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RepRisk Releases Report on Most Controversial Companies of 2012
By Tyler Collins

RepRisk has released its report on “The Most Controversial Companies of 2012.”  The report analyzes significant corporate controversies related to the ten firms that received the highest Peak RepRisk Index in 2012 (“Peak RRI”) as listed below:

1. Tazreen Fashions Ltd [Bangladesh] Peak RRI: 80

Garment manufacturer Tazreen Fashions came under fire in late 2012 following a fatal fire at its factory in Bangladesh in which 112 workers died and many more were injured as managers prevented workers from leaving the factory.

2. Olympus Corp [Japan] Peak RRI: 73

The exposure of massive accounting fraud dating back to the 1990s began a major corporate governance scandal for the company in early 2011 and into 2012. The company’s supply chain suffered media frenzy with accusations of the use of conflict minerals in its products and poor working conditions in its Chinese factories.

2. Lonmin PLC [United Kingdom] Peak RRI: 73

In August, approximately 3,000 of the British mining company’s workers were involved in a strike over their $2/day salaries. A few days later 34 protesters were killed, 78 were injured, and 259 were arrested for their involvement in the strike. A week later, nearly a quarter of the workers returned to mine in response to alleged threats by Lonmin.

4. News Corp Ltd [United States of America] Peak RRI: 70

In 2012, News Corp was still suffering from the UK phone hacking scandal that began in 2011. The company was also investigated for alleged bribery and money laundering. Additionally, HarperCollins, a News Corp company, was accused of sourcing paper from endangered Indonesian forests and arranged a settlement with regulators for trying to fix e-book prices in the European Union.

4. Samsung Group [South Korea] Peak RRI: 70

During 2012, Samsung was harshly criticized for poor conditions at its supplier factories, links to child labor, and violations of national legislations.  Samsung was sued by the State of Illinois in September and by the E.U. in December for price-fixing and other anti-competitive practices for televisions, computer monitors, and cathode ray tubes occurring for more than a decade.

6. HSBC Holdings PLC [United Kingdom] Peak RRI: 69

Two major scandals hit HSBC last year: a series of international money laundering charges, and the alleged involvement of the bank in the manipulation of the London interbank offered rate (Libor).

6. Reebok International Ltd [United States of America] Peak RRI: 69

Reebok’s RRI spiked in 2012 due to its involvement in alleged abuses of worker rights in Asia factories and a fraud scandal in India. The company was also involved in systemic fraudulent practices in its governance and operations, as well as tax evasion. One of its Chinese suppliers was fined in Guangdong for river pollution.

6. ING Bank NV [Netherlands] Peak RRI: 69

ING Bank came under public fire in the second half of the year due accusations that it facilitated money laundering for drug trafficking, terrorism, and sanctioned nations.

9. Wyeth LLC [United States of America] Peak RRI: 68

Wyeth is ranked in the top 10 most controversial firms owing to the settlement of several shareholder lawsuits related to its pharmaceutical products.  In addition, it has been allegedly linked to bribery of government officials and anti-competitive practices.

10. TeliaSonera AB [Sweden] Peak RRI: 67

The telecommunications group TeliaSonera made the list due to associations with bribery, corruption, money laundering, human rights violations and complicity with oppressive regimes. Repeated criticisms include alleged close cooperation with security services of authoritarian states such as Kazakhstan and Belarus related to aiding state authorities to monitor and counter opposition groups.

Mention of specific companies or securities should not be considered a recommendation to buy or sell that security. Past performance is never a guarantee of future results.

Posted: February 18, 2013

Posted: February 18, 2013