Najam Sethi in The Friday Times
Prime Minister Nawaz Sharif and his allies are making decidedly ominous statements. While announcing a relief package for the agricultural sector, Mr Sharif suddenly veered off his subject at the Convention Centre in Islamabad and started talking of “those who would like to overthrow the government and rule directly themselves”, followed by a couple of similar sentences meaning similar things.
If this statement wasn’t oblique enough, he then spoke of how neither he nor his family was using state resources to line their pockets. Indeed, he added, “all our personal expenditures come from our own personal resources and there cannot even be a whiff of corruption attached to us”. The linking of “corruption” with an intervention against the government has clinched the suspicion that Mr Sharif believes that sections of the military establishment are still out to “get him” and his government. This time, it is suspected, by initiating action against allegedly corrupt elements in the PMLN federal and Punjab provincial governments as they have done in Sindh against the PPP government by effectively taking over the reins of power in the NAB and FIA.
Mr Sharif’s ANP ally, Asfandyar Wali Khan, was more forthright. When asked if he foresaw a military intervention by year’s end – because of carefully planted stories of GHQ’s anger at the continuing corrupt practices of ruling politicians – he warned that “if, God forbid, such an intervention were to occur, it would lead to the break up of Pakistan”. Stronger words on the subject have not been uttered nor such a bleak scenario publicly articulated.
For an explanation, we need only to look at the recent behaviour of the one political leader who is desperately seeking a short cut to power on the back of the military: Imran Khan. His dharna last year was based on the theory of the third umpire putting an end to Nawaz Sharif’s innings and paving the way for Imran Khan’s entry into Islamabad. This is now an established fact. Several credible reports of the involvement of the then ISI chief, Lt Gen Zaheer ul Islam, in this conspiracy are circulating in the media. But Imran Khan’s failure hasn’t deterred him.
Now Khan is threatening to forcibly eject the four provincial election commissioners from office – they hold constitutional positions and cannot be ousted under any circumstances short of resigning themselves — by staging a mass rally in front of the ECP’s office in Islamabad despite a ban on such rallies in the capital. He is also defying the code of conduct of the ECP forbidding government and opposition leaders from canvassing on behalf of their candidates in local elections in the Punjab. He successfully challenged the ECP decision in the Lahore High Court. But the ECP has obtained a stay from the Supreme Court and ordered the Chief Secretaries and IGPs of all the provinces to ensure strict implementation of the ECP’s code of conduct. The PMLN has said it will abide by the law. But Imran Khan has said he won’t because he considers the law illegal. So the stage is being set for violent clashes between the PTI and the Punjab and Islamabad administrations of the PMLN.
If Imran Khan can create violent disturbances in Punjab or Islamabad during the local elections in October-November, we may expect to witness a repeat dharna-type performance that attempts to draw the military into the fray. The PTI has plastered over 20,000 banners in Lahore’s NA 122 with candidate Aleem Khan’s picture alongside that of the army chief General Raheel Sharif. And Imran Khan has publicly called upon the Rangers and the military establishment to carry out accountability of corrupt politicians and bureaucrats in Punjab, a demand that is clearly unconstitutional.
Finally, a rather sinister development is already making waves in the media. This is the question of whether or not Gen Raheel Sharif deserves an extension in service before he retires at the end of next year – “for doing such a great job as the saviour of Pakistan against the scourge of terrorism and corruption” – unlike his predecessor General Kayani. It may be recalled that in the latter months of his first tenure, Gen Kayani destabilized the PPP government on at least two occasions even as a debate about his extension was raging the media.
General Raheel Sharif is a soldier’s soldier. It is inconceivable that he and his lieutenants are involved in destabilizing the PMLN government or that he is maneuvering to seek an extension in tenure. But there is no doubt that an ill will is blowing in the direction of Islamabad and none other than Imran Khan is huffing and puffing again to bring the house down.
PM Nawaz Sharif is rightly sensitive to Intel data that has led him to allude to another dharna-type conspiracy in the offing. We should know how the game is unfolding by observing Imran Khan’s course of action.
“If only everything in life was as reliable as a Volkswagen” ran the slogan of one of VW’s most iconic ad campaigns. Last week’s revelations that VW deliberately and illegally cheated emissions tests will rightly do irreparable damage to a global brand that has traded off its reputation for quality and reliability.
The way this has played out on both sides of the Atlantic raises two critical and related questions about corporate accountability. First, VW is only the latest in a series of global corporates to be caught breaking the law, a sure sign that, even where regulations exist, they are often not fit for purpose. Second, VW’s law-breaking has highlighted the extent to which powerful industry lobbying has watered down European testing to the extent it can be manipulated without illegal action, and at terrible cost. Air pollution accounts for some 50,000 premature deaths a year in the UK – three times as many as liver disease. But in the face of corporate lobbying, EU and government efforts to address it have been utterly inadequate.
