U.S. sanctions against the BNP and the emergence of a tri-polar legal world. Part Three: Chinese response and financial deterrence

China has established a strategy of resistance against the U.S. legal and financial supremacy which took place in four major steps.

The first step was that of kindness, what might be called the Stage of Open Collaboration with the West where Chinese doors wide opened to foreign corporations, openness of course coupled with the lure of mutual gain. It has been free entry of Americans and Europeans in China for 20 years.

U.S. and European multinationals have been invited to come to China to produce at very low costs. As multinationals became accustomed to low cost of production, they decided to settle permanently in China, to produce and also to sale.

The second step is what we could call the Stage of the Law. In the years 2005 to 2009 a series of court cases in China caused problems for the European multinationals, including German ones producing and selling chemical products in China. The best known case is that of a Chinese worker who came to work in pajamas. He was turned back at the entrance, but two hours later the Chinese police came to incarcerate the two German directors. The legality of their arrest was their ticket to an old, but still in force, local Chinese law that allowed workers to come to work in pajamas. It took several days to German employers in Europe to realize the seriousness of the situation and the determination of the Chinese. Their two executives could only get out of jail two weeks later, after paying a fine of several million dollars. Chinese authorities have strengthened their stances on the European front to attack the Americans.

The third step was the Stage of Sanctions and can locate its peak in 2010-2011 with a series of cases involving the number one global distribution, the renowned giant Wal Mart, both accused of not respecting the legislation work in China and of selling in its stores merchandise which did not comply with Chinese health regulations. Wal Mart’s first response was to simply despise these attacks. But the immediate and abrupt closure of several of its hypermarkets and the arrest and imprisonment of several senior managers in China put the store chain on its knees and at the end of 2011 it was sufficient enough for Wall Mart to consider the full and final closure of all its operations in China.

However having weighed the pros and cons and under its best interests, Wall Mart decided to present its apologies to dismiss senior officials, or at least officially held responsible, pay steep fines and above all agree to abide by Chinese laws forever ...

The fourth step is the last step and it could be called the Chinese March for Legal and Financial Power.

American financial power has many faces, but it is best known through some particular faces. Among these faces is the face of the SEC and those of the Big Five.

The SEC or Securities and Exchange Commission is the supreme authority of the U.S. financial markets and by repercussion of all the companies that are listed on the New York Stock Exchanges, or who invest in the NYSE, specifically all banks and insurance of the planet as well as all multinational companies worldwide. In other words, the SEC controls everything, everywhere, all the time.

The Big Five are the giants of the accounting, auditing and certification of the balances sheets of all the large companies in the world. The Big Five validate and certify the financial statements of the corporations listed on the New York Stock Exchange, the NYSE companies.

The Big Five are the guarantors of the regular financial health reports of the listed companies.

These health bulletins determine the price of the shares of these corporations end therefore the course of actions of these companies.

To close the loop, since the SEC controls the BIG Five, this means that the great leading controllers of the SEC control the controllers.

One of the findings of the U.S. financial markets has been to double-list companies on Wall Street and in the stock exchanges in Hong Kong and Shanghai. Originally this meant more money, more investments, more shareholders, and more money again.

But this double-listing also proved to be the Achilles’ heel of the U.S. financial supremacy.

Between 2011 and 2013, one of the Big Five, a subsidiary of Accenture in China, and then others among the Big Five, have been the target of the SEC regarding the audit of listed Chinese companies in both the financial markets China and in Wall Street.

The SEC required Accenture delivers secret information on its Chinese corporate clients. If Accenture did not comply, then Accenture leaders could be imprisoned in the United States and Accenture would then be hit with huge fines.

However for the first time in the SEC history there was a complication, a complication of size.

This time, the China Securities Regulatory Commission (CSRC) and the Chinese Government showed teeth.

The CSRC is the equivalent of the Chinese SEC.

The argument of the CISC and Chinese Government is that the information required by the SEC from Accenture about corporate clients was Chinese about Chinese trade secrets protected by Chinese law on secrecy of business transactions. Their violation would have resulted in the imprisonment of the Accenture leaders in China this time.

