rating agencies and this has driven up the cost of borrowing. Cyprus currently holds a ‘junk status’ credit rating.

Where are the women in boardrooms?

Posted on by Ben Debski

Hilary Devey
In the UK, Hilary Devey is well known to viewers of the popular BBC programme, Dragon’s Den. Her no nonsense approach is famous and it is this level headedness that has helped her establish a net worth of £50m through her role as CEO of her Pall-Ex haulage firm which she founded in 1996.

Carol Bartz
Known as a firebrand and famous for her creative use of language, Carol Bartz is the former CEO of Yahoo. She was fired from her post in February 2012 despite increasing the company’s profits from $285m to a staggering $1,523m in just six years. Bartz started her career in computers at software giant Autodesk, and she was previously one of the world’s first women to rise to the boardroom during her 14 year tenure at the firm.

Oprah Winfrey
Winfrey is almost as famous for her acting and TV presenting roles as she is for being a leading US CEO. She is the chair of production company Harpo, and recently assumed the role of CEO for the Oprah Winfrey Network, OWN. Winfrey’s business acumen has recently led her to transform the top tier management of OWN, in a bid to achieve long-term success for the cable network and to improve the channel’s ratings.

Cher Wang
Cher Wang is something of a technological genius. She is currently the chair of HTC, the company behind the Android operating system for Google that led to further development of the smartphone. In 2011, HTC posted income of $9.6bn and this figure is set to rise following HTC’s investment in Beats Electric, the headset manufacturer, started by iconic DJ, Dr Dre.  Cher Wang initially founded HTC in Taiwan in the 1990s and the company has seen meteoric growth under her leadership.

Ellen Kullman
Ellen Kullman is the CEO of DuPont.  She has been described as one of the world’s most powerful women by Forbes. Kullman has been CEO at DuPont since 2009 and she was the first woman ever to hold that position in this company. Kullman started her life as an engineer, following a degree from the Tufts University, she and has worked for DuPont since 1988. She was promoted to the role of vice president and she has continued her meteoric rise ever since.

Irene Rosenfeld
Irene Rosenfeld is the world’s most powerful CEO according to research sttistics. She is CEO of food giant Kraft and has worked within the food industry. She is the driving force behind the recent Kraft mergers and takeovers, including the company’s acquisition of the UK’s Cadbury brand.

The Ponzi palaver: the top 5 schemes

Posted on by Ben Debski

Bernie Madoff
Madoff hit the headlines in 2008 when it was revealed that his massive international empire was built on fraud. Madoff has since been sent to prison because of his long running Ponzi in which he managed to amass over $65bn. Charities, Hollywood celebrities, and US football teams have all suffered as a result of believing that their investments in Madoff’s company were sound, whereas his back office trading accounts were pure fiction and each successive group of investors was funding another group therefore, no actual share trades and returns were involved.

Kautilya Nandan Pruthi
Recently, UK based criminal, Kautilya Nandan Pruthi was sent to prison for defrauding his victims of over £115m. While investors thought they were investing in a scheme that purported to give high yields, they were in fact only receiving their initial profits from other members of the scheme. Few of the funds taken by Pruthi have been recovered, he is reputed to have personally made £38m and maintained a very luxurious lifestyle. Approximately 800 people invested in the scheme – including cricket star Darren Gough – which ran for many years.

Michael Eugene Kelly
Kelly used the ‘timeshare’ model to deceive his investors and managed to defraud them of $428m in 2006.  Kelly targeted his operation at pensioners who wished to invest their savings in timeshare hotels in Cancun that would give them the opportunity to earn some extra money through leasing contracts. The whole scheme was a hoax and many pensioners lost their entire savings when the scheme collapsed and US fraud investigators revealed the Ponzi.

Reed Slatkin
US citizen, Reed Slatkin set up a Ponzi, whereby managing to con around 800 Hollywood celebrities and other famous people out of $593m. Slatkin used his garage as a base for his operations while posing as an experienced investment broker and analyst. He created false trading accounts and fictitious brokerage firms whereas in reality he used his Ponzi in order to fund the Church of Scientology, where he was a minister. The original investors were paid out of funds secured by a later tier of investors and the scheme only became known following an investigation by the SEC.