“It was not an accident… a lot of work has gone into this,” was the verdict of John German of the International Council on Clean Transportation, the NGO that uncovered VW’s use of sophisticated software to flout US emissions tests. It’s a textbook case of predatory capitalism: a global business deliberately flouting regulations to harm the environment and cause unnecessary deaths in the name of profit.
The business community reacted with outrage when former Labour leader Ed Miliband condemned predatory businesses, accusing him of unfairly tarring the whole private sector with this brush. But each new corporate scandal makes this response more untenable. Scandals in banking, energy and food show that a serious misdemeanour at one global firm is often indicative of poor practice across a whole industry. Other car firms have already been found guilty of illegally manipulating tests, albeit not on the scale of VW.
The common lesson from these scandals is that capitalism is neither inherently good nor inherently evil. But unless they are rooted out, poor cultures that permit bad individual behaviour can and will develop in businesses. Companies such as VW employ the equivalent of a small city’s worth of people: in a company that size, there may well be employees with criminal tendencies. What’s critical is whether company cultures root out these bad apples, or whether they allow them to set in train a corporate race to the bottom. This is not an insight limited to business: the MP expenses scandal and widespread doping in athletics show what happens when people feel able to police themselves.
The financial crisis should have served as a warning of how imperfect our regulatory systems are at rooting out criminal practices within business. But the debate about reforms to corporate accountability has not been commensurate with the scale of the challenge. This is partly because there are no easy solutions. There is a consensus that regulators need to focus more on firm cultures, but little understanding about what an effective approach might look like. Greater personal liability undoubtedly has a role to play, but is no magic fix, as poor organisational cultures can encourage people to take risks regardless of the consequences.
The German system of corporate governance – often held up as an exemplar for its employee representation – has failed to prevent scandals afflicting big German companies such as Siemens, Deutsche Bank and Deutsche Telecom: a system designed to work for modestly sized, community-rooted businesses has not worked in holding global giants to account. But corporate governance is an imperfect lever through which to try to change corporate culture.
The VW case shows how a relatively small NGO running independent tests was eventually able to get US – if not European – regulators to take action. It demonstrates how independent civil society organisations can play an important role in holding corporates to account: but to do so, they need to be properly resourced.
This is particularly true given the way in which global companies have wielded their huge power to get regulations watered down, perhaps the most shocking aspect of how this has played out in Europe.
Air quality is a serious killer. But addressing it is easier than other public health challenges because it relies more heavily on changing corporate than individual behaviour. It is much more localised than climate change policy: unlike with carbon emissions, action to improve air quality in the UK overwhelmingly benefits the UK. Yet the immense lobbying power of the German car industry has knocked air quality down the agenda both in Brussels and Westminster. As a result, EU emissions tests are far laxer than in the US. There are even legal loopholes that allow car manufacturers to use the type of software that VW was found to be using in the US.
The European Commission and the government have both been warned about the implications: some diesel cars that have passed European laboratory tests have been found to be producing seven times the legal limit of nitrogen oxide emissions. But as reported by this paper today, the government has been seeking to block EU legislation to toughen up emissions tests. And it has ignored European legal limits for nitrogen dioxide levels altogether. It has taken a legal case by the NGO Client Earth to force Defra even to consult on proposals to reduce air pollution, proposals that experts believe fall far short of what’s needed. The scale of government inaction in the face of heavy industry lobbying is staggering even in relation to other public health challenges such as obesity and smoking.
As well as tougher European vehicle testing and a properly resourced plan from government to improve air quality, there needs to be a more holistic approach to environmental policy. Diesel has been promoted as a greener alternative to petrol as a result of its lower carbon emissions, but it performs much worse on air quality. There are similar issues with biomass. Yet climate change policy sits with the department of energy and climate change, while air quality is the responsibility of Defra.
VW’s behaviour has had terrible consequences for global human health. It is only the latest warning that business regulation remains unfit for purpose, and a powerful reminder that corporate lobbying has too often stopped governments taking action to prevent avoidable human suffering. It must not take another corporate scandal on this scale to get governments to act.
Will Hutton in The Guardian
A well-functioning capitalism has, and will always need, multiple and powerfully embedded checks and balances – not just on its conduct but on how it defines its purpose. Sometimes those checks are strong, uncompromised unions; sometimes tough regulation; sometimes rigorous external shareholders; sometimes independent non-executive directors and sometimes demanding, empowered consumers. Or a combination of all of the above.
CEOs, company boards and their cheerleaders in a culture which so uncritically wants to be pro-business do not welcome any of this: checks and balances get in the way of “wealth generation”. They are dismissed as the work of liberal interferers and apostles of the nanny state.