In other words Accenture leaders had a choice between obeying the SEC and go to jail in China or disobey the SEC and go to jail in the United States.

After two years of struggle, the Accenture cases, and other similar cases, have resulted in a negotiated agreement. Chinese financial authorities have authorized that certain information be disclosed to the SEC and the SEC had to be content with only receiving a small portion of the information the SEC first requested.

And so, there was a clear and total victory of China who got what it wanted from the beginning: that the world recognizes the supremacy now shared by the United States and China's domination of international finance and international financial law.

Since 2013 there are two super-gendarmes of finance in the world: 1) The Securities and Exchange Commission and 2) the China Securities Regulatory Commission.

What could be called a new Financial Deterrence.

Prof. Olivier Chazoule

U.S. sanctions against the BNP and the emergence of a tripolar legal world. Part II: the European response

The European response to legal and financial penalties imposed on the BNP is imminent. One could even say that it has already arrived in 1957.

At the end of the Second World War the Allies realized that the Franco-German rivalry that had already resulted in three wars in less than a century should be permanently stopped.

A thorough study of different options to extinguish this wildfire, resulted in these different parties to create a European Economic Union (in addition to the ECSC Coal and Steel Community and Euratom) linking the protagonists of close economic means and manners in attempt to avoid any future conflict to spare their immediate economic interests.

In short: trade to prevent a new war.

This is the origin of the Treaty of Rome in 1957.

A central pillar of the Treaty of Rome and the economic and legal practice of the Union of European States is the Policy of the Concurrence, or Competition. In fact, it is a legal, political, financial and economic outcome of the antitrust laws of the United States, a body of legal doctrines and powerful laws to limit the adverse effects of large financial groups and dominant in the U.S. economy start at the time by the Rockefeller oil company: Sherman Act 1890, Clayton Act 1914, and the Federal Trade Commission Act 1914. This is by any means to avoid monopolies and market dominance, or oligopolies.

Over the years, the competition policy of the European Union has become independent of its American origins. And copy it became innovative and very strong. Today, the policy of the European competition is much more developed and efficient than the U.S. antitrust policy.

The favorite weapon of the European Commission in Brussels and the Court of Justice of the European Union in Luxembourg to enforce competition is the administration of huge fines to companies and particularly to U.S. multinational companies, such as Intel ($1.4 billion in 2009); Microsoft ($1.2 billion in 2008) or even Microsoft with ($757 million in 2013; in fact if Brussels had applied the rule to the end the penalty could rise to 10% of global turnover Microsoft and become a $7.9 billion fine.)

The new weapon of Brussels has evolved by the recent directive Barnier put under de facto control of the major credit ratings agencies which have greatly contributed to the huge scale of the subprime crisis of 2007-2008 by promoting uncontrolled creation of MBS the Mortgage Backed Securities and their subsequent explosion.

Now the rating agencies, primarily U.S. are accountable before the European Commission.

Americans, like the British in the famous phrase of Count Anterroche at the battle of Fontenoy, fired first. But the outcome of the battle was not in their favors.

Here it is fortunately only financial conflicts.

But should the U.S. financial control authorities have unsheathed first, facing European sanctions, which has the arsenal of financial and legal control that they themselves furnished?

As they say, time will tell and bets are open.

Prof. Olivier Chazoule

Professor of Law, City University of New York

Director of Studies, The New York Institute for Business and Finance

Telephone (646) 775 2812

Mobile: (347) 721 1331

Website: http://nyibf.com/

Email: olivierchazoule715@gmail.com

Blog Business Schools:  http://wallstreetbusinessenglish.blogspot.com/

Blog Executive Education: http://wallstreetexecutiveeducation.blogspot.com/

Group on Linkedin: Business Schools Global

U.S. sanctions against the BNP and the emergence of a tri-polar legal world. Part I: The U.S. Legal problematic

Enormous fines and public apology, accompanied by partial disqualification from the banking profession in dollars, the sanction against the BNP is not only very strong, it may seem to some totally exorbitant in Law and in facts.

