from Development Channel

This Week in Markets and Democracy: Brazil’s Lula Charged, Thai Labor Case, Corporate Tax Battles

Brazil's former president Luiz Inacio Lula da Silva attends an event with workers' unions leaders against the privatization of...mpanies and against Brazil's interim President Michel Temer, in Rio de Janeiro, Brazil, June 6, 2016 (Reuters/Ricardo Moraes).

September 23, 2016

Brazil's former president Luiz Inacio Lula da Silva attends an event with workers' unions leaders against the privatization of...mpanies and against Brazil's interim President Michel Temer, in Rio de Janeiro, Brazil, June 6, 2016 (Reuters/Ricardo Moraes).
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Brazil’s Lula Charged with Corruption

After months of speculation, Brazilian judge Sérgio Moro allowed bribery charges against former president Luiz Inácio Lula da Silva (Lula) to move forward. He is accused of accepting $1.1 million in improvements for his beachfront apartment from OAS, one of Brazil’s largest construction companies, in exchange for Petrobras contracts. Lula is the latest and most prominent figure to be charged in the Lava Jato investigations, joining dozens of other political and business leaders, including former lower house speaker Eduardo Cunha, former Worker’s Party (PT) treasurer João Vaccari Neto, and construction magnate Marcelo Odebrecht. Next up may be President Michel Temer, already named in Odebrecht’s plea bargain for soliciting illegal campaign contributions during the 2014 presidential election.

Thailand Convicts Labor Rights Activist

The United States and United Kingdom have stepped up efforts to curb labor abuses in global supply chains through new laws. Many require companies to report on whether their products are made with forced or slave labor (relying on “naming and shaming,” an approach with limited efficacy). Others go further, including the recently-passed Trade Facilitation and Enforcement Act, which allows U.S. customs officials to seize goods they believe were made by forced or slave labor—putting the burden on exporters to prove otherwise. Yet local governments at times push back against investigations. Thailand is the latest example, charging and convicting a British activist of criminal defamation for reporting alleged migrant worker exploitation. This intimidation makes it all the harder for multinationals to be good corporate citizens, and to comply with legislation in their main consumer markets.

Countries Chase Corporate Taxes

Services today span the globe, bringing in nearly $5 trillion in sales. Countries are already fighting over who should tax—and benefit from—these transactions. This week, Indonesia made a significant claim, sending Google a $400 million bill for back taxes and fines on advertising revenue earned in Indonesia, but taxed in Singapore. Their claim follows several from wealthier countries, including Japan’s $118 million and the European Union’s record $14.5 billion in back taxes claims, both against Apple. As services continue to increase as a driver of economic growth and a percentage of global trade, these conflicts are sure to rise.

 

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