Germany’s economy has been a good example of how checks and balances work well. But the existential crisis at Volkswagen following its systematic cheating of US regulators over dangerous diesel exhaust emissions shows that any society or company forgets the truth at its peril.
Volkswagen abused the system of which it was part. It became an autocratic fiefdom in which environmental sustainability took second place to production – an approach apparently backed by the majority family shareholder, with no independent scrutiny by other shareholders, regulators, directors or consumers. Even its unions became co-opted to the cause. Worse, the insiders at the top paid themselves, ever more disproportionately, in bonuses linked to metrics that advanced the fiefdom’s interests. But they never had to answer tough questions about whether the fiefdom was on the right track. The capacity to ignore views other than your own, no external sanction and the temptation for boundless self-enrichment can emerge in any capitalism – and when they do the result is toxic. VW, facing astounding fines and costs, may pay with its very existence.
So why did a company with a great brand, passionate belief in engineering excellence and commitment to building great cars knowingly game the American regulatory system, to suppress measured emissions of nitrogen dioxide to a phenomenal degree? Plainly, there were commercial and production benefits. It could thus sell the diesel engines it manufactured for Europe in the much tougher regulatory environment – at least for diesel – of the US and challenge Toyota as the world’s largest car manufacturer. Directors, with their bonuses geared to growth, employment and profits, could become very rich indeed.
Nor did the risks seem so outlandish. It was an open secret that car emission tests are artificial constructs, with special tyres, lubricants and measures to reduce car weight and air drag all allowed with the connivance of the regulators. To create a special piece of software that closed down nitrogen dioxide emissions during a test must have seemed to the executives involved only an extension of this artificiality. In any case, regulations are for busybodies, especially in areas as controversial as climate change and air quality. The software ruse was merely taking the game of cat and mouse between regulator and car maker to another level.
Former CEO Martin Winterkorn, who resigned last week over the scandal, claims he knew nothing of what was going on, blaming a few unnamed executives for making a catastrophic error of judgment. Winterkorn was the consummate German engineer, knowing every dimension of engine performance; if he did not know how the dirty diesel engines of some popular VW brands were successfully passing US emission tests it was only because he chose not to ask. He did not need to. He had the backing of the Porsche family, who own just over 50% per cent of VW’s shares and who agree to vote as a block; the support too of the state of Saxony with a further 20% per cent –and of union members on the supervisory board. Winterkorn could run a company of 600,000, as Süddeutsche Zeitungremarked, as if it were North Korea.
VW is about production and jobs which trumps concerns about environmental sustainability – a culture than unites unions as much as the Porsche family. And Winterkorn was its standardbearer, leading the charge against the tightening of EU emission regulations – urging weaker targets and a longer timetable. Despite a vast R and D budget, VW is far from a leader in the electrical car or hybrid market. Mr Winterkorn’s bonuses were based on his capacity to deliver production, jobs and profits: environmental sustainability or engaging with wider stakeholders did not get a look-in.
Make your god the share price, as so many British and US companies do, and you create one basket of problems – under-investment, excess deal-making and cutting corners. Abuse the stakeholder system, as did VW, and make your god production on any terms, damning the concerns of outsiders as irrelevant, and your end can be equally grisly. Capitalism, in short, may have boundless creative and innovative energy – but it also has boundless ways to go wrong. Intriguingly, recent work by a group of researchers at Harvard and the London Business School compared 90 American companies that took sustainability seriously with 90 who did not. Over 18 years the 90 committed to sustainability delivered annual financial returns 4.8% higher than the other 90.
In order to deliver sustainability they had to organise themselves around a core purpose, and then embed checks and balances to keep themselves honest. They shaped the way they were governed to open up to outside stakeholders with whom they checked their strategy. Their reporting measures embraced many metrics beyond share price and they rewarded directors for meeting them. Sustainability was a route to more open governance and rounded strategy – and it delivered.
VW did not believe in this any more than the British government does, now steadily rolling back “green crap” and efforts to promote sustainability as “anti-enterprise”. Transport secretary Patrick McLoughlin, under fire for doing nothing when he was sent the same damning report as the Americans 11 months ago, will have known that in Tory terms there would be no rewards for being cast as a bleeding-heart green. Enterprise is about getting regulators off car-makers’ backs and disempowering meddling stakeholders, especially trade unions.
Yet nor is it right in Corbynesque style to damn capitalism with a reflex call for stronger unions and public ownership. The government of Saxony and union members of VW’s supervisory board proved ineffective whistleblowers. They were not sufficiently interested in human betterment or the fatal consequences of excess nitrogen dioxide emissions. They just wanted jobs at any cost. Checks and balances alone don’t work: they have to be animated by an honest acceptance of mutual responsibility between firms and society – a moral ethic that must inform unions, regulators, shareholders and systems of corporate governance alike. VW lost the plot. But so, in a more profound way, have both the apologists and critics of western capitalism.
