Global Glance: Sep 14, 2015

A quick look at intriguing international stories

By John Bostwick, Managing Editor, Radius

Welcome back to Global Glance. This week we look at:

• A Spanish case that may force a company to bottle Coke against its will
• Cracking down on illicit financial Flows from Africa
• A travel jacket company that received $9 million in Kickstarter Funding

Spanish Case May Force Company to Bottle Coke Against Its Will

In a blog post on European Union worker representation, Radius legal expert Stuart Buglass writes: “Multinationals operating in a European country … should be familiar with employer obligations specific to that country. However, understanding the local mandatory standards might not be enough — it’s also advisable to have an awareness of the forces that can change these standards.” [Italics added.]

That’s sound advice. But even a deep understanding of the forces behind EU labor law could not have prepared the multinational bottling company Coca-Cola Iberian Partners for the ongoing legal troubles it’s now enduring in Fuenlabrada, Spain. As an article in last Monday’s New York Times reports, Coca-Cola Iberian — which is under license to the Coca-Cola Company but is a separate operation — is in the midst of a three-way merger. The Fuenlabrada factory had been slated by the company to transition from acting as a bottling center to acting as a “logistics center.” Perhaps not surprisingly, this transition entailed layoffs. Now, the Times explains, “union leaders say Coca-Cola Iberian is taking unfair advantage of labor reforms pushed through in 2012 by [Prime Minister Mariano] Rajoy that were meant to reinvigorate Spain’s employment market and make labor rules less rigid, notably by making it easier for employers to hire and fire workers.” Those union members want the Spanish government to ensure that Coca-Cola Iberian gives them their old bottling jobs back at Fuenlabrada factory, despite the company’s transition plans.

The case is significant in that it’s part of a larger trend in Spain of unions challenging the country’s new labor laws. The case, however, is in some ways unique. Here’s the Times again: “Legal experts said that it would be unprecedented for a court to force a company to produce a specific product against its will.”

While an extreme example, the Coca-Cola Iberian dispute is another reminder that at-will employment is basically nonexistent outside the US, and that terminating workers in the EU is seldom easy or inexpensive. In this instance, it may not even be legally possible.

For more on the merger involving Coca-Cola Iberian Partners, check out this Wall Street Journal article.

Cracking Down on Illicit Financial Flows from Africa

Early this year, the High Level Panel on Illicit Financial Flows from Africa, chaired by former South African President Thabo Mbeki, released a report that attempts to gain an understanding of the reasons for and extent of illicit financial flows (IFFs) from Africa and to “make specific recommendations of practical, realistic, short- to medium-term actions that should be taken both by Africa and by the rest of the world to effectively confront what is in fact a global challenge.” Depressingly, it is not drug traffickers, illegal arms dealers and other organized criminals that are responsible for most of the fraudulent activity in Africa leading to these financial outflows. Former President Mbeki explains in his forward to the report: “Despite the challenges of information gathering about illicit activities, the information available to us has convinced our Panel that large commercial corporations are by far the biggest culprits of illicit outflows.” Basically, many large multinationals are engaging in fraud and tax evasion in Africa.

The authorities of at least one African nation are taking real steps to stop IFFs. Last Monday, the Ethiopian newspaper Addis Fortune reported through the website AllAfrica that numerous criminal cases have been brought against foreign companies for “tax fraud, acts of corruption, money laundering, engagement in areas not allowed for foreign investors, failure to pay value added tax (VAT), and working without having a business license or work permit.” The cases referred to in the article involve companies in Ethiopia from Israel, Sri Lanka, India and the United Arab Emirates. The African nation’s efforts are in fact part of a global trend of anti-corruption detection and enforcement. For information on anti-bribery programs throughout the world, check out the Organization for Economic Co-operation and Development’s (OECD’s) "Bribery in International Business" page.

Travel Jacket Company Receives $9 Million in Kickstarter Funding

According to its “About” page on Kickstarter, BauBax “is a Chicago based product design firm that designs and manufactures creative lifestyle products. With the launch of the World's Best travel jacket, BauBax seeks to solve the many inconveniences of traveling.” I doubt most people would characterize jackets as “lifestyle products,” but that hasn’t stopped the new company from generating serious interest from investors and media outlets. The Economist ran a story on BauBex last Monday, noting that “funding from Kickstarter for the ‘world's best’ travel jacket clocked up investment of around $9m, blowing away a target of $20,000 set by” the company.

It’s hard not to regard the product as gimmicky, seeing as it has 15 “features,” including built-in gloves, an inflatable neck pillow and at least 10 pockets for items such as sunglasses, a phone, passports and a drink. Still, its early success must point to some trend or basic human desire, maybe simply that people like to have lots of pockets while they’re traveling. The promotional video, available on YouTube, notes that the jacket will help you “make new friends.” Of that at least I’m skeptical. My wife never would have married me had my opening gambit been, “Want to check out my jacket’s built-in inflatable neck pillow?”