This is partly because even broader than the autonomy of the judicial decision, we find here the very large autonomy of the unilateral administrative decision. Which could be called: le Fait du Prince. It is the U.S. government which is exercising independently of any external control - for now, as you can imagine future judicial remedies - in respect of a very large entity, the BNP. Major large banks are global, international. They have branches in almost every country.

Some legal logic would dictate that each country enacts its financial norms and enforce these standards on its territory and do not extend its long arm jurisdiction (legal American theory jurisdiction of jurisdiction extending beyond borders which is called literally the long arm jurisdiction) over the entire planet, or any other country in which these banks have activities.

This would be to forget that the U.S. financial system and the U.S. economy as well as the U.S. legal system are based on the legal theory and practice to search for big pockets. In other words, while the administrative and judicial civil legal system, e.g. French legal system, will seek to define the responsibilities of offender's by regulations, including criminal, on behalf of the interests of the State and its citizens, the people, the largest number, some common law systems like the American legal system will seek civil monetary responsibilities and will look for those who can pay.

The American legal system, based primarily on negligence, liability and damages (often considerable) seeks to sue, join in lawsuits or in administrative proceedings the greatest number of individuals and corporations. It then determines one or a few targets through lengthy investigations and plea bargain in which individuals and corporations are encouraged to denounce each other in order to be exempted partly or wholly by loading the other responsibilities the widest possible and fractionated. Therefore this division of responsibilities is based on the facts but also mainly on the ability to pay.

Then the judicial or administrative system will identify the greatest potential target for paying damages and focus its attacks on him. The other co-leaders will be invited to denounce one or a few big payers and benefit from reductions in charges and penalties, even full exemptions.

If criminal law is used, it is to support and act as leverage to civil law. The threat of criminal sanctions will push the offender to accept significant civil penalties in exchange for reduced criminal penalties allowed by the plea bargain.

This is why non-American financial institutions, businesses and even non-American States sometimes struggle to grasp and accept this American supremacy which they consider in effect a way for Uncle Sam to dictate fiscal policy to the world.

Theoretically, the basis of U.S. law in that federal law is passed by the Congress of the United States, or the law of a State is passed by the parliament of one of 50 the State of the Union and will apply DE JURE to the U.S.

In reality it does apply DE FACTO to the world.

According to the American Constitution, the constitutions of every State in the Union and the international legal system, these laws are intended to apply only to the territory and legal persons, individuals and corporations, who live on the territory or have their main activity on the territory (link, principal place of business, point de rattachement).

Curiously, in the interest of an extensive cause of action, it is simply not the case.

Take the BNP case as an illustration.

Will, however, Europe, China, and the rest of the world, remain passive before such a concept of an American global law?

This is the subject of the following parts:

The European response

The Chinese response

Prof. Olivier Chazoule

Professor of Law, City University of New York

Director of Studies, The New York Institute for Business and Finance

Telephone (646) 775 2812

Mobile: (347) 721 1331

Website: http://nyibf.com/

Email: olivierchazoule715@gmail.com

Blog Business Schools:  http://wallstreetbusinessenglish.blogspot.com/

Blog Executive Education: http://wallstreetexecutiveeducation.blogspot.com/

Group on Linkedin: Business Schools Global

Group on Linkedin: Global Executive Training

U.S. sanctions against the BNP and the emergence of a tri-polar legal world. Part I: The Legal Anglo-Saxon problematic

Enormous fines and public apology, accompanied by partial disqualification from the banking profession in dollars, the sanction against the BNP is not only very strong, it may seem to some totally exorbitant in Law and in facts.

This is partly because even broader than the autonomy of the judicial decision, we find here the very large autonomy of the unilateral administrative decision. Which could be called: le Fait du Prince. It is the U.S. government which is exercising independently of any external control - for now, as you can imagine future judicial remedies - in respect of a very large entity, the BNP. Major large banks are global, international. They have branches in almost every country.