We could also bomb Hell, and within a month the residents would say ‘We were better off under Satan’
Mark Steel in The Independent
Some people get confused by events in Syria, but they’re not that complicated. Quite simply, we need to bomb somewhere or other out there, like we should have done two years ago. Back then we should have dropped bombs to support the Isis rebels fighting against the evil Assad. But as we didn’t bother, we now need to put that right by bombing the Isis rebels, and protecting Assad.
Because if only we had bombed Assad back then, it would be much easier to bomb Isis and their allies now, as we would be one of their allies so we could bomb ourselves. And we could do that without the fuss of going all the way to Syria, which would cut down on carbon emissions as well.
Also, we could ask Isis if they had any bombs left over that we had given them, “as we need them back to bomb you please”.
The change has happened because back then, you may recall, Assad was so unspeakably evil he had gassed his own people. But now we have decided we support Assad so I suppose we have found out the gas wasn’t so much a chemical weapon as a Syrian version of Febreze, that has left Aleppo with an alluring scent of lemon.
Former UN Secretary-General Kofi Annan warned against bombing, saying “Syria is not Libya, it won’t implode but explode beyond its borders.” So that might not be too cheery, if he is saying things will not necessarily go as smoothly as they have turned out in Libya.
If you were really fussy, you could look for another example of a western invasion in the Syria/Iraq region in the recent past, and find out how well that went. But where we went wrong in Libya and Iraq, is we only bombed one side.
This is the sort of pacifist behaviour that causes the trouble. We should have bombed all the different sides, to make sure we annihilate the right people.
Sometimes we have tried this to a certain extent, so at different times we have armed Assad and Gaddafi and Saddam and Bin Laden and then bombed them for using the bombs we had sold them. But it is not organised properly and leaves the poor sods confused.
Instead of supporting Arab dictators for 20 years, then opposing them for three, and then supporting them again, we should arrange it on a rota system. We could bomb them on Mondays, Wednesdays and Fridays, bomb their opponents on Tuesdays, Thursdays and Saturdays, and leave Sundays for US construction companies to make some money rebuilding the stuff we have bombed, so there is something new to bomb.
Otherwise we are left with the predicament Tony Blair finds himself in. He complains that we didn’t bomb Assad two years ago. But, in 2002, Blair invited Assad to stay at Buckingham Palace and praised his modernising outlook. If he had used my suggested system, he could have grovelled to him on Thursday, then bombed him in his bedroom on Friday. I’m sure the Queen wouldn’t have minded sleeping on a mate’s settee for a couple of weeks while builders repaired the damage.
The silly thing is, it’s now claimed there are secret units of the IRA – who have kept their weapons against the rules of the peace process. It would have kept them out of mischief if they had been asked to bomb Blair’s pals such as Assad and Gaddafi, as long as they did it on one of the agreed days, and it would have strengthened the Northern Ireland peace process as well.
There could also be a surprise element to which side we bomb, with vast commercial potential. Instead of the same predictable places popping up, there should be an international body that chooses the venue, with Sepp Blatter opening an envelope to reveal “next year the place we have to bomb as we can’t just do nothing is… Finland”.
Then, whenever someone suggests bombing Finland will make things worse, columnists and politicians and blokes in pubs can shout “well, we can’t do NOTHING”.
This argument, that we can’t do NOTHING, is powerful and well thought through, because it’s clear from Western military interventions in the Middle East that no matter how bad the situation is before we go there, we manage to make it worse. This must have taken immense planning in Libya, but was worth it because everyone seems to agree that most of the country looks back on their days under the foul, despotic, murderous tyranny of Gaddafi with a dreamy nostalgic affection.
We could bomb Hell, and within a month the residents would say “We were better off under Satan. At least he kept the demons under some sort of control.”
Maybe the problem is we are not entirely trusted. This goes to show what a touchy people they are out there. We do all we can to support the spread of democracy by arming the royal family of Saudi Arabia and the Amir of Kuwait and the honourable folk who rule Qatar, and go out of our way to support people with titles such as “Mighty Wizard of Eternal Vengeance and Holy uber-King who can make up laws as he goes along, Divinely Grand Swisher of the Majestic Whip and his Million Wives of Bahrain”, and the little sods still doubt our honourable intentions.
But now there is an even more urgent reason to back the bombing of somewhere or other, which is we must do it for the refugees. The Sun newspaper, in particular, has been running a campaign that we “Do it for Aylan”, the three-year-old lad who was drowned as his family fled from the horrors of Isis.
I suppose they must have spoken to Aylan’s family, who would have told The Sun that bombing somewhere or other is exactly what he would have wanted.