The Albanian government Ponzi
In 1997, just after the collapse of the state of Albania and during the rule of its first freely elected government, the country’s citizens were persuaded to invest in a variety of Ponzi schemes run by the government. The population had no way of knowing that these schemes were based on the pyramid or Ponzi model. Investments rose to around $1.2bn, but when the citizens failed to receive any return on their investment, riots broke out.

Thierry Koskas on electric vehicles | Renault Nissan | Video

Posted on by The New Economy

Renault and Nissan have been pioneers in zero-emission motoring thanks to their strategic alliance, and are set to capitalise as the market expands beyond the niche consumer. Nissan sold 25,000 LEAF models, and Renault has already taken 5,000 orders for its new EVs in three months. Thierry Koskas explains the changes making electric vehicles more appealing and accessible, and the behaviours they’re set to change forever.

The New Economy: Renault-Nissan has been a real pioneer in development of electric vehicles, so, what point in the curve are we at, in the adoption of the electric car?

Thierry Koskas: I think we are really at a tipping point in terms of electric car adoption. Previously the number of EVs that were sold in the world was extremely limited; now we are moving to a higher volume. For example, Nissan sold in total 25,000 Nissan LEAF. We have launched from Renault’s side the first vehicles three months ago, and we have already taken 5,000 orders, so we are now heading for big volumes. It’s really changing.

The New Economy: As you touched on, your group has produced the most popular zero emission so far, the LEAF. Why do you think that particular model has been a winner?

Thierry Koskas: I think it makes a big big difference compared to everything we’ve seen before. Reasonably cheap car, range that enables you to use the car on a daily basis, for daily trips. Very convenient. And obviously, zero emissions.

That changes a lot, compared to what we saw before. So, that makes EV now popular, whereas before it was very much a niche market.

And now another big addition to the range, in the shape of the Renault Zoe. Why do you think this kind of class of car might catch on with the customer; not so much the fleet customer, but the private buyer?

Yes, that’s going to be a winner. That’s typically a city car: four metres long, so you are really looking at, you know, every family that has a second car in the household. They can replace it with this type of car. Extremely convenient to commute, do daily trips. And as it’s released a year after the first models, that will be more advanced technically. Better range, lower price; so there will be a lot of progress on this car.

The New Economy: Is there a particular segment of the market where you expect electric vehicles to really make an impact in the next few years?

Thierry Koskas: Yes: I think the EVs will very much spread in a few typical segments like second cars. That’s a typical usage for an EV, I mean, with a car that can make 100 miles, that’s very good. Also let’s not forget vans, especially the minivan segment, where you know, you need urban delivery. Sometimes you get restrictions in some cities – you cannot go into city centres and so on, but with an electric car you can. And that will probably be one of the most promising segments we have in the future.

The New Economy: Of course the technology and the curb appeal are improving all the time, but what’s your approach to overcoming our love affair with the internal combustion engine? Persuading petrol-head consumers to go electric?

Thierry Koskas: Well I’m not really sure that we have a love affair with petrol cars! If it’s the only thing that you know, of course, you have to be in love. But at the end, as soon as you try an EV, you fall in love with it. That’s very much the feeling: to drive in silence, very good acceleration, the feeling that it’s good for the planet as well. Very convenient on a daily basis. So I think it’s very much a question of, okay: let’s try an EV, and you will soon forget your previous lover.

The New Economy: Looking ahead, one forecast from the International Energy Agency sees as many as 2.5 million electric vehicles on the world’s roads as soon as 2020. What has to happen to make that forecast a reality?

Thierry Koskas: Well actually, we think there could be more electric cars than 2.5 million in 2020. There are a few conditions though. The first one is, for the first years, we need the government’s help to develop EVs. It is more expensive at the beginning, so there is need for some support. We need also the infrastructure to spread; and we need also to ensure there is consistent progress on the technology.

With all that in mind, you know, definitely the petrol price will increase, and so EVs will spread. So, there are a few conditions, but we are extremely confident that it will happen.

The New Economy: Thierry Koskas, thank you very much.

Thierry Koskas: Thank you.