Some legal logic would dictate that each country enacts its financial norms and enforce these standards on its territory and do not extend its long arm jurisdiction (legal American theory jurisdiction of jurisdiction extending beyond borders which is called literally the long arm jurisdiction) over the entire planet, or any other country in which these banks have activities.

This would be to forget that the U.S. financial system and the U.S. economy as well as the U.S. legal system are based on the legal theory and practice to search for big pockets. In other words, while the administrative and judicial civil legal system, e.g. French legal system, will seek to define the responsibilities of offender's by regulations, including criminal, on behalf of the interests of the State and its citizens, the people, the largest number, some common law systems like the American legal system will seek civil monetary responsibilities and will look for those who can pay.

The American legal system, based primarily on negligence, liability and damages (often considerable) seeks to sue, join in lawsuits or in administrative proceedings the greatest number of individuals and corporations. It then determines one or a few targets through lengthy investigations and plea bargain in which individuals and corporations are encouraged to denounce each other in order to be exempted partly or wholly by loading the other responsibilities the widest possible and fractionated. Therefore this division of responsibilities is based on the facts but also mainly on the ability to pay.

Then the judicial or administrative system will identify the greatest potential target for paying damages and focus its attacks on him. The other co-leaders will be invited to denounce one or a few big payers and benefit from reductions in charges and penalties, even full exemptions.

If criminal law is used, it is to support and act as leverage to civil law. The threat of criminal sanctions will push the offender to accept significant civil penalties in exchange for reduced criminal penalties allowed by the plea bargain.

This is why non-American financial institutions, businesses and even non-American States sometimes struggle to grasp and accept this American supremacy which they consider in effect a way for Uncle Sam to dictate fiscal policy to the world.

Theoretically, the basis of U.S. law in that federal law is passed by the Congress of the United States, or the law of a State is passed by the parliament of one of 50 the State of the Union and will apply DE JURE to the U.S.

In reality it does apply DE FACTO to the world.

According to the American Constitution, the constitutions of every State in the Union and the international legal system, these laws are intended to apply only to the territory and legal persons, individuals and corporations, who live on the territory or have their main activity on the territory (link, principal place of business, point de rattachement).

Curiously, in the interest of an extensive cause of action, it is simply not the case.

Take the BNP case as an illustration.

Will, however, Europe, China, and the rest of the world, remain passive before such a concept of an American global law?

This is the subject of the following parts:

The European response

The Chinese response

Prof. Olivier Chazoule

Professor of Law, City University of New York

Director of Studies, The New York Institute for Business and Finance

Telephone (646) 775 2812

Mobile: (347) 721 1331

Website: http://nyibf.com/

Email: olivierchazoule715@gmail.com

Blog Business Schools:  http://wallstreetbusinessenglish.blogspot.com/

Blog Executive Education: http://wallstreetexecutiveeducation.blogspot.com/

Group on Linkedin: Business Schools Global

Group on Linkedin: Global Executive Training

The Power of Negotiation

The incredible amount of $10 billion that the BNP will pay the U.S. financial authorities which have violated U.S. restrictions on international funding dollars with embargoed countries of the United States between 2008 and 2009.

This exceptional situation raises several questions:

The first question relates to the jurisdiction which is subject to the BNP, as did the other French banks, like all non-US banks worldwide. This is a question of territorial and legal jurisdiction of U.S. law. With what right? How the American justice system recognize the actions of a moral legal entity, a commercial and finance company operating under French and European law?

Part of the answer lies in the nature of the offending companies, subsidiaries of the BNP operating on the territory of the United States.

But this response is insufficient.

The second part of the answer lies in the currency in which the operations are performed, the dollar is still the world's reserve currency. But in this case, we can consider that each country has vocation and / or legitimacy to act globally in transactions that take place anywhere, will trade in its own currency?

The third part of the answer lies in the nature of the interests considered strategic by the United States. In other words, everything that may directly or indirectly threaten the security of the United States must be controlled and prevented if necessary. If taken too late, and after commission of what is considered a failure or a fault, then a penalty is warranted.

The most famous law in this area is one that has been issued by Congress on 26 October 2001, in response to the events of 11 September 2001, the Patriot Act. Intended to protect the United States from any illegitimate financial transactions, money laundering and cash, the Patriot Act is to regulate and control financial transactions with U.S., as well as international implications and impact on the United States in order to restrict access sources and transferring channels of funding by terrorist groups.

There were already comparable U.S. provisions from the Cold War, which restricted exports of sensitive technology to the USSR, which included the allies of the United States. They have been transformed into export restrictions sensitive to Chinese technologies.

The fourth question is: With what right does the United States allow themselves to enact global legislation, where laws passed by only Americans can and do have an effect on the rest of the world? The series of laws Foreign Account Tax Compliance Act, or FATCA, 2010 is an example. It provides a pragmatic answer: it’s just the way it is! We will come back to this later.

The Romans said that the perfect laws or pefectae leges, laws are enforced by sanctions. In other words, if there is no sanction applied and nobody respects the law. This is what leads to the fifth question: what are the ways to pressure and sanction of the United States against foreign banks and financial institutions, non-U.S. companies?

This major penalty, this bottleneck is the denial of access to Wall Street, which remains the dominant financial market in the world and the potential driving ban transactions in dollars, which is the major currency in international trade and of world reserves.

If a bank is banned access to Wall Street and / or effect transactions in dollars, it's not considered a bank.

This means that U.S. federal authorities have the power to validate and invalidate any bank in the world; and this power they wield discretion.

It's not exactly The Prince’s Act, but it’s close.

Faced with such an exorbitant power of the common law, what strategy should be adopted?

The U.S. banks, as powerful as they are, go in the direction of the current.

Like them, we must consider the psychology and sociology of American business and finance, enough to know the right federal administrative procedures and key states in this area, New York, Delaware, and finally engage in direct negotiations using what we observe.

The last thing to do is to face head-on the federal government, we must persevere in negotiations.

As Americans often say is explicit and should be considered here: if you cannot beat them, join them.

Prof. Olivier Chazoule

Professor of Law

Director of Studies

New York Institute of Business and Finance

Website: http://nyibf.com/

Email:  olivierchazoule715@gmail.com

Blog Business Schools:  http://wallstreetbusinessenglish.blogspot.com/

Blog Executive Education: http://wallstreetexecutiveeducation.blogspot.com/

Group on LinkedIn: Business Schools Global

Group on LinkedIn: Global Executive Traning

A Global Approach to Executive Training

In a global and pragmatic environment, executive training can no longer be limited to matters concerning only the hexagon, France, or Germany, Japan, China or the U.S. 

In this global economy, executive training must take into account the international aspects of the enterprise. Mastery of business English, knowledge of laws prohibiting anti-competitive behaviors, and an understanding of the competition between global economic players such as France and the E.U., the U.S. and the Western Hemisphere, China -Japan and the Asian Bloc are imperative.

Every level and every topic of Executive Training is affected by the existence of the global economy. The subject cannot be avoided.

For example, the level of English an employee or executive may have mastered, is not important. What is important however is to measure that level through what the Anglo-Saxons call an assessment.

The executive or employee begins by evaluating his or her skills. Then the skills are measured through a simplified and objective test to determine the actual needs. Finally a training program is put in place that may consist of coaching, language classes, total immersion in an English speaking environment (day to day living, workplace etc.).

Once the outline of the executive training program is determined, the program is set in motion. The results  come about quickly and are quite remarkable. 

The program evolves as results are achieved and the English language training program is extended over several months or even years through refresher courses in conversational exchanges, or in small group instruction.

Prof. Olivier Chazoule

Professor of Law

Director of Studies

New York Institute of Business and Finance

Website: http://nyibf.com/

Email:  olivierchazoule715@gmail.com

Blog Business Schools:  http://wallstreetbusinessenglish.blogspot.com/

Blog Executive Education: http://wallstreetexecutiveeducation.blogspot.com/